We have an NPRI in 20 acres in Reeves based on a reserved interest found in a 1928 deed when the property was sold, the reserved interest is 1/32nd. Division Orders have been signed and heirs are receiving monthly royalty payments. There is no “lease” signed by the heirs, only DO’s. Its my understanding the 20 acres is part of a 300+/- acre unit. My question, if additional wells are drilled and begin producing within the unit, will the heirs share in those, or is the NPRI only for the 20 acres?
Hi, Randy. You will need some specific advice, but, in my case, the 1/32nd NPRI interest was divided among the entire 640 acres, so that my family became a party to any well in the entire section. In your case, possibly 300 acres, being the south half, north half, east half or west half. It may be possible, too, that the interest does only cover those literal 20 acres, but it would surprise me. Being nowhere near Reeves County, I purchased documents such as deeds and leases from TexasFile.com, and found them helpful. I also met an executive rights holder in my section on here who has been extremely helpful with his knowledge.
The answer to your question depends on a few factors. As an owner of an NPRI, your interest is not pooled with the other acreage in the unit unless you ratify either the lease/s that is burdened by your interest or if you ratify the pooled unit directly. If you have not done that or been offered the opportunity you should contact the operator and see if they will send you one. By law they are supposed to give you the option to ratify.
That said, if you don’t ratify the pooling through the lease or the unit then you will only receive interest from wells that are drilled directly through your 20 acre tract. It is also good to note that generally the calculation (if not ratified) is based on the amount of productive well bore crossing your tract as a percentage of the entire well bore. There are instances where you can make more revenue by not ratifying but that calculation needs to be considered in the larger context of the unit and how many wells may or may not be ultimately drilled and what your property’s position is in the unit.
I own NPRIs and always calculate which will be more lucrative before I decide to sign any ratifications.