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What type of interest has Juniper acquired

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Question - Blackstone Oil & Gas Company (Blackstone) owns a 100% working interest in an oil and gas lease located in Coleman County, Texas. The royalty on the lease is 1/8. Blackstone does not have the funds to develop the lease and decides to assign the working interest to Juniper Oil Company (Juniper), reserving an interest that will pay 1/5 of 7/8 of gross revenues, but where Blackstone will pay none of the operating expenses. Assume in 2020 Juniper produces and sells 10,000 BBLs of oil for total gross revenue of $550,000 and incurs $220,000 in lease operating expenses.

REQUIRED -

-What type of interest has Juniper acquired?

-What type of interest has Blackstone retained?

-What is the gross revenue to each owner?

-What portion of the lease operating expenses will each owner pay?

Reference no: EM133035495

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