landowner

Which acreage determines an NPRI owner's royalty interest?

Apologies for posting on this general Discussion board. My area (Upshur County) does not have it's own group. I inherited an NPRI share in a horizontal gas well being currently drilled. This new well involves multiple pooled gas units, gas leases, two major-company operators, allocated lease acres, etc.

I do not own acreage, just inherited mineral interests. In short, how is the royalty interest determined once the well starts producing? Is it the length of lateral across the original old homestead acres? I have received the very-long formula calculation from a Landman and know my estimated percentile. Just wondering which, of the many acreages involved, that is based on?

Thank you!

ninecats1

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Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on September 19, 2022 at 8:00

Chances are the well you refer to is a unitized well.  A unit boundary encompasses multiple tracts and all or portions of multiple surveys.  All mineral owners within that boundary share proportionally in the production of all unit wells based on the net mineral acres and their royalty fraction.  Your mineral acres owned divided by the acres in the unit times your royalty fraction will equal you eight digit fractional interest.  In cases of Allocation wells that produce from two or more units, your eight digit interest would be multiplied by the percentage of the horizontal perforated lateral that lies in your unit.  So if half of the well was in your unit, your eight digit interest decimal would be multiplied by .50.  The homestead acres are irrelevant.


landownerPermalink Reply by ninecats1 on September 19, 2022 at 14:01

Thank you so much! Exactly the information I was needing to make sense of it all.

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