1. Blackstone Oil & Gas Company (Blackstone) owns a 100% working interest in an oil and gas lease located in Coleman County, Texas. The royalty on the lease is 1/8. Blackstone does not have the funds to develop the lease and decides to assign the working interest to Juniper Oil Company (Juniper), reserving an interest that will pay 1/5 of 7/8 of gross revenues, but where Blackstone will pay none of the operating expenses. Assume in 2020 Juniper produces and sells 10,000 BBLs of oil for total gross revenue of $550,000 and incurs $220,000 in lease operating expenses.

REQUIRED (where applicable, you must show your work):

1. What type of interest has Juniper acquired?
2. What type of interest has Blackstone retained?
3. What is the gross revenue to each owner?
4. What portion of the lease operating expenses will each owner pay?