When entering conveyances you have a few options in indicating and labeling for the correct calculations to occur.
Notecard Home Page
All - Enitre bundle of sticks including surface and executive rights.
Breakout - Each stick in the bundle is broken out into surface, executive, bonus, delay, ingress, and royalty.
NPRI - This is for floating royalty interests.
NPRI 8/8 - This is for fixed royalty interests.
Floating Royalty (Fraction of Royalty)
- Select the "NPRI" button in the Digital Notecard to convey a floating NPRI in Tracts.
- The interest shares in a portion of the royalty and varies, or floats with the lease royalty rate
- The NPRI owner’s royalty is proportionately reduced according to the lease royalty rate
- Example: Joe Smith grants John Doe a non-participating 1/2 of all royalties. If Joe Smith signs a lease with a 1/8 lease royalty rate, John Doe is now entitled to 1/16 of the royalties from production. If Joe Smith later signs a lease with a 1/5 royalty rate, John Doe is entitled to 1/10 of the royalties from production.
Fixed Royalty (Fractional Royalty or NPRI of 8/8ths)
- Select the "NPRI 8/8" button in the Digital Notecard to convey a fixed NPRI in Tracts.
- The stand-alone right to a particular share of the proceeds from production
- A fixed NPRI is not proportionately reduced based on the lease royalty rate
- Example: Joe Smith grants Jane Doe a 1/16 non-participating royalty interest. John Doe is now entitled to a fixed 1/16 of the royalties from production, irrespective of the lease royalty rate.
In Texas, certain language can cause an NPRI to be treated as floating, when it appears to be fixed.
For example, in Sundance Minerals, L.P. v. Moore, the court determined that a 1/2 floating NPRI was reserved when the grantor reserved “one-half of the usual one-eighth royalty.” The court explained that the reference to the usual 1/8 royalty was “merely an example showing the type of interest they intended to reserve, not a further limitation.”