How do you calculate the expected royalty check?

Accounting and Taxes
1

Hi all

I got the info that was required to calculate the expected royalty check. I asked this before and someone wanted to know the wording on the royalty claim.

So, I went to the courthouse and got copies of the mineral leases or royalty assignment. There are two parts to this problem.

1st) A lady was granted this: do here by sell, assign, transfer, convey and set over unto the said assignee, all of their right, title and interest in and to One-half of one percent (1/2 of 1%) Royalty of all the oil and all the gas and saved from described lands.

2nd) A few days later, this lady gave my grandfather: all of their right, title and interest in and to an undivided one sixth of one per cent (1/6 of 1%) royalty of all the oil and and all of the gas produced xxxxxx

I am not sure if the first document makes a difference in my grandfather royalty or if the undivided wording makes a difference.

You can look at this mathematically two different ways, which can make a huge difference in the monthly check. I do not know which method is correct. So, based on these numbers below, what would we get for a monthly check. It could mean getting a Big Mac once a month or steak dinner once a week.

100 barrels per day average production.

The lease is at 15% royalty.

Oil sells for $60 per barrel.

The land is for 1 full section and I think that is all they drilled. If not, I will just divided the finally number in two as I know they will not drill more than 10,0000 feet horizontally or 2 sections.

Thanks for your help.

Joe

2

I dont know how accurate it is but there is a Royalty Calculator on the go haynesville shale website. I would be curious how accurate it is. It is on the left side of the page near bottom I think.

3

I think the royalty calculators are perfectly accurate if you input all of the correct information. If you are looking for your net after taxes, you need to put in everything, the price your production sells for where you get paid for it [ wellhead, etc. ] production and severance taxes, any deductions your operator is allowed to take out of your royalty before they pay you [ gathering ,transporting, compressing, etc. ] state income tax if any, your home state income tax also if there is any, but you may be able to deduct the state income tax from where your minerals are produced from your home state income tax [if any], production and severance taxes, federal taxes. All said and done, I think you get to keep about half or possibly a little more for oil using the mineral web calculator. Gas could be drastically less depending on what the operator can charge you for and deduct from your payment. The bright side is that the federal government hasn't taken away the 15% depletion allowance, yet.