My family has been informed that they drilled a well on one of our properties and the well come. This is in the Heath formation near Melstone. My question is, the mineral dead reads "undivided one-sixth of one per cent Royalty". I know we have a small interest in this well, but we are reading this statement mathematically two ways. One gives us a nice monthly payment and the the other gives us enough to go to McDonald's for dinner. Can someone please tell us how to legally compute the royalties. Thanks
Example 250 barrels average for the month, sold at $70/barrel and the gross royalty is at 12%.
There are a lot of factors which you need to know to calculate the royalty. How many acres does the deed cover? How many acres in the drilling unit? Does the deed cover yoyalties for the whole unit or just for your minerals? The amount of acres in the deed compared to the size of the producing unit. You will receive 1/6 of 1% royalty on your amount of minerals as compared to the unit or 1/6 of 1% of the entire unit. It depends on the language of the deed. More information would be needed from the deed you have to determine whether you are entitled to royalties and how much. You say you have a mineral deed but the conveyance is for royalties. There is a difference. A royalty deed only applies to royalties in a producing unit. If there is no production, there will be no royalties. A mineral deed is an actual transfer of minerals from one party to another.
however i do not agree with "A royalty deed only applies to royalties in a producing unit. If there is no production, there will be no royalties."
royalty can be severed from the mineral estate in the same manner that minerals can be severed from surface.
jeremy gautreaux said:
There are a lot of factors which you need to know to calculate the royalty. How many acres does the deed cover? How many acres in the drilling unit? Does the deed cover yoyalties for the whole unit or just for your minerals? The amount of acres in the deed compared to the size of the producing unit. You will receive 1/6 of 1% royalty on your amount of minerals as compared to the unit or 1/6 of 1% of the entire unit. It depends on the language of the deed. More information would be needed from the deed you have to determine whether you are entitled to royalties and how much. You say you have a mineral deed but the conveyance is for royalties. There is a difference. A royalty deed only applies to royalties in a producing unit. If there is no production, there will be no royalties. A mineral deed is an actual transfer of minerals from one party to another.
I got the info that was required to calculate the expected royalty check.
I went to the courthouse and got copies of the mineral leases or royalty assignment. There are two parts to this problem. 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.
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.
You can look at this 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.
100 barrels per day
The lease is for 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 or 2 sections.
This sounds like an over-riding royalty interest which should mean ½ of 1% of anything produced under the described property. Were they a landman, geologist or engineer? Often those professionals earn a part of the production as a "ride"... an over-riding royalty interest or ORRI.