Replies to This Discussion

Permalink Reply by DYST_JP on August 13, 2008 at 4:41

(Production X price of Oil or Gas X interest in well) - taxes = Royality check

well produces 50,000 mfc of gas a month
Price of gas is 8.50/mcf
you own 40 acres with 25% royalites in a 640 acre unit

50,000 X 8.50 = 425,000
40/640 X 25% = 0.015625
425,000 X 0.015625 = $6,640.63 less taxes = Royality Check.

This is basic but I hope it helps.

landownerPermalink Reply by Rick Cash on August 13, 2008 at 6:17

Lease payments are a one time payment for the right to access your minerals.

There is a royalty estimator online that you can use to just plug in the figures.

http://geology.com/royalty/

It figures annual royalties.
Hope this helps.

Permalink Reply by James MoneyBags on August 13, 2008 at 6:23

this helps alot thanks

Permalink Reply by James MoneyBags on August 13, 2008 at 6:32

I have another quick question, are the 640 acres in the well unit the absolute standard or do they vary in size? Say for instance, can a producing unit be greater or less than 640 acres? And if I am understanding correctly, if the unit acreage is smaller,then the royalty checks go up right?

Permalink Reply by Kassi on August 13, 2008 at 10:07

640 acres is typical but some of the companies are now trying to get 1900 acre units.

Permalink Reply by DWC on August 16, 2008 at 3:57

Where are 1900 acre units being sought? And which company is asking for them?

Permalink Reply by Kassi on August 16, 2008 at 4:55

From the lease an O&G Company started negotiations with:
to combine, pool or unitize the land, royalty, or mineral interests covered by this lease, or any portion thereof, with any other land, lease or leases, royalty or mineral interests in or under any other tract or tracts of land in the vicinity thereof, whether owned by Lessee or some other person or corporation so as to create, by the combination of such lands and leases, one or more operating units, provided that no one operating unit shall, in the case of gas, including condensate, embrace more than six hundred forty (640) acres [except in the event of a horizontal oil or gas completion, in which event such unit may embrace as much as one thousand nine hundred twenty (1920) acres], and in the case of oil, including casinghead gas, (other than a horizontal oil or gas completion) embrace more than forty (40) acres

Permalink Reply by Linda Whatley on August 13, 2008 at 6:57

Here's where you can calculate your daily, monthly, and annual royalty payments:

http://www.pagaslease.com/calculator_natural_gas_royalty_form.php

Permalink Reply by CR on August 21, 2008 at 1:31

Here's a real fast little calculator


http://geology.com/royalty/