− | Assume the Oily Co., lessee, obtains oil and gas leases from I. M. Lucky, lessor, who owns a 3/4 interest in a [[area::20 acre]] tract of land, and from I. S. Rich, lessor, who owns the other 1/4 interest in the tract. Mr. Lucky and Mr. Rich each reserve a 1/8 royalty (cost-free) interest. Oily Co. drills and completes an oil well at a depth above 3000 ft on the leased [[area::20 acre]] tract. The costs and revenue interests are shown in [[:Image:Drive-mechanisms-and-recovery_fig1.png|Table 1]]. | + | Assume the Oily Co., lessee, obtains oil and gas leases from I. M. Lucky, lessor, who owns a 3/4 interest in a [[area::20 acre]] tract of land, and from I. S. Rich, lessor, who owns the other 1/4 interest in the tract. Mr. Lucky and Mr. Rich each reserve a 1/8 royalty (cost-free) interest. Oily Co. drills and completes an oil well at a depth above 3000 ft on the leased [[area::20 acre]] tract. The costs and revenue interests are shown in Table 1. |