How to Track and Understand Oil and Gas Royalty Deductions
When you receive a royalty check, the amount is rarely just a simple percentage of production revenue. Operators deduct various post-production costs before cutting your check. MinRight helps you track every one of them.
Common Deductions MinRight Tracks
MinRight supports over 10 deduction categories that mirror what you'll see on a typical check stub:
- Gathering: fees for collecting gas from the wellhead
- Transportation: pipeline transport costs to processing or market
- Compression: costs to pressurize gas for pipeline transport
- Processing: fees for removing impurities and separating liquids
- Marketing: costs associated with finding a buyer
- Dehydration: removing water from natural gas
- Treating: additional purification costs
Why This Matters
Over time, deductions can add up significantly. By tracking them in MinRight, you can:
- Spot anomalies: a sudden spike in one deduction category may warrant a call to the operator
- Compare across wells: see which wells have the highest deduction ratios
- Prepare for taxes: have an organized record of net vs. gross income
- Audit check stubs: verify the operator's math against your own records
How to Enter Deductions
When recording a royalty payment in MinRight, expand the Deductions section on the payment form. Enter each deduction amount in its corresponding field. MinRight automatically calculates the net payment and tracks the deduction percentage over time in your Analytics dashboard.
Check our How-To Guides for a step-by-step walkthrough of entering your first royalty payment.