7. Mr. Duke owns some mineral rights in Texas that he leases to Seagull Oil Comp

ID: 2424875 • Letter: 7

Question

7. Mr. Duke owns some mineral rights in Texas that he leases to Seagull Oil Company, reserving a 1/8

royalty interest. During 2014, Seagull Oil made the following assignments:

a. To Mr. Hall, an ORI of 1/6.

b. To Mr. Evans, a production payment interest of 10,000 barrels of oil to be paid out of 1/5 of the

working interest’s share of production.

c. To Ms. Wilson, a joint working interest of 40% after giving consideration to the above

assignments.

Questions:

A. Calculate the decimals to be used in the division order.

B. Assuming production of 12,000 (gross) barrels of oil, calculate the number of barrels each owner

would receive.

a) all decimals to be used is 1/8=0.125

b)Hall = 0.125*1/6*12000= 250 barrels

b)Evans:

working interest: .125*(1/5)*12000=300

c)Wilson:0.125*(12000)= 1500

=1500-250-300=950

=.4*950=380

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