In the petroleum industry, an Alaska Assignment of Overriding Royalty Interest (By Owner of Override) refers to a legal agreement or transaction where the owner of an overriding royalty interest in Alaska sells, transfers, or assigns their interest to another party. This allows the assignee to receive a portion of the revenues generated from oil or gas production. An overriding royalty interest (ORRIS) is a non-operating interest in an oil and gas lease, which entitles the owner to a percentage of the revenues generated from the lease, often at a higher rate than regular royalty interests. The Alaska Assignment of Overriding Royalty Interest (By Owner of Override) outlines the terms, conditions, and rights associated with transferring the ORRIS to another entity. There can be various types of Alaska Assignments of Overriding Royalty Interest (By Owner of Override). Some common ones include: 1. Full Assignment: This type involves the complete transfer of the overriding royalty interest to the assignee, relinquishing all rights and ownership of the ORRIS by the original owner. 2. Partial Assignment: In this case, the owner of the overriding royalty interest transfers only a portion or a percentage of their interest to the assignee, while retaining some ownership. 3. Temporary Assignment: Sometimes, overriding royalty interests can be assigned temporarily, usually for a specific time period or until certain conditions are met. This type of assignment is often used to finance a project or to manage cash flow. 4. Permanent Assignment: In contrast to temporary assignments, a permanent assignment involves the transfer of overriding royalty interest without any specific time limitations or conditions. 5. Assignment with Reservation: This type of assignment allows the owner of the overriding royalty interest to transfer their interest to another party while reserving specific rights or conditions. These reservations can vary according to the negotiation between the parties involved. The Alaska Assignment of Overriding Royalty Interest (By Owner of Override) agreement typically includes details such as the names and contact information of both parties involved, a legal description of the ORRIS being assigned, the specific percentage or amount being transferred, terms and conditions of the transfer, any reservations or limitations, and any other relevant contractual provisions. Overall, Alaska Assignments of Overriding Royalty Interest (By Owner of Override) are crucial in the petroleum industry as they allow for the efficient transfer of non-operating interests in oil and gas leases, enabling the monetization and management of royalty revenues.
Alaska Assignment of Overriding Royalty Interest (By Owner of Override)
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FAQ
An overriding royalty interest (ORRI) is an undivided interest in a mineral lease giving the holder the right to a proportional share (receive revenue) of the sale of oil and gas produced. The ORRI is carved out of the working interest or lease.
Royalty interest in the oil and gas industry refers to ownership of a portion of a resource or the revenue it produces. A company or person that owns a royalty interest does not bear any operational costs needed to produce the resource, yet they still own a portion of the resource or revenue it produces.
Overriding Royalty Interests To calculate the ORRI, multiply the gross production revenue by the ORRI interest percentage, and the figure gotten is what the ORRI owner is entitled to.
Overriding royalty interest: Unlike mineral and royalty interests, an overriding royalty interest runs with a lease and not with the land. Therefore, they only remain in effect for as long as a lease is in effect and they expire when a lease expires.
An overriding royalty interest (ORRI) is similar to a royalty interest in that it is also a portion of the proceeds from the sale of production. However, it is not retained under the terms of the oil and gas lease. An ORRI is granted, assigned and created under the terms of a separate document.
ORRIs are created out of the working interest in a property and do not affect mineral owners. An overriding royalty interest (ORRI) is often kept or assigned to a geologist, landman, brokerage, or any entity that was able to reserve an interest in the properties.
Calculating Overriding Royalty Interest An ORRI is a straight percentage. For example, a 2% override would appear on the royalty statement as 0.02 interest in the proceeds from the sale of the leased hydrocarbons.
You may convey overriding royalty interest on either an Assignment of Record Title Interest (Form 3000-3), a Transfer of Operating Rights (Form 3000-3a), or on a private assignment. We only require filing of one signed copy per assignment plus a nonrefundable filing fee found at 43 CFR 3000.12.
A gross overriding royalty entitles the owner to a share of the market price of the mined product as at the time they are available to be taken less any costs incurred by the operator to bring the product to the point of sale.
