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Oil/Gas/Royalty Interests

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Question
In a previous answer an expert stated that the royalty averages at about 20% up to 22.5%.  My question is 20-22.5% of what?  I am reviewing a contract and I cannot figure out what royalty interests are a percentage of.  Thank you!

Answer
The Royalty Interest is the royalty owner's fraction of the proceeds from selling the oil and gas.  If the sale is $100 worth of oil and you own all of the royalty interest in the production unit, then a 20% Royalty Interest would receive 20% of $100.  The operator and working interest owners would get to keep the other 80%.

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Oil/Gas

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Mark Bonner

Expertise

Interests include oil and gas leases, mineral deeds, royalty payments, interest on late royalty payments, post-production costs.

Experience

I have been an attorney for over 20 years.

Organizations
Norman & Edem, PLLC 127 N.W. 10th St. Oklahoma City, OK 73103 405-272-0200 (Tel.)

Publications
Oklahoma Bar Journal; Oklahoma Association for Justice Advocate

Education/Credentials
Highest Honors, OU College of Law, 1992 Earl Sneed Award for Oil & Gas

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