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landman.trainingWorkbook · Unit 3 Supplement

Royalty Decimals & Duhig Rule Workbook.

Worked problems on Net Mineral Acres (NMA), pooled unit royalty decimals, fixed versus fraction-of-royalty NPRIs, and how Duhig v. Peavy-Moore Lumber Co. resolves warranty-deed over-conveyances.

Topic
NMA, NRI decimals, NPRI burdens, and Duhig estoppel
Cases cited
Duhig v. Peavy-Moore Lumber Co. (Tex. 1940); Hysaw v. Dawkins (Tex. 2016)
Cost
Free self-study

Three checks on every tract

  1. Do all Mineral Interest (MI) fractions in the tract sum to 1.00000000?
  2. Did the warranty deed except prior mineral reservations, or only reserve a new one?
  3. Does Lessee NRI + Lessor RI + NPRI + ORRI equal the tract Working Interest (WI)?

EquationsFrom mineral share to division order decimal

Key rules

  • Keep exact fractions until the final 8-decimal step.
  • Subtract NPRI burdens from the lessor's royalty, not the lessee's NRI.
  • Weight multi-tract units by the tract participation factor.

Every division order decimal rests on three numbers: the owner's fractional share of the minerals in the tract, the royalty rate in the oil and gas lease covering that share, and the tract's participation factor in the producing unit.

Problem 1 (Unburdened Lessor). Lessor A owns 1/4 MI in a 160-acre tract (40 NMA) and signs a lease with a 3/16 (0.1875) royalty. The 160-acre tract is pooled into a 640-acre unit (Tract Factor = 160/640 = 0.25).

1/4 × 3/16 × 160/640 = 0.01171875 Unit RI

Problem 2 (Floating NPRI Deduction). Same facts as Problem 1, except Lessor A's 1/4 MI is subject to a prior recorded "1/3 of royalty" floating NPRI held by B.

B NPRI = 0.00390625 A Net RI = 0.00781250

Fixed NPRI
A set fraction of gross production (such as "an undivided 1/16 of all oil and gas produced"), which stays 1/16 regardless of the lease royalty rate.
Floating NPRI
A fraction of whatever royalty is reserved in the lease (such as "1/2 of the royalty"), which scales up or down with the lease royalty rate.
Proportionate reduction
The lease clause that reduces the stated royalty in proportion to the mineral fraction the lessor actually owns.

Sources. Hysaw v. Dawkins, 483 S.W.3d 1 (Tex. 2016); Van Dyke v. Navigator Group, 668 S.W.3d 353 (Tex. 2023).

Duhig DrillWhen the reservation fails vs. holds

Other workbooks

Compare two deeds signed by O, who owns the surface and 1/2 of the minerals (because X reserved the other 1/2 in 1945):

  • Case A (No Subject-To / No Exception): O's general warranty deed to G conveys "all that certain tract of land" and adds, "Grantor reserves an undivided 1/2 of the oil, gas, and other minerals," without mentioning X's 1945 reservation. Because the deed warrants 1/2 of the minerals to G, G takes 1/2 MI, X keeps 1/2 MI, and O keeps 0 MI.
  • Case B (Express Exception of Prior Reservation): O's general warranty deed to G conveys the land "SAVE AND EXCEPT the 1/2 mineral interest previously reserved in Vol. 40, Pg. 12, and Grantor herein reserves unto himself an undivided 1/4 mineral interest." Because the warranty expressly excepted X's 1/2, there is no over-conveyance: X has 1/2 MI, O keeps 1/4 MI, and G takes 1/4 MI.

Test yourself on the 6-question blue book exam

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