Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright

Exercise 11

Mr. Lomax owns the mineral rights in some land in Texas. He leases the land to Frank
Oil Company, reserving a 1/5 royalty. During 2011, Frank Oil Company makes the
following assignments:
a. To Mr. Jones, an ORI of 1/7 of Frank's interest
b. To Ms. Wilson, a production payment interest of 30,000 barrels of oil to be paid
out of 1/4 of the working interest's share of production (i.e., Ms. Wilson gets 1/4 of
this production until she receives a total of 30,000 barrels)
c. To Mr. Smith, a joint working interest of 1/3 after giving consideration to all the
above assignments.
REqUIRED: Assuming gross production is 45,000 barrels, calculate each owner's
share.