District of Columbia Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced is a legal agreement specific to the District of Columbia that grants ownership rights to a portion of the revenue generated from oil production. This type of assignment is primarily aimed at incentivizing the oil production industry and encouraging investment within the region. The Assignment of Overriding Royalty Interest is a contractual arrangement between the assignor (the current owner of the oil rights) and the assignee (the party receiving the royalty interest). It entails the assignor granting a portion of their royalty interest to the assignee. In this case, the interest is "overriding," meaning it is separate from any existing royalty interests or leases. The effective payout in this assignment occurs only after a specified condition is met, commonly referred to as the "payout" threshold. It means that the assignee will start receiving royalty payments only when the oil production exceeds a predetermined volume, typically based on barrels of oil produced. Until this threshold is met, no payout will be issued. The payout structure is directly tied to the volume of oil produced. This means that as oil production increases, the assignee's royalty payments also increase proportionately. This setup aligns the interests of both the assignor and assignee, as the potential for higher revenue drives further exploration and extraction efforts. It is important to note that there may be variations or specific types of District of Columbia Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced, depending on factors such as specific lease terms, parties involved, or industry regulations. Some additional variations may include: 1. Time-based payout: In this scenario, the payout becomes effective after a specific time period, regardless of the volume of oil produced. This type allows investors to receive revenue even if the oil production is slower than expected. 2. Graduated payout: This variant involves a tiered or graduated payment structure based on different volume thresholds. For example, the assignee may receive a certain percentage of royalty for oil production up to a certain threshold, and a higher percentage for production exceeding that threshold. 3. Cost-recovery payout: Under this type, the assignee receives royalty payments only once the costs associated with exploration and extraction are recouped. This provides some protection to the assignor, ensuring that they recoup their investment before the assignee begins receiving royalties. The District of Columbia Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced serves as a valuable legal tool for facilitating oil production and attracting investment within the District of Columbia. The specific terms and conditions of each assignment will differ based on individual agreements and negotiation between the parties involved.
District of Columbia Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced
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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 ...
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
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.
It is calculated as follows: Volume X Price ? Deductions ? Taxes X Owner Interest = Your Royalty Payment. Whether you are a mineral owner receiving royalty checks or just wanting to know what your minerals are worth, LandGate knows what they are worth and can market your minerals to get you the most money.
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, ...
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.