The royalty fraction: what share you get paid
Your royalty is the share of production, or of the money from it, that you are paid without paying drilling or operating costs. The lease states it as a fraction, such as 1/8, 3/16, 1/5 or 1/4. Over the life of a well it is usually the term that matters most.
What it does
Older lease forms often used 1/8. Many offers today name a larger fraction, and what is usual depends on the area and how active it is. The fraction in an offer is a starting point.
The fraction is not what lands on your check by itself. Your share of a well is your net mineral acres divided by the acres in the unit, times the royalty fraction. For example, 10 net acres in a 640 acre unit at 3/16 gives 10 ÷ 640 × 0.1875 = 0.00292969.
Read the royalty clause together with the cost language and the clause for owning less than all of the minerals. A good fraction can be cut down by deductions. Reducing royalty in proportion when you own only part of the minerals is normal.
What we mark on a review sheet
Normal
- A fraction written out for oil, for gas and for other products the well makes.
- A reduction in proportion if you own less than all of the minerals under the tract.
Missing
- The fraction left blank, or stated only in the cover letter and not in the lease.
- Gas liquids or other products left out of the royalty clause.
Ask about
- A fraction lower than what neighbors in the same area are being offered.
- Royalty figured "at the well" or on "net proceeds", which can let costs come out of your share.
Questions to ask the company
- What royalty fraction are you offering, and is it the same for oil, gas and liquids?
- Is royalty figured on gross proceeds, on market value, or at the well?
- How many net mineral acres do you show for me, and how did you get that number?
Common questions
What is a normal royalty on an oil and gas lease?
It depends on the area. Older leases often used 1/8. Many current offers name 3/16, 1/5 or 1/4. Ask what others nearby are being offered, and read the cost language next to the fraction.
Is the royalty fraction the same as the decimal on my check?
No. Your decimal is your net mineral acres divided by the unit acres, times the royalty fraction. A small decimal is normal when the unit is large.
Send it before you sign
Tell us what you got and what you want to know. We reply by email and tell you how to send the pages. A landman reads them and sends back a one-page review sheet.
Email hello@landman.review with what you got and your question, or call (307) 263-8515.