The recent discussion of Gross/Net Mineral acres left me a little bleary - perhaps the following will be of assistance.
EXAMPLE - Accounting for Gross/Net Mineral Acres in North Dakota 1. In 1908, assume that ¼ Section (160 Acres) was homesteaded. The outcome of this was that the homesteader acquired title to 160 Surface Acres/160 Gross Mineral Acres/160 Net Mineral Acres [Call the homesteader “Owner A”]. 2. In 1955, assume the same ¼ Section was sold with provision that Seller/“Owner A” will retain 50% mineral ownership. a. Buyer in this transaction [Call the buyer “Owner B”] would have acquired title to 160 Surface Acres/160 Gross Mineral Acres/80 Net Mineral Acres. b. Seller/“Owner A” would have retained title to 160 Gross Mineral Acres/80 Net Mineral Acres. 3. In 1960, assume “Owner A” dies leaving his interest to 4 offspring. Now each of the offspring acquire title to 160 Gross Mineral Acres/20 Net Mineral acres [Call the offspring “Owners A1, A2, A3, A4”]. 4. In 2006, assume “EOG” comes to lease total Mineral Acres in the original ¼ Section (160 Acres). a. From “Owner B” they lease 160 Gross Mineral Acres/80 Net Mineral Acres. b. From “Owner A1” they lease 160 Gross Mineral Acres/20 Net Mineral Acres. c. From “Owner A2” they lease 160 Gross Mineral Acres/20 Net Mineral Acres. d. From “Owner A3” they lease 160 Gross Mineral Acres/20 Net Mineral Acres. e. From “Owner A4” they lease 160 Gross Mineral Acres/20 Net Mineral Acres. 5. Think of “Net Mineral Acres” as expressing “Owned Mineral Acres” which are titled to a person or an entity in a particular tract of land. 6. Think of “Gross Mineral Acres” as expressing the “Total Mineral Acres” in a particular tract of land. This will remain constant for a given tract of land (whether as in this example 160 or in other instances 320 or 640, etc.) 7. In 1908, following the homestead - Owner “A” had title to 160 Net (Owned) Mineral Acres in a tract of land containing 160 Gross (Total) Mineral Acres. a. Expressed as a ratio of Owned Mineral acres to total Mineral acres this was 160:160 b. Expressed as a fraction of Owned Mineral acres to total Mineral acres this was 160/160 = 1/1 = 1 c. Expressed as a percentage of Owned Mineral acres to total Mineral acres this was 160/160= 1 (x 100%) = 100% 8. In 1955, following the change in ownership – Both Owner “A” and Owner “B” had title to 80 Net (Owned) Mineral Acres in a tract of land containing 160 Gross (Total) Mineral Acres. a. Expressed as a ratio of Owned Mineral acres to total Mineral acres this was 80:160 b. Expressed as a fraction of Owned Mineral acres to total Mineral acres this was 80/160 = 1/2 c. Expressed as a percentage of Owned Mineral acres to total Mineral acres this was 80/160 = ½ = .5 (x 100%) = 50% 9. In 1960, following the death of Owner “A” – the interests of Owner “B” remained what they had become in 1955. Owners “A1”, “A2”, “A3” & “A4” now each had title to 20 Net (Owned) Mineral Acres in a tract of land containing 160 Gross (Total) Mineral Acres. a. Expressed as a ratio of Owned Mineral acres to total Mineral acres this was 20:160 b. Expressed as a fraction of Owned Mineral acres to total Mineral acres this was 20/160 = 1/8 c. Expressed as a percentage of Owned Mineral acres to total Mineral acres this was 20/160 = 1/8 = .125 (x 100%) = 12.5% 10. In 2006, notice that “EOG” Leased 100% of the 160 Net (Owned) Mineral Acres - and no Mineral Acre owner was shortchanged - the sum of percentages of shares owned being Owner “B” 50% + Owner “A1” 12.5% + Owner “A2” 12.5% + Owner “A3” 12.5% + Owner “A4” 12.5% = 100% --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Bakken Shale Discussion" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [EMAIL PROTECTED] For more options, visit this group at http://groups.google.com/group/bakken-shale-discussion?hl=en -~----------~----~----~----~------~----~------~--~---
