Brad Duersch owns the mineral rights in land in South Texas, which he leased to Twillo Oil Company. In that agreement, Duersch received a 25% royalty interest.

Later, Twillo Oil Company entered into a sales contract where it sold 40% of its working interest to Grimes Company. In 2019, total proved reserves for the property are estimated to be 1,000,000 barrels, and total production during 2019 was 100,000 barrels. Under this agreement, royalty is payable to Mr. Duersch in cash.

REQUIRED: 

Determination of proved reserves to be included in reserve report