On horizontal wells that are allocation wells, I know that I can go to the RRC site and find the as-drilled plat and pull the lengths of the well segments to calculate the well allocation.
On vertical wells, how do I obtain the information needed to calculate the well allocation?
The easiest method is to go to the RRC permit to drill. The newer permits will provide a plat of the unit boundaries.
If I look at a plat that defines the lease as being the SE 1/4 of one section and the east 1/2 of the section above and both those areas are included in my royalty deed, would that mean that my well allocation is 100% or 1? or are there other factors in the calculation?
Newer permits should contain factors for tracts in the unit and the gross acreage of each tract. You unit participation is:
NMA within unit / Gross Unit acres = Unit Participation
Unit Tract Participation is:
Gross Tract Acres / Gross Unit Acres
I hope this is helpful.
I am not sure how to interpret your response because of the use of Net Mineral Acres. Erwin K5 plat.pdf (456.8 KB) This is the specific plat I am asking about. Is it too old? All of section 4 and section 45 are included in my royalty deed. So is my well allocation 1 on this well? I am treating well allocation as the portion of the well I am entitled to royalties on which is then reduced by my royalty interest to come up with the decimal interest on this well.
The Erwin K Lease looks to include the #1,2,3,4,5 and 8 wells. If you interest is the same across sections 4 and 45, then the NRI should be the same. However, this assumes an OGL or OGL’s with the same terms. You will need to confirm the controlling OGL at the Midland County Recorder’s Office if your interest is the same on your deed. You can also do this at Texas County Clerk Records Search | TexasFile.
I do not have the OGL information. Only K3 and K5 are paying and the payable decimal interest on both is the same (.00002974)
As I understand it, my royalty deed grants me 1/2 of 317/716155 of 1/8 of the royalties. If the 1/8 is a floating factor (which I believe it is) then my understanding is the OGL royalty reserve (may be using wrong term?) is substituted for the 1/8 and that result is multiplied by the well allocation to obtain the payable decimal interest. Assuming I have a the maximum well allocation of 1, if I divide the payable decimal interest (.00002974) by (1/2 of 317/716155 = .0002213), I should come up with the OGL royalty reserve. The result is 13.42% vs the original 1/8 of 12.5% which does not make a lot of sense to me I have heard of 1/16, 1/8, 20% and 1/4 reserves.
Based on that, I am led to believe that I either don’t understand the well allocation or the OGL royalty reserve.
I am merely trying to improve my understanding of the payments I receive and figure out how to ask intelligent questions of the DO analyst.
You have a general understanding of how to calculate a NRI. Your nomenclature is a bit off, but it can be followed. You just need to use “OGL Royalty” since reserve is a term used as a part of the OGL grant. The NRI is not referred to as floating, but I can understand how you can develop that concept. The RD grants you an interest into an OGL that will have a specific royalty. The combination of that RD grant and the OGL royalty develops your tract NRI or participation. If this is the only tract in the producing unit, then that is your NRI for the unit. If there are multiple tracts in the unit, then it gets a bit more complicated.
Thank you, James_Garner1.