This provision provides for the assignor to except from this assignment and reserve an overriding royalty interest of all oil, gas, casinghead gas, and other minerals that may be produced from the lands under the terms of the Leases that are the subject of this assignment.
Arkansas Reservation of Overriding Royalty Interest refers to a legal provision that allows the owner of mineral rights to retain a portion of the royalty interest when leasing or transferring those rights to another party. This reservation ensures that the original owner will continue to receive a predetermined percentage of the revenue generated from the mineral extraction. The Arkansas Reservation of Overriding Royalty Interest serves as a safeguard for the mineral rights' owner, who retains a share of the royalties even if the rights are sold or leased to an oil and gas company. This reservation is typically stated explicitly in the lease or conveyance agreement to provide legal clarity and protection for all parties involved. The Arkansas law recognizes two main types of Reservation of Overriding Royalty Interest: 1. Fractional Overriding Royalty Interest: Under this type, the mineral rights' owner reserves a specific fraction or percentage of the royalty interest. For example, if a lease agreement involves a 20% royalty interest, the owner may reserve 1/8 (12.5%) of the royalty interest, resulting in the lessee receiving 87.5% while the owner retains 12.5%. 2. Fixed Overriding Royalty Interest: In this type, the mineral rights' owner reserves a fixed amount of royalty interest, usually stated as a specified number of barrels or cubic feet of hydrocarbons per day. For instance, if the lease agreement allows a production of 1,000 barrels of oil per day, the owner may reserve 100 barrels per day as an overriding royalty interest, leaving the lessee with 900 barrels per day. These two types of Arkansas Reservation of Overriding Royalty Interest provide flexibility for mineral rights owners to tailor their royalty preservation based on their specific needs and expectations. It should be noted that the percentage or amount reserved is negotiable between the parties involved and can vary depending on the market conditions, the value of the mineral resource, and the specific terms of the lease or conveyance agreement. In conclusion, the Arkansas Reservation of Overriding Royalty Interest is a crucial provision in the oil and gas industry, allowing the original mineral rights owner to retain a portion of the royalty interest when transferring or leasing their rights. By reserving either a fractional or fixed royalty interest, the owner ensures a continuous stream of revenue even after selling or leasing the rights to a third party. This provides both stability and financial security for the mineral rights' owner.
