Mabel Oil Company owns 100% of the working interest in a lease that has a 1/7 royalty

Question:

Mabel Oil Company owns 100% of the working interest in a lease that has a 1/7 royalty interest. The royalty interest owner is Mr. Kyle. Needing additional funds to develop the property, Mabel sold Pitt Company 60,000 barrels of oil for a consideration of

\($800,000\). The oil is to be paid out of the first 20% of the working interest’s share of production. During the first four years of production, 140,000 barrels are produced each year. How many barrels of oil does each interest receive in each of the first four years?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamentals Of Oil And Gas Accounting

ISBN: 9781593701376

5th Edition

Authors: Charlotte J. Wright, Rebecca A. Gallun

Question Posted: