Reading Your Royalty Statements

The Bakken acquisition desk reviews well, title, spacing, and payment records before preparing a written conclusion. Here is how to read that stub the way we read it.

Most royalty owners in the Williston Basin get a statement once a month, glance at the net amount, and file it in a drawer. We don't blame them. The layout looks like it was designed to be skimmed past rather than understood. But if you own minerals under two or three wells on the same spacing unit, that statement is the single best record you have of what your interest is actually doing over time, and it's the document any serious buyer is going to ask to see before they put a number in front of you.

The Bakken acquisition desk reviews the producing, spacing, title, and payment record for the interest. We've seen owners get talked into low offers because they never learned to separate a normal production decline from a deduction line quietly eating into their check. A real multi-well statement reads top to bottom, the way we'd walk a landman or a new engineer through one.

The Header Block: Your Decimal Interest

Start at the top, not the bottom. Your decimal interest is the fraction that ties your net mineral acres to a specific well's production, and it's calculated from the spacing unit size, your royalty rate under the lease, and your net acres inside that unit. A single Bakken unit in McKenzie or Mountrail County typically runs 1,280 acres, sometimes 2,560 where two sections are pooled. If you own 40 net mineral acres in a 1,280-acre unit at a 3/16 royalty, your math should be checkable with a calculator in about ten seconds. If the decimal on the statement doesn't match your own calculation, that's the first thing to call the operator's division order department about, not the last.

Multi-well statements stack a separate decimal for every well draining your unit. Core Bakken units in Dunn and McKenzie counties commonly have three, four, sometimes six wellbores on one spacing unit now that operators have gone to tighter downspacing. Each wellbore gets its own line, its own decimal, and its own volume and price columns. Don't assume they're identical just because they're on the same unit — infill wells drilled years apart can carry different working interest ownership and different net revenue interest splits.

Volumes and Prices: Where Decline Shows Up

Every statement reports gross volume for oil, gas, and often natural gas liquids separately, along with a price per barrel or per MCF for that month. Bakken wells follow a steep decline curve — a well can produce at a high initial rate for the first six to twelve months and then fall off by fifty percent or more in year two, settling into a long, shallow tail that can run for a decade or longer at low but persistent volumes. If your check has been dropping for eighteen straight months, that's not necessarily a red flag. That's the physics of a horizontal shale well doing what it does. What you want to watch for is a sudden, unexplained drop that doesn't track normal decline — that can signal downtime, a mechanical issue, or a well being shut in for offset drilling nearby.

Price swings are the other half of the picture, and they're outside anyone's control. When crude dropped hard in 2020, statements across the whole basin cratered even on wells producing steady volumes. A buyer pricing your interest today should be looking at trailing production data across a full commodity cycle rather than last month's number alone, and you should expect the same discipline from anyone giving you a range for what your interest might be worth.

Deductions: The Line Owners Skip Over

This is the section that costs people money because they never read it. Below the gross value line you'll usually see severance and production tax withheld — North Dakota runs a combined oil extraction and production tax that's baked into most statements automatically. Below that, depending on your lease language, you may see deductions for gathering, compression, transportation, and processing — what the industry calls post-production costs. Whether those are allowed to be netted against your royalty depends entirely on the deduction clause your original lease carried, and older Bakken-era leases vary a lot on this point.

The Bakken acquisition desk reviews division orders, well files, spacing units, and the recorded interest before offering a conclusion. That's not automatically wrong — it depends on your lease — but it is something a buyer factors into an offer, because it directly affects your realized net revenue interest going forward, beyond the decimal shown on paper.

What We Do With This Before Pricing an Interest

When someone sends us statements on a multi-well unit, we're building a trailing twelve-month average net, checking it against the well's public production history from the state's oil and gas records, and asking where each wellbore sits on its decline curve. A well in year eight of production and a well in year one produce very differently and get valued differently, even sitting on the same unit with the same decimal interest. That's the whole exercise — the statement tells the story, you just have to read past the net-amount box at the bottom.