Essential Mineral Rights Calculations
Learn the most common calculations and formulas you’ll need to know as an oil and gas mineral rights owner.
Sell Your Mineral Rights (Request an Offer):
Decimal Interest Formula
The decimal interest appears on your division order and royalty statement. It is used to calculate your share of the revenue from an oil or gas well.
Net Mineral Acres (NMA) Owned: The number of net acres out of the gross acres. You might need to hire a landman to figure out your net mineral acres (nma).
Total Acres in the Unit or Tract: The entire area contributing to the well. You can usually find this information from your state’s oil and gas regulatory agency.
Royalty Reservation: The agreed percentage in the oil and gas lease (e.g., 12.5%, 18.75%, 25%, etc.).
Royalty Payment Calculation
The royalty payment calculation determines how much the royalty owner receives based on the sale of oil and/or gas from a well (minus any deductions).
Decimal Interest: Your share of the proceeds from the sale of oil and gas produced from a well.
Production Volume: Total production (e.g., barrels of oil or million cubic feet (MCF) of natural gas).
Oil or Gas Price: The price of of oil or gas at the time of sale. This will probably be close to the WTI or Henry Hub prices, but varries based on a vareity of factors.
Deductions: Include transportation, marketing, or processing costs, if allowed by the lease or division order.
Lease Bonus Formula
To calculate your royalty payment, multiply your decimal interest by the gross volume of the oil or gas commodity price (minus any deductions).
Net Mineral Acres (NMA) Owned: The number of net acres out of the gross acres. You might need to hire a landman to figure out your net mineral acres (nma).
Lease Bonus per Acre: Dollar amount offered by the oil and gas company per net mineral acre.
Allocation Well Calculation
To calculate your royalty payment, multiply your decimal interest by the gross volume of the oil or gas commodity price (minus any deductions).
Net Mineral Acres (NMA) Owned: The number of net acres out of the gross acres. You might need to hire a landman to figure out your net mineral acres (nma).
Total Acres in the Unit or Tract: The entire area contributing to the well. You can usually find this information from your state’s oil and gas regulatory agency.
Royalty Reservation: The agreed percentage in the oil and gas lease (e.g., 12.5%, 18.75%, 25%, etc.).
Tract Allocation Percentage: Percentage of the tracts which has been allocated to you. You can get this information from the operator or the oil and gas regulatory agency.
Where We Buy Mineral Rights
We buy both producing and non-producing minerals in all oil and gas states. However, we are especially interested in Texas and Kansas mineral rights.
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We even buy minerals in more obscure states, which produce very little oil and gas compared to other states.
Why Sell?
Why People Sell Their Mineral Rights
I am putting my affairs in order. I don’t want to burden my kids with the hassle of transferring ownership and managing small mineral rights. When my sister passed away, my niece and nephew had to hire an attorney to help them with the minerals. I don’t want my kids to go through that.
I inherited my mineral rights so they were sentimental, but I don’t really want to bother with managing them and filing extra tax returns. I decided to sell and use the money as a down payment on my house.
I had no idea how fast the oil production would decline. My checks are only 20% of what they were a few years ago. I should have sold my mineral rights when the wells were brand new and still generating huge royalties.
My oil wells have been producing for decades and the reserves are almost depleted. Once the wells are plugged, the value will be significantly lower. I’d rather cash out now.
I inherited mineral rights, but don’t want to be involved with fracking and fossil fuels. I would prefer to support renewable energy and do my part to reverse climate change.