Just heard a new term called NRI or “Net Reserve Interest”. Does anyone know how this number is calculated. I have been told the my NRI is 3.125%. This is based upon 80 NMA at 25% royalty and likely other factors. The NRI is used to figure the dollar amount that the driller will pay.
I think you mean Net Revenue Interest. Each working interest owner has 2 decimals, larger decimal (WI) for its share of drilling, operating and other costs and smaller decimal (NRI) for its share of the revenues after deduction of the royalties due under its leases. If Operator is only WI and all leases are at 20% royalty, then its WI decimal is 100% of costs and NRI is 80% (being 100% less 20% royalties). Are you an unleased mineral owner or do you own a portion of the lease(s)?
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Like TennisDaze said, I think you are probably referrring to net revenue interest. Your share of the revenue for those wells.
IMO chances are that they are drilling wells that are dedicated to 640 acres (likely two miles long and half a mile wide). In those 640 acres you have 80 acres @ 25% royalty. So you own 1/8th of the acreage and you get 1/4th of the money on your 1/8th.
Thus you get 1/32 of the revenue (1/4 times 1/8). 1/32 = 3.125%
That’s just my guess what is going on…
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The other two comments have provided you with sound answers. Typically, the term NRI, Net Revenue Interest, is used when referring to the revenue interest associated with WI, Working Interest. WI owners are responsible for the cost of drilling and completing a well or wells and the ongoing expenses associated with operations.
For you to calculate your NRI, more commonly referred to as a decimal intersect when referring to the interest owned by a mineral owner, you will need to know the number of acres dedicated to a particular well. The acreage dedicated to a well or wells is call a DSU, Drilling and Spacing Unit. DSUs are designated by the governing agency of the state the acreage is located in. For example Texas has the Texas Railroad Commission and Oklahoma in governed by the Oklahoma Corporation Commission.
This is the formula: NMA / DSU * Royalty
80 / 640 * 0.25 = 0.03125 or 3.125%
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