A California Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option is a legal agreement commonly used in the oil and gas industry. This contract allows a party to transfer their overriding royalty interest (ORRIS) in an oil or gas lease to another party, who has the option to convert it into a working interest. The ORRIS is a type of royalty interest that is paid out of the working interest's production revenue, usually specified as a percentage. It entitles the owner to receive a share of the production proceeds without having to bear the costs associated with the exploration, drilling, and operation of the lease. In California, different types of Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option may exist based on specific terms and conditions outlined in the agreement. These variations can include factors such as the percentage of ORRIS being assigned, the duration of the assignment, and options for conversion into a working interest. This assignment provides an attractive opportunity to assignors seeking to transfer their ORRIS with the potential benefit of an assignee converting it into a working interest. From the perspective of the assignee, it offers flexibility by allowing them to choose whether they want to retain the ORRIS or convert it into a working interest based on their strategic preferences. Investors or companies involved in oil and gas development in California find this type of agreement advantageous as it facilitates the transfer of ORRIS between parties while offering the potential for increased participation in the lease. By converting the ORRIS into a working interest, the assignee gains the ability to actively participate in drilling operations, decision-making processes, and the potential for a higher return on investment. It is important for parties entering into a California Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option to clearly define the terms and conditions in the agreement. This can include provisions relating to the conversion process, any associated costs, obligations, or responsibilities, as well as any legal considerations unique to California's oil and gas laws and regulations. In summary, a California Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option is a contractual arrangement that allows for the transfer of ORRIS in an oil or gas lease, with the added option for the assignee to convert it into a working interest if desired. This flexible agreement presents opportunities for both parties involved, offering potential benefits such as increased participation and potentially higher returns on investment in the oil and gas industry in California.
California Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option
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Overriding Royalty Interest Conveyance means an assignment, in form and substance acceptable to Lender, pursuant to which Borrower grants in favor of Lender an overriding royalty interest equal to six and one-fourth percent (6.25%) of Hydrocarbons produced, saved and sold or used off the premises of the relevant Lease, ...
If at any time Assignee desires to transfer or dispose of all or any portion of the Overriding Royalty Interest, Assignee must first give to Assignor written notice thereof stating: (a) the amount of the Overriding Royalty Interest offered by Assignee; (b) the form of consideration (which shall be either cash or a ...
There are three main types of royalty interests: 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.
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
Overriding Royalty Interest (ORRI) 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.
What Determines the Value of an Overriding Royalty Interest? Mineral interest location. One in a shale basin with high production is worth more. Producing oil and gas wells. Wells currently producing are valued more. ... Production reserves and levels. ... Prices.
Overriding Royalty Interest: A given interest severed out of the record title interest or lessee's share of the oil, and not charged with any of the cost or expense of developing or operation. The interest provides no control over the operations of the lease, only revenue from lease production.