# How to Calculate Oil & Gas Royalty Payments (With Example)
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> Oil and gas royalty payments are calculated from your decimal interest, the well's production, and the sale price, then reduced by severance taxes and any lease-permitted post-production deductions. The formula, a step-by-step worked example, multi-unit horizontal wells, and how to verify your check.

**URL:** https://www.buckheadenergy.com/how-to-calculate-oil-and-gas-royalty-payments
**Source:** Buckhead Energy (https://www.buckheadenergy.com/)
**Generated:** 2026-08-16 (heuristic; server-side extraction)

## Answer
An oil and gas royalty payment is calculated by finding your decimal interest — your net mineral acres in the unit divided by the total unit acres, times your lease royalty rate — and applying it to the well's production and sale price, then subtracting any severance taxes and lease-permitted post-production deductions. In short: decimal interest × production × price, minus taxes and deductions. Frequently asked questions How do I calculate my oil and gas royalty payment? Find your decimal interest (net mineral acres ÷ unit acres × royalty rate, and for a multi-unit horizontal well × your section's perforation share), then multiply it by the well's production times the sale price to get gross royalty, and subtract severance taxes and any lease-permitted post-production deductions to get your net payment. What is my decimal interest? It is the exact fraction of a well's revenue that belongs to you: net mineral acres in the unit divided by total unit acres, times your lease royalty rate (times your section's perforation share on a multi-unit horizontal well). Example: 40 NMA in a 640-acre unit at 1/4 royalty = 0.015625. It appears on your division order. Why is my royalty check less than my calculation? Usually because the gross calculation omits severance taxes and post-production deductions (gathering, compression, processing, transportation) that a lease may permit, and because your realized wellhead price is typically below the quoted benchmark by a basis differential. Use your actual received price and check your lease's deduction language. Is there a tool to calculate oil and gas royalties? Yes — a royalty calculator performs the same arithmetic from your inputs (acreage, unit size, royalty rate, perforation share, production, and price). It estimates gross royalty; your actual check also reflects severance taxes, lease-permitted deductions, and your operator's realized prices.

## Page Outline
- How to Calculate Oil and Gas Royalty Payments
  - The formula in two steps
  - Step 1 — your decimal interest
  - Step 2 — apply it to production and price
  - Step 3 — subtract taxes and deductions
  - Check your own number
  - Related reading
  - Frequently asked questions
  - Ready to Sell Your Mineral Rights?

## Related Pages
- [Oil and Gas Royalties](https://www.buckheadenergy.com/oil-and-gas-royalties)
- [Division Orders](https://www.buckheadenergy.com/division-orders)
- [Mineral Royalty Calculator](https://www.buckheadenergy.com/royalty-calculator)
- [Oil & Gas Encyclopedia — all terms](https://www.buckheadenergy.com/learn)

## About Buckhead Energy
Buckhead Energy is a direct buyer of oil & gas mineral rights and royalty interests across 33 U.S. states. We provide free written offers within 24-48 hours, with closings in 30-45 days. Family-owned and operated since 2007, A+ BBB rated.

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