Mineral and Royalty Calculator

Tag: Mineral and Royalty Calculator

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Selling Your Minerals: One Detail Can Save You Thousands

One of the most crucial, and often overlooked, details that can prevent mineral and royalty sellers from losing thousands, is not understanding the importance of two very important terms used in the oil and gas industry: Net Mineral Acres and Net Royalty Acres. When a mineral buyer submits an offer to you, they will base […]

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Two engineers using a tablet in front of an oil pump jack, discussing average gas well royalties per acre and using a royalty calculator.

How Do You Calculate Mineral Interest Using Royalty Calculator?

It is quite common that mineral and royalty owners don’t know exactly how much interest they own and yet it’s one of the most important things they need to be aware of as a responsible interest owner. Some of the most common terms used to describe the amount of mineral and royalty interest include: Net […]

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Oil pump jack in desert at sunset, highlighting economic potential and mineral rights value.

Unlocking Value: Your Expert Guide To Mineral Rights

Looking for expert advice on mineral rights and royalties? Venergy Momentum is the go-to resource. With an A+ BBB rating and glowing 5-star Google reviews, our team is dedicated to providing unrivaled service in the field of oil and gas mineral rights. Our expertise ranges from valuation to negotiation, meeting the full range of mineral […]

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How Do I Read My Royalty Statement?

I’m a BIG Big Lebowski fan. If you haven’t seen the movie, this is Walter – a raucous, erratically-tempered bowling nut who has had it with a fellow bowler who broke the rules by stepping over the alley line. He’s frustrated as all get out and won’t stand for it. Ever felt this frustrated when […]

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Discussion between buyers and sellers in a business meeting setting.

Why is it so hard for buyers and sellers to agree on a price?

Mineral buyers will try to entice mineral and royalty interest owners with a super fast and surprisingly simple way of valuing their assets with a “mineral and royalty calculator”.

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Understanding Net Mineral Acres and Net Royalty Acres

Welcome back, friends! I find myself explaining the differences between Net Mineral Acres (NMA) and Net Royalty Acres (NRA) to a lot of my clients and for good reason. These terms are used a lot in the industry yet most owners don’t know what they mean, if they own NMA or NRA, and how to […]

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Venergy Momentum is a land, mineral and royalty management company specializing in helping individuals, families, family partnerships and/or trusts manage their current land, mineral and royalty interests.

We are experts in title, leasing, and the acquisition and divestiture of mineral and royalty assets and operated and non-operated working interests.

Location

3300 Bee Caves Rd Suite 650 #110,
Austin, TX 78746

One of the most crucial, and often overlooked, details that can prevent mineral and royalty sellers from losing thousands, is not understanding the importance of two very important terms used in the oil and gas industry: Net Mineral Acres and Net Royalty Acres.

When a mineral buyer submits an offer to you, they will base it on mineral acres or royalty acres. At first glance, you may think their offer is fantastic, but have you noticed whether it’s based on the net mineral acres or royalty acres? This can make a significant difference when determining the value of the offer and help you when negotiating with mineral buyers. 

Sometimes, buyers will let you “do the math” and at the same time, try to rush you into accepting their offer with a warning that it will expire.

This is your first sign that you need to slow down, get some professional guidance, and take the time to sort out what the buyer is really offering you.

What Is A Net Mineral Acre?

A Net Mineral Acre (NMA) is the net mineral interest owned by a mineral owner from under the gross acres of a particular parcel or tract of land.

Once they’re leased, the net mineral acres can then be converted to Net Royalty Acres, or NRA. 

What Is A Net Royalty Acre?

A Net Royalty Acre (NRA) is a net mineral acre that has been leased by an Operator and therefore subject to an oil and gas lease. It will have a royalty percentage granted to it such as ⅛ or 12.5% and upwards to 25%. This simply means that once the Operator drills and produces the acreage, and then sells the oil and/or gas production, the mineral owner will receive the percentage of the royalty granted in the lease proportional to the amount of interest they own in the production unit, while the Operator receives the remaining revenue. 

Conversely, when a Net Royalty Acre lease expires and does not get leased again, it reverts back to being called a Net Mineral Acre.

Note: The amount of unleased Net Mineral Acres and leased Net Royalty Acres are equal provided that when the minerals are leased, they are leased at ⅛ royalty or 12.5%.

For example, if a mineral owner owns 100 unleashed Net Mineral Acres they also own 100 Net Royalty Acres if the minerals are leased at ⅛ royalty or 12.5%. They’re the same. 

Only when a mineral interest is leased at more than ⅛ royalty will the Net Royalty Acres be greater than the Net Mineral Acres. 

How To Calculate Net Mineral Acres

Calculating Net Mineral Acres can be done two ways, depending on the information you have available to you:

  1. Using your known amount of Net Royalty Acres (NRA)
  2. Using your known amount of Division of Interest (DOI)
 

You may use our own calculators here to help determine your NMA.

How To Calculate Net Royalty Acres

Calculating Net Mineral Acres can also be done two ways, depending on the information you have available to you:

  1. Using your known amount of Net Mineral Acres (NMA)
  2. Using your known amount of Division of Interest (DOI)

  

You may use our own calculators here to help determine your NRA.

What Is Division Of Interest?

Division of Interest, or DOI, is your percentage of ownership in a unit that an Operator has formed. This number is used to verify you are receiving the correct amount in royalties. It can vary from unit to unit and well to well. 

How To Calculate Division Of Interest

Like the others, calculating Division of Interest can also be done two ways, depending on the information you have available to you:

  1. Using your known amount of Net Mineral Acres (NMA)
  2. Using your known amount of Net Royalty Acres (NRA)
 

You may use our own calculators here to help determine your DOI.

Two Examples Of How Not Knowing The Difference Between NMA And NRA Can Cost You

Janet inherited 20 Net Mineral Acres (NMA) and was granted a 20% royalty lease:

Image illustration: Janet inherited 20 Net Mineral Acres (NMA) and was granted a 20% royalty lease.

Using our mineral rights royalty calculator, we can calculate that Janet has 32 Net Royalty Acres:

Calculate your NRA using NMA in selling your minerals.

Janet receives two offers for her 20 NMA/32 NRA. Company #1 makes an offer based on Net Mineral Acres and Company #2 makes an offer based on her Net Royalty Acres:

Image illustration: Janet receives two offers for her 20 Net Mineral Acres.

Company Offer #1 is $7500/NMA

Company Offer #2 is $5000/NRA

At first glance, Company Offer #1 of the $7500/NMA looks better, but it isn’t.

Let’s do the math:

$7500/NMA x 20 = $150,000

$5000/NRA x 32 = $160,000

That’s a $10,000 difference! 

Not much you might think? What about this example…

Image illustration: Image illustration: Janet receives two offers for her 20 Net Mineral Acres.

Company Offer #1 is $7500/NMA

Company Offer #2 is $7500/NRA

Let’s do the math:

$7500/NMA x 20 = $150,000

$7500/NRA x 32 = $240,000

If you sold to Company #1 that offered you $7500 on a Net Mineral Acre basis, you would have lost out on $90,000!

Conclusion: Tips For Selling Your Minerals

So do you see how important it is to understand how buyers’ offers are being presented to you when selling your minerals?  

Unfortunately, it’s quite common for mineral owners to not know exactly how much interest they own. Taking the time to review the information you have and sort out how much interest you own with the help of our mineral and royalty calculators will prove to be a worthwhile task, especially when buyers are contacting you to purchase your oil and gas interests.

If you are receiving offers, there are some things to look out for so schedule a consultation with us so we can help you determine if the offers are fair and we can give you a valuation of mineral rights. It never hurts to have a professional look at your situation and offer guidance. Our consultations are complimentary and can be scheduled at a time convenient for you. Book here now. 

*Disclaimer when using our mineral and royalty calculators: If you find any contradictions in your calculations there could be other determining factors, including, but not limited to: previous conveyances, variations in unit sizes, size of gross acres relative to unit sizes, and if your interests are held by allocation wells. If your interests are subject to any of the aforementioned, this will require additional information and will be subject to variation in the calculations. Please schedule a time to speak with us for additional help.

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