Company's always show Working Interest, but the Net Revenue Interest, is the most important one.
People always take the WI and forget everything that's to be deducted from it, I used to do it myself. Eventually you work out that your always vastly over estimating cash-flow and profits etc.
As an example in Tex's case WI = 60% and NRI I'm sure is 45% (or close to it).
So they get roughly 45% of the revenue generated, but from this you have to also deduct State Taxes, which in Texas are 8% and 4% for oil & gas. On top of that you have to also deduct lease operating costs, a friend of mine who works in the industry and on many projects, told me a while ago to allow 8% for that.
So from the revenue TEX get, you've another 15% or so to deduct. So in effect Tex get a true net number of around 38% of a wells revenue.
That's how a big number becomes a smaller one very quickly, and they still have corporation tax to pay on top of that!!
Hope that helps
LOTM
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