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.
Delaware Reservation of Overriding Royalty Interest refers to a legal provision in the oil and gas industry that allows for the reservation of a portion of the royalties from the sale or production of oil and gas. The interest is typically carved out or reserved from the working interest lessee and granted to the lessor or another party. In Delaware, a state known for its rich oil and gas resources, the Reservation of Overriding Royalty Interest is an important aspect of lease agreements. It provides the lessor with a share of the revenues generated from the production of oil and gas, even after the working interest has been assigned to another party. There are several types of Delaware Reservation of Overriding Royalty Interest, which include: 1. Overriding Royalty Interest (ORRIS): This type of reservation grants the lessor a specific percentage of the revenues generated from the lease, often calculated on a gross proceeds basis. The ORRIS is typically associated with a specific lease or well and is not subject to the costs of production. 2. Non-Participating Royalty Interest (NPR): In this scenario, the lessor retains a specific percentage of the royalty interest but does not have the right to participate in the operations or expenses of the well. This type of reservation is often created when selling a property, allowing the seller to keep a portion of the royalties from future production. 3. Overriding Royalty Interest on the Leasehold (OIL): This type of reservation allows the lessor to retain a percentage of the working interest owner's share of the proceeds. The OIL applies to the entire lease instead of a specific well, granting the lessor a share of the revenues from any future development or production on the leased property. 4. Subordination of Royalty Interest: This reservation means that the royalty interest is subject to the payment of certain obligations, such as debts or overriding royalties. The subordination allows the operator to prioritize the payment of these obligations before distributing the remaining royalties. Delaware Reservation of Overriding Royalty Interest is an important consideration for both lessors and lessees in lease negotiations. It allows the lessor to retain a stake in the revenues from oil and gas production, providing an ongoing stream of income. Conversely, the lessee must account for the reservation when calculating their net revenue interest and ensure that the royalty interest is accurately distributed to the lessor.
