Much of our practice has been devoted to representing landowners on issues involving oil and gas leases. In the next several articles I will discuss some key concepts that may help make more sense of this challenging field.
The questions deals with the land-owner’s royalty interest in production from an oil and gas lease. Historically, this interest was 1/8 (12.5%) of the net production from a well or wells leased by the landowner. Note that the royalty is a net amount. This allows the producer to subtract production costs from the gross or total production before dividing the proceeds with the landowner.