Calculating My Royalty Percentage

I own a 53 parcel in Hubbard township with a producing shallow well. This was unitized as a 120 acre unit in the late 1980's with a royalty percentage of 12.5%. I now receive a royalty check of 5.6%. I would appreciate if someone could provide some insight that if Enervest who presently owns the property drills a deep well on a 640 acre or a 1280 acre unit of which I am included,  how  what would my royalty percentage be. Thanks for the information.

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Permalink Reply by JR on September 30, 2012 at 12:24pm
We're renegotiating our lease right now for this very reason. The driller immediately offered 17.5% royalties and no bonus $ to increase unit size. We have an atty reviewing and helping us negotiate as fair a deal as possible. Atty doubts we can get bonus $ but I'm most interested in fair royalties as that's the legacy that will live on with the land.
Permalink Reply by Jack Straw on September 30, 2012 at 12:54pm

With your 53 acres out of a 120 acre unit for the shallow well at 12.5 % royalty, your royalty percentage of that unit is:

53/120 x 12.5% = 5.6% of the existing shallow well(s) in that 120 acre unit.

Right now you are a relatively big fish in a small pool (pun intended).

 

Were your 53 acres to be included in a 640 acre unit at (say) 12.5% royalty for deep wells, your royalty percentage of that unit would be:

53/640 x 12.5% = 1.035% of production from all wells drilled in the hypothetical 640 acre unit.

For every Dollar of product sold, you would recieve a little over a penny.

 

Were your 53 acres to be included in a 1280 acre unit at (say) 12.5% royalty for deep wells, your royalty percentage of that unit would be:

53/1280 x 12.5% = 0.5176% of production from all wells drilled in the hypothetical 1280 acre unit.

For every two Dollars of product sold, you would recieve a little over a penny.

In a much larger unit (pool), you would become a small fish in a large pool.

 

I assume that a lease modification would be required to increase the unit size.

That should allow you the opportunity to attempt to negotiate for such things as an increase in percentage royalty.

 

All IMHO, 

                     JS

 

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on September 30, 2012 at 3:10pm

There's a law firm aggregating people in your situation to build a huge HBP group.  Send me a message if you want more information.

Permalink Reply by Michael Moore on October 3, 2012 at 8:34am

How do you find out if they're taken gas out of your leased parcel?  Can't figure out the royalties without know the amounts, correct?

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