A 1/6th royalty on 1,400 bbl would be about $22,000 at current prices. Oil well royalties are generally in denominations of eight, like a 1/8th royalty would be common, but not 1/6th. I would guess someone made an error. Traditionally, 12.5%, or a 1/8th royalty is the most common.
A 1/16th royalty would be about $8,300.
A 1/32nd royalty would be about $4,150.
Deducting expenses is itself controversial and debated as unfair among landowners, but it is allowable under many leases.
Call the operator of the well and ask what the royalty should be. Their name should be posted on the lease sign or on the lease agreement.
Hypothetical question so please bare with me...If u have an oil well producing 1,400 BPMonth, an depending on the value of each, we will say it comes to $130,000.00 just a round average value. Now the tax on that is around 11.5% equaling $14,950 In taxes and the mineral rights owner gets about $4,300 in royalties when all said an done...now im confused as to how the owner of this oil receives only about 1/3 of just the tax amount, let alone the net value $115,050 after tax! Now I seen a lease that clearly states "that 1/6th royalty of gross proceeds shall be paid to mineral owner" Now am I wrong to think it would be around $19k rather than $4k in royalties to the owner??? Thanks for your help!
