Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on June 10, 2010 at 3:34

One acre leased at an eighth (12.5%) royalty = one royalty acre. One acre leased at a quarter (25%) = two royalty acres. I have never run across a royalty calculator that utilizes royalty acres. They use mineral acres. The problem with royalty calculators is the unknown variable used for the well decline. Most that I have reviewed Do Not Use A Decline That Is Accurate For The Haynesville Shale. There are a number of calculators available here on the site posted by members who state that they are designed with a correct approximate HS decline. I can not personally vouch for their accuracy but I appreciate the work that went into them and would utilize any one before I would one not specific to the HS as they grossly overstate royalty income. The difference, approximately, between a 50% and a 80% first year decline rate.

Permalink Reply by fngrsxnpd on June 10, 2010 at 4:09

Thanks, so at the risk of sounding like a real idiot...i am however when it comes to this subject apparently! I have an option of buying 7.5 royalty acres in a very hot area of haynesville. When looking to see what I might could get royalty wise, I would use 7.5 as my part in the unit and 12.5% (???) as the lease rate?

Permalink Reply by Skip Peel - Mineral Consultant on June 10, 2010 at 4:22

7.5 royalty acres @ 12.5% or 1/8 = 7.5 mineral acres
7.5 royalty acres @ 25% or 1/4 = 3.75 mineral acres

Permalink Reply by Doc L'Herisson on June 25, 2010 at 16:58

RA as follows:

surface acres X 8/royalty on lease, such as:

300 acres times 8 = 2400, that divided by 1/8 royalty (8) =s 300 RA.

300 acres X 8 divided by 1/4 royalty (4)=s 600 RA

300 acres X 8 divided by 1/6 royalty (6) =s 400 RA

300 acres x 8 divided by 3/16 royalty would be a little different but quite similar, in this case
everything is the same except when you divide by the royalty 16 then you multiply that by 3,
and that yields 450 RA.

All you need is a hand held calculator or just do the math.

The formula is acres times 8 divided by royalty equals royalty acres.

I hope this helps.