Build a unit
A horizontal well often runs beneath several tracts. Rather than track which barrel came from under which tract, the tracts are pooled into one unit and production is shared.
In most units each tract's share is its acres in the unit divided by the unit's total acres. That share is often called the tract factor.
Make the unit bigger and every tract's share gets smaller, because the same production is split across more acres.
How units are formed (by agreement among owners or by state order) and how unleased owners are treated vary by state. Some unit agreements share production by a formula other than acreage.
Tract share
Tract share = tract acres in the unit ÷ unit acres
A 160-acre tract in a 1,280-acre unit has 160 ÷ 1,280 = 0.125, or 1/8, of the unit's production.
All the tract shares in a unit add up to 1.
Owner's decimal
An owner's share of the unit follows from three numbers: the tract's share of the unit, the owner's share of the tract, and the lease royalty.
Decimal = tract share × owner's fraction × royalty
This is the same as the net mineral acres formula: an owner of 1/4 of a 160-acre tract has 40 net mineral acres, and 40 ÷ 1,280 × 1/8 gives the same decimal.
Partly in the unit
Tract lines and unit lines don't always match. When the unit boundary cuts through a tract, only the acres inside the unit count toward that tract's share.
The rest of the tract is outside this unit. It may be in another unit, or in none.
Common mistake: using the tract's full acreage instead of the acres inside the unit.