Net Royalty Acres Vs. Net Mineral Acres – What You Need to Know
When it comes to land, you should have a clear understanding of what acres are. Different lands around the world are enriched with exploitable minerals and much more. In oil and gas leases, net royalty and net mineral acres are both significant parts to understand. If you are a mineral rights owner, you surely need to understand these two terms in detail. To estimate the value of your property, these terms will play a pivotal role. It will help you understand and prioritize your interests when it comes to property. Here’s what you need to know about net royalty acres and net mineral acres and how these two terms can open a gateway for you to sell your mineral rights at the highest possible rate;
What Are Net Royalty Acres?
The amount of money you are eligible to receive from your property in terms per acre is known as net royalty acres. Royalty and mineral buyers are much more familiar with this term rather than the general public who have little but no information about it. Royalty buyers use this term when calculating the worth or value of your property before suggesting you decide on selling it. This is where you need to understand; what is a Mineral Acre, as only with the understanding of NRA, you will not be able to make the right decision. The calculation of your net royalty acres is only precise and accurate when you know your NMA and royalty percentage.
What Are Net Mineral Acres?
The 100% mineral interest in one acre of land is often known as net mineral acres. Before you jump into the concept of net mineral acres, you need to understand that the gross acreage of land is different from your net mineral acres. The gross acreage is often divided among different people and entities but the precise idea of your average is finely calculated by NMA. From the gross amount, the total acreage owned is usually known as net mineral acres. Moreover, the percentage that comes under your ownership out of the gross tract average is known as your mineral interest.
If you are planning to calculate net mineral acres, you must get the gross number of acres and also the percentage of your mineral interest. Moving on, you need to multiply the gross acreage with the mineral interest to get NMA. Let’s consider you own 20% interest on the minerals under a 300-acre tract of land, the NMA would be 60 as you put the values in the formula;
300 * 0.20 = 60 NMA
Using this formula, you will be able to calculate the number of net acres different entities have under their ownership in the land tract. However, you need to know their mineral interest to complete the calculations. To sell your mineral rights, you need to have a clear understanding of net mineral acres.
Why is it important to know the NRA and NMA?
Before making any contract regarding your mineral rights, it is obligatory for you to deeply understand these terms. To sell and purchase mineral rights, there are a lot of risky decisions to make, but this is where you need to find credible buyers. Getting a reasonable price isn’t stiff when you have the right tools and knowledge with you. To attain the highest price possible, it is always suggested to calculate your NRA before trusting anyone else.
Both of these terms might sound familiar but they surely have different meanings. The NRA is responsible for telling you the worth of your property in dollars. NMA is known for leading you to NRA, and this is why both of these are dependent on each other in the majority of cases. There’s no denying the fact that selling your rights is an important decision to make and you can’t make the wrong decision. Only the net mineral acres can’t tell you the worth of your property, as it is responsible for explaining the relationship between the physical amounts of land keeping in sight the interest rate as well.
