Royalty Interest in the United States: Not Cut from the Same Cloth




Kramer, Bruce M.

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Tulsa Law Journal


If you ask any lawyer familiar with oil and gas law what a royalty is, the response will be reasonably uniform whether the lawyer is located in Colorado, Texas, Kansas, Louisiana, Oklahoma or New Mexico. Most lawyers agree with the basic definition given of a royalty interest by Williams & Meyers. They define a royalty as:

(1) The landowner's share of production, free of expenses of production. (2) A share of production, free of expenses of production ....

Thus we know that a royalty interest is not a cost-bearing or profit-sharing interest. We also know that it is solely a share of production and does not include any of the remaining constituent elements of a mineral estate. The royalty interest therefore would not be a possessory estate and would likewise not have any easement to use or occupy the surface.

But when you take a closer look at many of the underlying issues which affect royalty interests, you will not find universal agreement among the states. In fact you will find an amazing diversity of opinion on several basic issues relating to defining, measuring and valuing royalty interests. In this article, Professor Kramer will explore a number of those areas where there is a split of authority, especially where the differences relate to the valuation of the royalty interest



Oil and gas law, Royalty interest


29 Tulsa L. J. 449