A royalty rate is the percentage of revenue that a mineral owner receives from the sale of oil and gas. Royalty rates typically are of either 12.5%, 18.75%, 20%, or 25% (also described as 1/8 , 3/16, 1/5, and 1/4). Some lease agreements allow energy companies to deduct processing and transportation costs from royalty payments. This can be extremely disadvantageous to mineral owners and there are numerous cases of mineral owners seeing their royalty payments disappear as a result of poorly negotiated oil and gas royalty deductions.