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Calculate Your Decimal Interest

February 12, 2019

Why Calculate the Decimal Interest?

 

Do you know how to calculate your mineral decimal interest?  It is important to know how to calculate this before signing your Division Order to confirm it is correct.  It is also helpful to know your decimal interest to be sure it matches what you see on your revenue statements.  If you are not able to calculate the same values, there may be something wrong.  Operators nearly always get these correct, but following the formula and calculating the decimal interest for yourself can give you the peace of mind and satisfaction of knowing the numbers are right.  Here is how your ownership decimal interest is calculated:

 

The Formula.

 

Decimal Interest = (Net Mineral Acres ÷ Drilling Unit Acres) x Royalty Rate

Finding Your Net Mineral Acres.

 

Your net mineral acreage is found in the Mineral Deeds or other property deed information.  The deeds may be in your family records.  If not, the deeds are available from the County Clerk and Recorder where the minerals are located.

Net minerals are different from gross minerals, so be sure to calculate correctly.

Finding the Drilling Unit Acres.

 

Drilling units are defined by the state oil and gas regulatory body.  The information is generally available online, but can be somewhat difficult to find.  If you need help, call your state regulatory agency or ask Turrett for help.

Finding Your Royalty Rate.

Your royalty rate is found in the Oil and Gas/Mineral Lease.  The lease may be in your family records.  If not, leases are available from the County Clerk and Recorder.

 

Royalty rates are often presented as a fraction.  It is easier to convert the fraction to a decimal for completing the formula above.

Where to Find More Information.

  • County Clerk and Recorder

  • State Oil and Gas Commission

  • Division Order Analyst at the company operating the wells

  • National Association of Royalty Owners (NARO)

  • Consultants

Call us today for help with calculating your decimal interest.

These materials have been prepared solely for educational purposes to contribute to the understanding of oil and gas appraisal. These materials reflect only general concepts in the industry based on Colorado and may not apply to all circumstances.  It is understood that each case is fact ‐ specific, and that the appropriate solution in any case will vary.   These materials may not be relevant or apply to any particular situation.  While every attempt was made to ensure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed.