Calculate the portion of the tax each party pays

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Question - James Whitaker owns the mineral rights to 340 acres in Coleman County, Texas. James leases the property to Juniper Oil & Gas ("Juniper") reserving a 1/8 royalty interest. Juniper drills a successful well and begins producing oil. Before the first month's production Juniper assigns a 5% ORI to its engineer, Marty Jacobs. In March 2020 Juniper incurred $17,500 of lease operating expenses (production/lift costs), produced and sold 900 BBLs of oil at a price per BBL of $44; the severance tax is 7.5%. Juniper assumes the responsibility of distributing revenue and paying severance taxes. NOTE: When calculating owner decimal interest please go out six decimals.

a. Calculate the gross revenue to each party.

b. Calculate the portion of the tax each party pays.

c. What portion of the lease operating expenses does each party pay?

Reference no: EM132602167

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