fraction of royalty

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Co-author Ethan Wood

Coke or Pepsi? Elvis or the Beatles? Should there be a designated hitter? Fixed or floating royalty? Among the great debates of recent decades, few have proven quite as frustrating as the great “Fixed v. Floating” royalty debate in Texas jurisprudence.

A royalty can be conveyed or reserved in two ways: as a fixed fraction of total production (fractional royalty interest) or as a fraction of the total royalty interest (fraction of royalty interest). The fractional interest is “fixed” because it is untethered to the royalty in a particular oil and gas lease. A fraction of royalty is “floating” because it varies depending on the royalty in the lease.
Continue Reading Texas Supreme Court Decides Another Fixed-or-Floating Royalty Case

Fractions

“Blood may be thicker than water, but oil is thicker than both.”  J. R. Ewing.

This family dispute among Ethel’s descendants arose when Ethel’s will employed double fractions in bequeathing royalty interests to her children. Did the instrument create a fixed fractional royalty or a floating fraction of royalty?

Straight to the takeaway

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Head-scratchers: (1) Is a mineral reservation a fraction of royalty, or a fractional royalty? (2) Is there a difference? (3) Does it matter?

Answers: (1) It depends on how you phrase it. (2) Yes. (3) Yes, if you care about being paid on production, or you are the scrivener of deeds and assignments and want…