How do you calculate the decimal interest to see if you are getting a good contract?
In general for Oklahoma, the decimal interest is calculated with the following formula for horizontal wells:
net acres/actual spacing acres x royalty x % perforations in your section.
The reason I said actual spacing acres is that many wells may be spaced at 640 acres, but the actual section may be slightly different. The sections 1-6 on the northern tier of a township and 6,7,18, 19, 30, 31 on the western side of a township are often corrected for the curvature of the earth, so not exactly 640 acres. If a well is drilled into two or more sections, then the well will be “split” into the percentages of perforations in each section.
The equation is what it is…and only depends upon the net acres, royalty and amount of perforations.
A “good contract” is another whole issue. The wording of the clauses in the lease language or the force pooling language may or may not be in a mineral owner’s favor. To me, the bonus is rather irrelevant to legal language that may hold my family for decades to come. A good contract is in the eye of the beholder. Many first drafts of leases are a “good contract” for the operator, but a “terrible contract” for the mineral owner and require a bit of negotiation to get them into a more favorable light for the mineral owner. Each party needs the other, so reasonable negotiations can often come to a usable contract for both parties.
. 00097753 is the offer
Get them to break it out by net acres, spacing acres, royalty and splits. Are they trying to buy your acreage? Or is this a Division Order?
10 net mineral acres of which you received ÂĽ which equals 2.5 net mineral acres. Your interest is calculated as:
2.5/638.12 * .125 = .00048972 RI – Wilkerson 1-19
2.5/638.12 * .125 = .00048972 RI * .49902360 (Section 19 Allocation Factor) = .00024438 RI – American Pharoah 19-18-9-5 1XH
Originally listed in estate Net Rev int in track 1/2 * 1/8 or 0.06250000 Net Rev int in unit 0.0625 * 20/638.12 or 0.0019588 Lease fp Tract 8
Don’t know if that’s what you mean
"How do you calculate the decimal interest to see if you are getting a good contract? "
I am not sure what your question is really about. Do you have a sale offer or are you looking at verifying a Division Order.?
It sounds like you have Division Orders. It should say that at the top. There is no negotiation as the Division Orders are the result of the original lease or force pooling order.
It is an division order. I was just wondering on the decimal difference.
Also is there a way to renegotiate that any time in the future as new owners?
Always best to ask the Division Order analyst directly if you don’t understand any discrepancy and get them to explain it to you.
No, you cannot renegotiate on these particular wells. You might want to ask the DO analyst for a copy of the lease or force pooling or water flood unitization order that governs your decimal amount. Tell them that you need it for your files as you are a new owner. Then you will be able to see what terms are holding you and for how long.
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Does gross payment of $839.57 last year seem to be enough to hold my minerals by production? Not to me.
It is if your lease says it is.
That is likely sufficient to hold the lease for the depth.
If you own 100% of the minerals under the well, no. But otherwise, yes.
If it makes you feel any better, I have a lease that was held by $0.07 last year. Probably not economic, but then again, I only have a tiny bit of acreage and not worth the hassle to worry about it.
I believe the lease laws regarding mineral rights will change eventually. I may not be around but maybe my granddaughter will benefit.
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