Georgia Declaration of Election to Convert Overriding Royalty Interest to Working Interest

State:
Multi-State
Control #:
US-OG-312
Format:
Word; 
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Description

This form is used when, as a result of continuous production from the Lease and Lands, payout, as defined in an Assignment, has occurred, and Declarant is entitled to elect to convert the Override to a Working Interest, as provided for in the Assignment.

A Georgia Declaration of Election to Convert Overriding Royalty Interest to Working Interest is a legal document that allows a party to convert their overriding royalty interest (ORRIS) into a working interest (WI) in the oil and gas industry. This conversion involves a change in the ownership structure and potential benefits for the party involved. The Georgia Declaration of Election to Convert Overriding Royalty Interest to Working Interest is a significant decision for individuals or entities holding an ORRIS because it allows them to transition from a passive interest holder to an active participant in the exploration, development, and production of oil and gas resources. By converting an ORRIS to a WI, the party gains more control over decision-making processes related to the oil and gas operations. They obtain the right to participate in drilling programs, enjoy the benefits of increased revenue streams, and have a direct involvement in the management and decision-making aspects of the project. Through this declaration, the party elects to change their ownership interest from a non-operating ORRIS to an operating WI. However, it's important to note that the specific terms and conditions of the conversion may differ depending on the contractual agreements and provisions outlined in the original overriding royalty agreement. Different types of Georgia Declarations of Election to Convert Overriding Royalty Interest to Working Interest may include: 1. Standard Election to Convert: This is the most common type, where a party simply elects to convert their ORRIS to a WI by submitting the declaration to the relevant parties involved in the oil and gas project. The conversion is subject to the terms and conditions agreed upon in the original overriding royalty agreement. 2. Convertible ORRIS to WI: Some overriding royalty agreements may have specific clauses allowing holders to convert their ORRIS to a WI at a predetermined stage or event. In this case, the declaration serves as the formal notice of exercising that conversion option. 3. Conditional Conversion: Occasionally, parties may include conditions or prerequisites for the conversion, such as achieving a certain production threshold or meeting specific financial obligations. This type of declaration would outline the conditions and provide evidence of fulfillment before the conversion can take effect. Overall, a Georgia Declaration of Election to Convert Overriding Royalty Interest to Working Interest provides an opportunity for individuals or entities to actively participate in the development of oil and gas resources, allowing them to potentially maximize their returns and have a more significant role in the decision-making processes surrounding the project.

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FAQ

Oil and gas interests are interests in real property and thereby have the same attributes as other real property such as a home or a ranch. Although the ownership of oil and gas interests can take many forms, courts commonly analogize the ownership of oil and gas interests to a bundle of sticks.

Working Interest (WI) Value ? Since the overriding royalty interest (ORRI) is a portion of the working interest, the WI value is the major determinant of the value of overriding mineral rights. The WI owner incurs all of the costs associated with exploration and development activity.

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.

The definition of assignment in real estate is the sale, transfer, or conveyance of a whole property ownership/rights or part of it to another party. The term in the oil and gas industry is used for sale, transfer, or conveyance of working interest, lease, royalty, overriding royalty interest, or net profit interest.

Net Revenue Interest is the portion of an oil and gas leaseholder's interest in production that they are entitled to receive as part of their lease. The amount is calculated after deducting all royalty payments, production costs, and other fees.

An assignment of oil and gas lease is a contractual agreement between a landowner and an oil or gas company in which the company gains the right to explore for, develop, and produce oil and gas from the property.

A percentage of ownership in an oil and gas lease granting its owner the right to explore, drill and produce oil and gas from a tract of property. Working interest owners are obligated to pay a corresponding percentage of the cost of leasing, drilling, producing and operating a well or unit.

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, ...

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Georgia Declaration of Election to Convert Overriding Royalty Interest to Working Interest