Decimal disputes are where deals go to bleed. An interest that "everyone knows" is a full 1/8 royalty turns out to be burdened by a 1950s reservation nobody re-read; an ORRI assigned three operators ago never got proportionately reduced; an heirship split four ways in probate and only three made the division order. The cure is not more spreadsheets. It's traceability — every decimal tied to the instrument that created it.
The checklist
- 1. Establish the severance. Find the instrument where minerals first split from the surface. Everything downstream inherits its language — fractions, depth limits, executive rights.
- 2. Read every reservation forward. Reservations compound. A 1/2 reservation in 1948 followed by a 1/4 reservation of "all minerals owned" in 1971 is not a 3/4 — walk the arithmetic instrument by instrument.
- 3. Separate the bundle. Executive rights, bonus, delay rentals, royalty — deeds routinely split them. Note which stick carries with each conveyance, or the ownership table will lie to you politely.
- 4. Trace ORRIs to their lease. An override lives and dies with its lease. Confirm the lease is the one still held — and whether HBP status actually extends to the acreage carrying the override.
- 5. Apply proportionate reduction on paper. If the lessor owned less than the full mineral estate, reduce — and show the computation next to the cite, not in a side spreadsheet.
- 6. Chase the probates. Heirship is where decimals fracture silently. Match every deceased owner of record to a probate, affidavit of heirship, or determination — in the county where it was filed, which is often not the county of the land.
- 7. Reconcile against the division order — last. The DO is a claim, not a source. If your instrument-built decimal disagrees with it, the DO is what gets corrected.
The documentation standard
Diligence counsel will not ask whether you're confident. They'll ask where each number came from. The standard worth building to: every interest in the model links to the instrument chain that produced it — recording cites, computation shown, gaps flagged rather than papered over. If a number can't cite its instrument, it isn't a number yet; it's a hypothesis.
That standard used to be a luxury reserved for the biggest deals, because assembling it by hand took weeks per tract. With the county record extracted, indexed, and linked into chains, it becomes the default output rather than the heroic exception — modeled interests you can trace from the decimal back to the deed, at AOI scale.
The takeaway: confidence is not diligence. Traceability is. Build the decimal from the instruments up, and the audit takes care of itself.
Common questions
What is the difference between a mineral interest and a royalty interest?
A mineral interest carries the executive rights — the right to lease, develop, and receive bonus and royalty. A royalty interest is a right to a share of production revenue only, with no executive rights and no cost bearing.
What is an ORRI?
An overriding royalty interest — a share of production carved out of the working interest under a lease. It burdens the lease, not the land, and expires with the lease unless extended or converted.
Why do decimal interests so often turn out wrong in diligence?
Because they were computed from summaries instead of instruments: missed reservations in old deeds, proportionate-reduction clauses applied incorrectly, unaccounted prior ORRIs, and heirship splits that never made it into the division order.
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