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A broker obtains a lease from a landowner who retains an 20% royalty interest. The...

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Accounting

A broker obtains a lease from a landowner who retains an 20% royalty interest. The broker turns 100% of the deal for an 8% overriding royalty interest proportionately reduced to an independent. The independent farms the deal out to Farmee No. 1 for a 7% override convertible to a 40% WI on payout proportionately reduced.

a. Determine the working and net revenue interest for each player until payout occurs. How is payout calculated for the reversion?

b. Determine the working and net revenue interest for each player after payout occurs.

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