land_ownership · ownership
Net Revenue Interest (NRI)
NRI = WI × (1 - Total Royalty Burden)
click formula to derive ↑
Inputs
fraction
fraction
Description
Computes net revenue interest — the share of production revenue a working interest owner actually receives after all royalty burdens are deducted — from working interest and the combined (stacked) royalty burden.
Variables
| Symbol | Unit | Description |
|---|---|---|
| NRI | fraction | Net Revenue Interest |
| WI | fraction | Fraction of the well's costs and (before royalty burden) revenue this owner bears, as a fraction of the total leasehold (1.0 = 100% working interest). |
| RB | fraction | Combined (stacked) fraction of gross production revenue owed to all non-cost-bearing interests on the lease — landowner lease royalty plus any overriding royalty interest (ORRI) — added together into one total burden fraction. |
Assumptions
- Total Royalty Burden is the sum of the landowner lease royalty and any overriding royalty interest (ORRI), entered as one combined (stacked) fraction — not the lease royalty alone.
- The royalty burden applies uniformly to 100% of the leasehold, and WI is expressed as a fraction of that same 100% leasehold base.
Limitations
- Does not itself decompose a combined royalty burden into its lease-royalty and ORRI components — if that breakdown matters, use the ORRI calculator instead, which itemizes both before computing the same NRI.
- Does not account for non-participating royalty interests, back-in interests, or other more complex ownership structures beyond a simple WI/royalty-burden split — see the Back-in / Carried Interest calculator for the payout-conditional case.
- Costs are not addressed by this calculator — NRI describes the revenue split only; the working interest owner still bears its full WI share of costs regardless of NRI.
Use Cases
- → Revenue projection: Convert a gross production forecast into the net revenue an individual working interest owner will actually receive.
- → Division order / lease review: Sanity-check a division order or lease abstract's stated NRI against the underlying WI and royalty burden figures.
Related Calculations
Region Notes
General (U.S. onshore)
Historically a 1/8 (12.5%) lease royalty was common; modern leases, especially in active unconventional plays, are frequently negotiated at 3/16 (18.75%) to 1/4 (25%) or higher, and often carry one or more overriding royalty interests stacked on top — always confirm the actual stacked total from the lease and division order rather than assuming a standard figure.
References
Need geoscience support? BauerCalc is just one of the tools we build. If you're looking for independent expertise in well planning, geosteering, reservoir characterization, or opportunity evaluation, visit BauerSubsurface.com.