Whats the difference between a lease bonus and a royalty?
The lease bonus is a one-time upfront payment, sort of like the down payment on a house. The royalty is the monthly percentage of the gas revenue that goes to each mineral-rights owner. How are royalties figured? Companies take the average daily production from a well, (remember that although production is measured by million cubic feet, the price is always measured in thousand cubic feet), multiply that total by 30 or 31 depending on the month, multiply it again by the average price of natural gas for the month, then multiply it again by the royalty percentage. That figure is divided proportionally among the royalty owners in the lease. If a company wants to drill under a neighborhood, how many of the properties must be leased? Not all of them, just enough for the company to be able to drill horizontally through the shale about 7,000 feet below the surface. The drill bit can be steered around properties that haven’t signed. But doesn’t that take the gas out from under properties that
Related Questions
- If I signed a mineral lease and received my entire signing bonus payment, can the lawyers help me evaluate whether I am in a drilling unit or why I have not received any royalty payments?
- Why doesn the lease expressly state the signing bonus amount?
- Whats the difference between a lease bonus and a royalty?
