Net mineral acres
Gross acres are the size of the tract. Net mineral acres (NMA) are the owner's share of it, stated in acres.
NMA = mineral fraction × gross acres. An owner of an undivided 1/4 of the minerals under 160 acres has 40 NMA.
Undivided means a share of every acre, not a separate piece of the tract. The owner of 40 NMA in a 160-acre tract owns 1/4 of the minerals under all 160 acres.
The royalty decimal
When a tract is pooled into a unit, production from the unit is shared by acreage. A royalty owner's decimal is:
NMA ÷ unit acres × royalty
The first part, NMA ÷ unit acres, is the owner's share of the unit. Multiplying by the royalty gives the owner's share of production.
Decimals are usually carried to eight places. On a well selling $2 million of oil and gas a month, a difference of 0.000001 is $2 a month.
The burden stack
Every barrel is divided among everyone with an interest. The shares add up to 1.
The royalty goes to the mineral owners. Overriding royalties (ORRIs) come out of the lessee's share. What is left is the lessee's net revenue interest (NRI):
Lessee's NRI = 1 − royalty − ORRIs
A non-participating royalty interest (NPRI) is paid out of the mineral owner's royalty. It changes who receives the royalty, not the lessee's NRI.
This tool treats an NPRI as a share of the royalty. Some NPRIs are instead a fixed share of production; which kind it is depends on the deed that created it.
Check a division order
Before a royalty owner signs a division order, it is worth checking the decimal against the facts.
Compute the decimal yourself from the owner's facts, then compare it with the one on the division order.
Common errors: using gross acres instead of net mineral acres, using the wrong royalty rate, and leaving out the unit (dividing by the tract instead of the unit).
Real decimals can involve more than this: depth limits, unit agreements, and other adjustments. This exercise covers the basic formula.