CPL Mineral Rights & Royalty Calculations 2

Question 1

A tract contains 320 acres. An operator leases the minerals and the lease provides a 3/16 royalty. The well produces 10,000 Mcf/month at $3.00/Mcf. What is the monthly gross royalty value before deductions?

Accepted Answer

$5,625.00

Answer

10,000 Mcf × $3.00 = $30,000 gross; $30,000 × 3/16 = $5,625.00.

Question 2

Which doctrine holds that a severed mineral estate is the dominant estate over the surface estate?

Accepted Answer

Mineral dominance doctrine

Answer

The mineral dominance doctrine gives the mineral owner/lessee the right to use as much of the surface as reasonably necessary to develop the minerals.

Question 3

A non-participating royalty interest (NPRI) owner receives royalties but does NOT receive which of the following?

Accepted Answer

All of the above

Answer

An NPRI owner has no executive rights and typically does not share in bonus, delay rental, or shut-in payments unless specifically provided.

Question 4

An overriding royalty interest (ORRI) differs from a landowner royalty because it:

Accepted Answer

Is carved out of the lessee's working interest

Answer

An ORRI is carved out of the working interest owner's share and expires when the underlying lease terminates.

Question 5

A royalty clause states 'free of cost at the well.' This language most likely means:

Accepted Answer

Post-production costs cannot be deducted from the royalty

Answer

'Free of cost at the well' protects the lessor from having post-production costs (gathering, compression, transportation) deducted from their royalty.

(CPL) Certified Professional Landman Practice Test

(CPL) Certified Professional Landman Practice Test

CPL Mineral Rights & Royalty Calculations 2