Title: Arizona Assignment of Overriding Royalty Interest (No Proportionate Reduction): Explained with Key Details & Types Introduction: The Arizona Assignment of Overriding Royalty Interest (No Proportionate Reduction) refers to a legal agreement in the oil and gas industry where the owner of the mineral rights assigns a portion of their overriding royalty interest (ORRIS) to another party without reducing their proportionate share. This type of assignment plays a crucial role in the acquisition and development of oil and gas properties in Arizona. Key details and components: 1. Overriding Royalty Interest (ORRIS): An overriding royalty interest is a non-operating interest in oil and gas properties that entitles the owner to receive a specific percentage of the production revenue, known as the overriding royalty, without contributing to the associated costs or risks. 2. Assignment: This refers to the transfer of ownership or rights from one party to another. In the context of the Arizona Assignment of Overriding Royalty Interest, it involves the transfer of a portion of the ORRIS to another party. 3. No Proportionate Reduction: Unlike some other types of assignments, this agreement ensures that the assigning party's overall ownership of the mineral rights remains unchanged. In other words, their proportionate share of the revenue and any other benefits associated with the royalty interest does not diminish due to the assignment. 4. Parties Involved: The Arizona Assignment of Overriding Royalty Interest typically involves two main parties—the assignor and the assignee. The assignor is the owner of the mineral rights who transfers a portion of their ORRIS, while the assignee is the party acquiring the assigned interest. Types of Arizona Assignment of Overriding Royalty Interest (No Proportionate Reduction): 1. Partial Assignment: This type of assignment entails the transfer of a specific percentage or fraction of the assignor's ORRIS to the assignee. The assignee will then be entitled to receive a proportionate share of the overriding royalty. 2. Temporary Assignment: In certain cases, an ORRIS assignment may be temporary, where the assignee holds the overriding royalty interest for a specific period or until certain conditions are met. Upon expiration of the assignment or occurrence of the specified condition, the ORRIS reverts to the assignor. 3. Assignment of Specific Wells or Areas: This type of assignment focuses on assigning the overriding royalty interest of specific wells or designated areas instead of transferring a percentage or fraction. It allows the assignor to retain full ownership of the remaining ORRIS outside the assigned wells or areas. Conclusion: The Arizona Assignment of Overriding Royalty Interest (No Proportionate Reduction) serves as an essential tool in the oil and gas industry, facilitating the transfer of a portion of the overriding royalty interest without reducing the assignor's overall proportionate benefits. Various types of ORRIS assignments, including partial assignments, temporary assignments, and assignments of specific wells or areas, cater to different needs and circumstances in the industry. Clear understanding and effective implementation of these agreements are vital for investors and stakeholders involved in Arizona's oil and gas ventures.
Arizona Assignment of Overriding Royalty Interest (No Proportionate Reduction)
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The ORRI lease holder's proportional share is based on the WI revenues after the royalty mineral owner receives their share. The RI holder's share of the working interest is typically 12.5?25 percent of the mineral reserves' revenue under the WI.
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.
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.
Overriding Royalty Interest (ORRI) A royalty in excess of the royalty provided in the Oil & Gas Lease. Usually, an override is added during an intervening assignment. ORRIs are created out of the working interest in a property and do not affect mineral owners.
ORRI means overriding royalty interest, or interest in oil and gas produced at the surface, free of the expense of Production, and in addition to the usual land owner's royalty reserved to the lessor in an oil and gas lease.
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 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.
Like Royalty Interest (RI), an ORRI ends when the oil and gas lease ends. ORRI and MI/RI (mineral/royalty) interests in the same tract of land may be valued differently. Unlike the mineral interest, which lasts in perpetuity, overriding royalties expire with the lease.