Pooling order #703302. Section 16 5N 5W pooling order goes from$ 4300 per acre for 3/16 royalty to $4000 per acre for 20 percent royalty down to $800 per acre for 25 percent royalty. Is it normal for such a disproportionate drop off of bonus between 20 and 25 percent royalty?
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Yes this does look a bit out of proportion. If it were I I’d go with 25% despite the difference.
I hope that you have opted already. The Order which was entered on 10/7/19 said:
Yes, it is quite often that way. Companies prefer to keep 80% of the royalties, so that extra jump to 25% to the mineral owner versus the 20% is usually quite different in bonus money paid. You would think that 25% (1/4) would be half the bonus of the 12.5% (1/8th), but it rarely is. But remember that the operating company has to pay overrides, post production costs (unless they convince the mineral owner to pay for them), drilling costs, etc. and take all the risk out of their share. In the long run, many experienced mineral owners will take the highest royalty and the lowest bonus because the bonus per acre is fairly insignificant compared to the higher royalty payout of a successful well or wells. In the long run, it usually pays off.
Thank you for your reply.
Poolings are like this, however I have found outside Non-OP working interest partners will pay more for the 1/4 royalty just to get into the well.
Well they had to reissue the order because the first order had errors in the election dollar figures. So the revised order # 705150 is dated Oct 24th by the corporation commissioner. Thanks for your input.
Great. Don’t miss your deadline!
you might want to reach out to the Operator with the telephone number listed on the pooling order. Looks like they spud the well on the 7th of this month.