Mineral Rights Glossary

A chalk and shale formation in the DJ Basin that is one of the primary targets for horizontal drilling in Colorado. The Niobrara is divided into multiple benches (A, B, C) that operators target with horizontal wells.

A sandstone formation below the Niobrara, also a common horizontal drilling target in the DJ Basin. The Codell is often developed alongside the Niobrara, with operators drilling multiple wells targeting both formations in a single spacing unit.

A unit of energy equal to one barrel of oil, used to compare oil and gas volumes. One BOE equals approximately 6,000 cubic feet (6 MCF) of natural gas.

A document signed by mineral owners directing the operator how to distribute royalty payments among multiple owners. You'll typically sign a division order when a new well begins producing.

A prolific oil and gas basin centered in northeastern Colorado, extending into Wyoming, Nebraska, and Kansas. Home to major formations including the Niobrara and Codell. One of the most active basins in the United States.

The total amount of oil or gas expected to be produced from a well over its productive life. EUR is a key input in estimating the value of mineral interests.

A lease that remains in effect as long as a well on the leased acreage is producing in paying quantities. HBP leases do not expire at the end of their primary term as long as production continues.

An upfront cash payment made by an operator to a mineral owner in exchange for the right to drill. Paid per net mineral acre. This is separate from royalty payments, which only begin when production starts.

Thousand cubic feet / Million cubic feet. Common units for measuring natural gas volumes. One MCF of natural gas is roughly equivalent to one-sixth of a barrel of oil in energy content.

The ownership of oil, gas, and other minerals below the surface of a property. Mineral rights can be owned separately from the surface of the land. When you own mineral rights, you are entitled to lease those rights to operators and receive royalty payments from production.

A legal document that transfers ownership of mineral rights from one party to another. When you sell your mineral rights, the transaction is completed via a mineral deed recorded in the county where the minerals are located.

Your proportionate share of mineral ownership within a spacing unit. Example: if you own minerals under 80 acres within a 640-acre section, you own 80 net mineral acres. Net mineral acres are the most common unit for pricing mineral interests.

One acre of mineral rights owned outright, free of any lease or royalty burden. Net Mineral Acres are the standard unit for buying and selling mineral interests in most states.

A unit of measure equivalent to one Net Mineral Acre leased at a 12.5% (1/8) royalty. NRAs allow apples-to-apples comparison of mineral interests that may carry different royalty rates. Example: one NMA leased at 25% equals two NRAs; one NMA leased at 12.5% equals one NRA.

The share of production revenue you receive after deducting royalty interests. Typically applies to working interest owners. A working interest owner with a 100% working interest but a 1/8 royalty burden has an NRI of approximately 87.5%.

A royalty interest that receives a share of production revenue but has no right to sign leases or participate in operations. NPRIs are carved out of the mineral estate and run with the land.

The company responsible for drilling and operating an oil and gas well. Major DJ Basin operators include Civitas Resources, Chord Energy, and others. The operator manages day-to-day field operations and makes distributions to royalty owners.

A royalty interest carved out of the working interest, not out of the mineral estate. ORRIs typically expire when the underlying lease expires. They are commonly granted to landmen, geologists, or others involved in leasing.

The combining of mineral acres from multiple landowners into a single drilling unit. Colorado operators frequently pool acreage across an entire section. Pooled owners share royalties proportionally based on their net acres within the unit.

Mineral interests that are currently generating royalty revenue from producing wells. Producing minerals typically command a premium over non-producing minerals because they generate immediate income.

A lease provision that releases mineral rights in formations or depths not being actively developed. A Pugh clause prevents an operator from holding all of your minerals with a single producing well in a single formation.

The legal contract used to transfer mineral rights from seller to buyer. The PSA defines the purchase price, closing timeline, representations and warranties, and other terms of the transaction.

A monthly statement from the operator or purchaser showing production volumes and royalty payments. Your pay stub documents exactly how much oil or gas was produced and how your payment was calculated.

A schedule showing the working interest, royalty interest, and net revenue interest for each owner in a well. Revenue decks are used to calculate distributions and verify ownership.

The mineral owner's share of production, paid free of drilling and operating costs. Typically expressed as a fraction (e.g., 1/8 or 3/16) or percentage. Royalty owners receive payment from production without contributing to well costs.

The percentage of gross production revenue paid to the mineral owner. Common rates in Colorado range from 12.5% to 25%. Your royalty rate is established in your oil and gas lease.

The designated area from which a single well is permitted to produce. In the DJ Basin, spacing units are commonly one section (640 acres) or fractions thereof. All mineral owners within the spacing unit share in production from wells drilled in that unit.

Ownership of the surface of the land, distinct from mineral rights. A landowner can own the surface without owning the minerals beneath it — this is known as a "severed" mineral estate, which is very common in Colorado.

A legal opinion from an attorney confirming the ownership of mineral rights in a specific tract. Before closing a mineral purchase, a title opinion is prepared to verify that the seller owns what they are conveying.

The largest natural gas field in Colorado, located in Weld County within the DJ Basin. The Wattenberg Field has been producing for decades and remains one of the most active development areas in the basin.

A unique identifying number assigned to each oil and gas well by the American Petroleum Institute. Colorado well API numbers begin with "05." You can use a well's API number to look up production history on the COGCC website.

An ownership interest in a well that bears a proportionate share of drilling and operating costs. Working interest owners receive revenues after royalty payments. Unlike royalty owners, working interest owners are responsible for their share of well costs.