Royalty Calculator
Use the oil and natural gas royalty calculator below to calculate your decimal interest in an oil or gas unit.
| Property Characteristics | Example | Your Situation |
|---|---|---|
| Size of Your Property:This is the physical size of your property measured in acres. | 100 acres | ____ |
| Size of Unit:This is the physical size of the entire production unit as established by the operator (i.e the oil or gas company). |
400 acres | ____ |
| % of Your Mineral Ownership:This could be 100%, 50%, 33% or some other percentage. | 50% (i.e. 1/2) | ____ |
| Royalty % from Your Oil or Gas Lease:This is the % of royalty agreed to between you and the Lessee, as sated in the oil or gas lease that you signed. |
20% (i.e. 1/5) | _____ |
The Decimal Interest Calculation
Size of Your Property/Size of Unit × % of Your Mineral Ownership × Royalty %
from your Oil or Gas Lease = Your Decimal Interest in the Unit
Example: 100/400 × 1/2 × 1/5 = .025
Your Situation: ____ × ____ × ____ = ____
Note: These examples of royalty calculations do not consider situations where any royalty has been
carved out (reserved) through other means, nor does it consider situations where your acreage may have been contributed to more than one production Unit.
To calculate your share of the Unit’s revenue, multiply your Decimal Interest × Price per
Barrel of oil or MCF of gas × Gross Production Volume. HOWEVER, remember that state severance taxes apply in most states and will be deducted from your revenue.
Additional Reading
- Oil & Gas Measurement – Explanation of how oil and gas is measured at the lease and how it relates to payment for royalty owners or mineral owners. Defines MMBTU, MCF, BBL and more.
- Oil & Gas 101: Oil and Gas Basics for the Mineral Owner – Article explaining the basics of oil and gas production written for mineral rights owners. Topics include drilling, production, pricing and marketing.
