What the decimal is
An oil or gas lease is split into eight eighths, called 8/8ths, which together make up all of the production. Your decimal interest says how much of that whole is yours. A decimal of 0.00097656 means you receive 0.097656 percent of what the lease sells, roughly one dollar in a thousand.
Operators keep this number on your division order, the paper that tells them who to pay and how much. They round it, often to eight places. The same decimal should appear on every line of every statement for that lease. If it moves, something changed: the unit, the ownership, or a mistake.
How it is built
For a mineral owner who leased the minerals and receives a royalty, the recipe has three parts:
- The royalty fraction written in your lease: 1/8 in older leases, 3/16, 1/5 or 1/4 in newer ones.
- Your net mineral acres in the tract: the tract’s gross acres times your fraction of the minerals.
- The unit acres: the acres of all the tracts pooled together to drill the well.
Your acres in the unit
The bar is drawn to scale: 5 acres out of 1,280 is 0.39 percent of the unit.
The same numbers, written out
Royalty fraction1/4 = 0.25
Net mineral acres5
Unit acres1,280
0.25 × 5 ÷ 1,2800.00097656
If you own part of the minerals, say half of a 10-acre tract, your net acres are 5. If you own all of the tract, your net acres are 10. The calculator on this site does the arithmetic and shows the working: decimal interest calculator.
The royalty fraction moves the answer most. Here is the same 5 net acres in the same 1,280-acre unit under four common leases:
| Royalty in the lease | As a decimal | Your decimal interest |
|---|---|---|
| 1/8 | 0.125 | 0.00048828 |
| 3/16 | 0.1875 | 0.00073242 |
| 1/5 | 0.20 | 0.00078125 |
| 1/4 | 0.25 | 0.00097656 |
If your statement shows the 1/8 number and your lease says 1/4, you are being paid half of what the lease promises. That is worth a question, especially on older properties that were re-leased.
Royalty, override, working interest
The recipe above is for a royalty interest. The stub may show a different kind of interest, and the decimal means something different for each.
RI Royalty interest: 1/4, 25%
Paid to the mineral owner. This is the line on a royalty stub.
ORRI Overriding royalty interest: 1/16, 6.25%
Carved out of the working interest, so it comes off the working interest's share.
NRI Working interest's net revenue interest: 11/16, 68.75%
What is left for the working interest after both. The working interest also pays its share of the costs.
A made-up split: a 1/4 royalty and a 1/16 overriding royalty, each measured against the whole lease. The net revenue interest is what remains: 1 minus 1/4 minus 1/16 is 11/16.
| Interest | What you own | How the decimal is built |
|---|---|---|
| Royalty (RI) | The right to a share of production, free of drilling cost | Royalty fraction × net mineral acres ÷ unit acres |
| Overriding royalty (ORRI) | A share of production carved out of a lease, often kept by a seller of the lease | ORRI fraction × the lease's share of the unit |
| Working interest (WI) | A share of the well, and of its costs | Your share of the unit; the stub also shows a net revenue interest after royalties |
What a decimal is worth
The decimal turns a lease’s sales into your check. Here is what three decimals pay in a month when the lease sells 10,000 barrels at $70, before tax:
| Decimal | Your barrels | Gross oil royalty |
|---|---|---|
| 0.00025000 | 2.50 bbl | $175.00 |
| 0.00097656 | 9.77 bbl | $683.59 |
| 0.00250000 | 25.00 bbl | $1,750.00 |
Because the number multiplies everything, an error in the eighth digit does not matter and an error in the fourth does. A decimal of 0.00095 in place of 0.00097656 is 2.7 percent low, which at the example above is about $18.59 a month, every month, on oil alone.
Why it changes
Owners see the decimal move for a handful of reasons. Some are correct and some are not:
- A different unit. A new well may pool different land, so the unit acres, and your decimal, are different for the new well.
- Allocation wells. Where a long horizontal well crosses several tracts, its production may be split by a method other than acres. Your decimal for that well can then differ from acres divided by acres, so ask how the operator allocated it.
- A change in ownership. After a sale, a gift or an inheritance, the decimal is split among the new owners, and it can take months for the operator to update.
- A revised title opinion. The operator may find a different mineral fraction than the one first used.
- A mistake. A dropped digit, an old unit size, or a decimal for a different tract.
A decimal that changes without a letter from the operator is worth a question. A new decimal that arrives with an explanation is worth checking the same way.
How to check yours
- Find your division order and your lease. The lease gives the royalty fraction. The division order gives the operator’s decimal.
- Find your net mineral acres in the deed, the lease description or a mineral title opinion.
- Find the unit acres in the operator’s pooling notice or division order. If you cannot, ask.
- Work out royalty fraction × net acres ÷ unit acres. Compare it with the stub, to the fifth digit.
- Look at the volume. Your barrels should be the lease’s sales, from the Railroad Commission record, times your decimal. If both the decimal and the arithmetic agree, the volume is right.
The question to ask
Please send me the division order for this lease showing my decimal interest, the unit acres you used, and how my net mineral acres were counted.
Rebuild it before you write. It takes a minute.
If the decimal is wrong, ask for corrected payments back to the first month it was wrong. The audit on this site compares the decimal on each statement with the one you enter, and flags a decimal that moves between statements.