A net mineral acre is your portion of ownership out of the whole gross acreage tract.  If the tract you own in is 100 gross acres, and you and your siblings each own 1/4 of the acreage, you would own 25 net mineral acres in the tract. (100)*(.25)=25 NMAs. Net mineral acres equal the gross tract size multiplied by your ownership percentage in the tract.

Oftentimes, offers to purchase your minerals are expressed in terms of price per net royalty acre. Net royalty acres and net mineral acres oftentimes do not equal the same so you should be careful to note the difference. The major difference is that a net mineral acre does not take into account the royalty rate your minerals are leased at, whereas a net royalty acre does. In the past it was common to have your minerals leased at 1/8^th or 12.5%, which would help determine your NRI. Because of this standard 1/8^th royalty rate, net royalty acres use a baseline determination of an 1/8^th lease and then scale up from there based on your actual royalty rate.

To determine your net royalty acres, the formula is: (net mineral acres)*(royalty rate)/(1/8^th)

So if you own 100 net mineral acres leased at 1/4^th, you would own 200 net royalty acres – (100*.25)/.125=200 NRAs.

In this case, an offer of $5,000 per net mineral acre would not equal an offer of $5,000 per net royalty acre, it would only be half.

To calculate NRI, multiply your net mineral acres owned in a unit by the royalty rate (ex. 1/5^th) and then divide by the unit size (ex. 640 acres) — (20)*(0.2)/640 = .00625 NRI

Because a well is often owned by multiple persons or entities, a division order specifically details your individual ownership interest in an oil and/or gas well or unit.  The decimal/royalty interest indicates how much of the revenue you will specifically receive as a result of the proceeds that come from the sale of the well’s product. The division order is typically the result of an attorney’s title opinion and is based on public records from a county. Royalties are usually not distributed to an owner until they have signed a division order and after a few months of production from a well or unit.

We are interested in all opportunities to acquire minerals and royalties. CONTACT US and we can let you know what information we need to make an offer on your interests.

The offer that Pecan Creek Energy is actually making is the offer shown in the draft and offer letter.

Because the mineral and royalty conveyance will be filed on record in the county courthouse, many sellers and buyers would prefer to keep the actual transaction price outside of the public domain.

In the state of Texas, therefore, it is common practice to state on the conveyance “Ten Dollars ($10) and other good and valuable consideration” solely for privacy.

Pecan Creek Energy bases our initial offers on the publicly available data detailing the size of the unit your interest falls in and the decimal or net revenue interest you are being paid on that unit. Our offer assumes your interest covers all depths and is not an interest that expires at a given time (a “term” interest). Unlike many other companies, it is never our intention to make larger offers than we are willing to pay. We would only reduce the price of our offer if you have sold all or part of your interest in the past year or if the publicly available data proved to be incorrect.