How to Calculate Your Net Revenue Interest and Estimate Your Royalty Check Amount
- May 17
- 3 min read
When you receive your first oil and gas royalty check, one number matters most: your Net Revenue Interest (NRI), the percentage that determines what you actually get paid. For many mineral owners this number can feel confusing, but it’s based on a straightforward formula. In this post, we’ll break down how to calculate your NRI step by step so you can confidently understand and verify your payments. Plus, we’re offering a free NRI and Royalty Check Estimator Worksheet to help you plug in your numbers and quickly estimate what you should be earning.
1. Calculating your Net Mineral Acres (NMA):
Let’s say that you own mineral rights in all of Section 27, Block 51, T&P Ry Co. Survey, Reeves County, Texas. The number of gross acres for this section is 640 acres, and you own a 1/40 interest in this tract. This means your decimal interest in this tract is 0.025. To calculate your NMA's, take the number of gross acres and multiply it by your decimal interest in the tract. In this example, you own 16 NMA's.
Net Mineral Acres = 640 Acres x 0.025 = 16 net mineral acres.
2. Â Determining the Size of your Drilling Spacing Unit:
Fortunately, this information is usually available on your State’s Oil and Gas Commission Website. In Texas, you can go to the Texas Railroad Commission's GIS Viewer website for this information.
Let’s assume for the purposes of this example that you just found out that a horizontal well is permitted on your minerals in Section 27 and that Section 27 is part of a 1280 acre Drilling Spacing Unit that includes Sections 27 & 22 of Block 51.
3. Finding Your Royalty Rate:
You can find this information on your Oil and Gas Lease. On the first page look for a statement like:
“As royalty, Lessee covenants and agrees: (a) To deliver to the credit of Lessor, in the pipe line to which Lessee may connect its wells, the equal 1/4 part of all oil produced and saved by Lessee from said land..."
For our example, let's say the Royalty Rate for both oil and gas is 15%. If you don’t have a copy of the lease, you can perform a search in your County Clerk's office or hire Stephens Legacy Law to do it for you.
4. Calculate Your NRI
NRI = Net Mineral Acres / Drilling Spacing Unit Acres X Royalty Rate
Continuing our example, here’s what we know:
Net Mineral Acres = 16 Acres
DSU Size = 1280 Acres
Royalty Rate = 15%
So, your NRI = 16 / 1280 X 0.15 = 0.001875
This means you will receive 0.1875% of any oil or gas sold on this new well.
IMPORTANT: In this example, we assume that 100% of your acreage is inside the DSU in question. If your acreage is only partially in the DSU (for example, if the DSU spans part of a section that cuts through your acreage), you will need to multiply this NRI result by the percentage of your acreage inside that DSU. For example, if only half of your land is in a particular DSU, you would multiply the NRI calculated as above by 50% since half of your tract is part of that DSU and the rest is part of one or more other DSU’s. Or, if you know the number of Net Mineral Acres that are part of a particular DSU, use that number in the NRI calculation rather than the total number of Net Mineral Acres owned.
5. Estimating Your Royalty Check
To put the NRI in perspective, let’s put this in terms of dollars and cents.
In our example, let’s look at nearby horizontal wells drilled on 1280 acre spacing. Let's say they average around 10,000 barrels (bbl) of oil per month, and the average price of crude is $50/bbl. An estimate of your monthly royalty check for this one well is:
Gross Owner Interest (before tax) = Gross Volume x Gross Price x NRI
10,000 bbls x $50/bbl x 0.001875 = $937.50
This is just for the oil produced, but you can calculate gas revenue the same way. Not too bad for income you likely weren’t expecting to receive!
In this example the lease terms are royalty free of cost. However, your lease may give the operator the right to deduct certain costs (e.g. processing and transportation) in addition to the standard severance and local taxes that will be deducted.
If you aren’t sure what your lease allows or what mineral rights you own, Stephens Legacy Law can help determine your ownership, interpret your lease, and make sure you understand your rights and what you should be getting paid.
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