Royalty Interest
A share of production revenue free of drilling and operating costs, paid to the mineral owner under a lease — commonly 1/8 to 1/4.
A royalty interest is the right to a share of the value of oil and gas produced, paid to the owner without bearing any of the cost to drill or operate the well. It is carved out of the mineral estate when a lease is signed. Lease royalties commonly run from 1/8 (12.5%) on older leases up to 1/4 (25%) in active basins.
Because it bears no costs, a royalty interest is the income most buyers want. The amount paid each month depends on your decimal interest, the volume produced, and the price received. Operating expenses can still reduce a check through post-production deductions, depending on the lease language.
See how royalties work and how they factor into mineral rights value.