Royalty Fraction
The share of production a lease pays the mineral owner — historically one-eighth, and commonly three-sixteenths or one-quarter on leases signed in competitive areas in recent years.
Why it matters when you sell
The royalty fraction is the largest single driver of what your interest earns and therefore of what it sells for. Two tracts of identical size over identical rock can be worth very different amounts purely because of a fraction agreed in one afternoon, possibly generations ago.
Example
Suppose the wells on a tract return $4,200,000 gross across their producing life. A one-eighth lease sends $525,000 to the royalty owners. Three-sixteenths sends $787,500. One-quarter sends $1,050,000 — twice the first figure, from rock that behaved identically in all three cases. Any buyer capitalising those streams will separate the three positions by roughly the same proportions.
How this varies across the states we serve
What is achievable varies across the states we work in and moves with drilling activity. Competitive Delaware Basin acreage in New Mexico and core Bakken acreage in North Dakota have commanded the upper end; areas with a single active operator and little recent permitting sit lower. County records show what neighbouring tracts actually obtained, which is the most reliable guide available.
What to have in hand
Read the royalty fraction off your lease rather than relying on memory or family lore. It is the first figure a buyer asks for and the one most often misremembered.
Related terms
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