How Royalty is Calculated in West Virginia

    I was wondering how to determine the  acreage numbers to plug into the royalty calculaters? For example lets say I own 100 acres and the production pool is 640 acres. Do you put in 100 acres for the amount I own and 640 for the production unit size or do you put in the amount of land they are actully drilling under on me and the amount of land they are actually using in the production pool. Once I understant this I will have some more questions thanks so much for your help.

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Permalink Reply by Billy Park Whyde on March 7, 2012 at 6:47am

put in your 100 with the unit your royalty percentage, price, production  feel free to correct me if this wrong but this is my method. 

Permalink Reply by Clinton44 on March 7, 2012 at 7:13am

If you want the actual percentage figure that you will be paid in royalties for the acreage you have in the unit  100 divded by 640 = 0.15625 x royalty percentage. 

for example using a fifteen  percent royalty 0.15625 x 15% (.15)  = 0.0234375 Don't let the small percentage worry you as this is the number they use as the multipier for the dollar value of gas sold so it adds up quick especially if you have multiple horizontals coming off one well pad.

Here in PA they pay royalties on all wells in a drilling unit not just the ones under your land. Good Luck!!

Permalink Reply by SS 2510 on March 7, 2012 at 7:57am

 Is this true if there horizintal run is only under 2 acres of the 100. They still pay for all 100 acres?

Permalink Reply by Clinton44 on March 7, 2012 at 8:28am

Esentially yes, The royaties are paid proportionally related to the amount of acreage you own within the unit.

For instance we have 14 acres of our land in one unit where two of the well bores end within 500 feet of our property. Of course the percentage paid is lower than In the other unit where 43 of our acres are included and two of the six well bores actually end under our property and we recieve royaties from all wells in each unit

 (At least in PA) you will receive royalties from all the wells in that partucular unit using the percentage figure that is realative to the acreage that you own in the unit

Your first step must be to find out how many of your acres are pooled into a unit. these pooling/unitization documents can be found in the county courthouse in which the property is located usually in recorder of deeds office.

Sometimes a call to the drilling company/ or whomever holds the lease can get you this information as well if you are lucky enough to find a good contact within the company..  

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