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Npri Calculations

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Npri Calculations

Postby Maoltuile » Mon Mar 20, 2017 8:26 pm

Need to understand NPRI better and from a search on past questions, still somewhat confused. location is in Texas

If(100%) mineral owner signs a 25% royalty lease and there happens to be a 1/16 NPRI no deduction clause on that tract(from a long time ago) . The NPRI has approved pooling. Tract is 200 acres in a 200 acre producing well unit. Would the NPRI receive monies based on 100% production income of 1/16 of 200 acres or would the NPRI money be based on the 25% royalty paid on the 200 acres?  

What would each get for $100.00 produced at well head? Mineral owner be paid =$18.75?

NPRI owner be paid=$6.25?

If the NPRI Has to pay nothing to drill what would keep people from reserving minerals with NPRI at a larger %? If this is the case wouldn't a NPRI of 3/10 on the 200 acres override the 25% that the mineral owner has and mineral owner gets nothing although he owns 200 mineral acres?
Maoltuile
 
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Npri Calculations

Postby Curtiss » Sat Mar 25, 2017 9:22 am

Hello John. Following is a quick and dirty answer to your question. If a mineral owner is subject to a 1/16 NPRI  on his/her tract, and a well is drilled on the tract, and no pooling is involved, the mineral owner would get .25-..0625000, or .1875.  If pooling is involved, and the NPRI owner has ratified the lease, then the royalty would be allocated on a pooled basis as follows in a 640 acre unit====200/640 x .25-200/640 x 1/16---everything would be reduced to the royalty paid to the 200 acres on a pooled unit basis.   If the NPRI owner has not ratified the lease, and a pooled unit is involved, and there is no vertical or horizontal well bore on the 200 acre tract, the NPRI owner will receive noting.  If the NPRI owner has not ratified the lease, and pooling is involved, and there is a horizontal well bore that crosses the 200 acre tract, then everyone needs to contact their lawyers to resolves the issue. John, common sense and a desire to get the property developed should keep NPRI levels at an acceptable level.  Once the NPRI gets so high that it totally consumes all or most of the lease royalty, then property won't get developed or leased.  Thats my opinion anyway. Good lcuk john and let me know if you have any further questions.  
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