Illinois Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option is a legal document that outlines the transfer of a royalty interest in an oil and gas lease to another party, known as the assignee. This assignment grants the assignee the right to receive a portion of the profits generated from the lease, known as the overriding royalty interest (ORRIS), and also provides them with the option to convert this interest into a working interest (WI) at their discretion. The primary purpose of this type of assignment is to provide the assignee with flexibility and the potential for greater returns on their investment. By initially receiving an ORRIS, the assignee can enjoy a share of the revenues generated from the lease without assuming the operating costs and responsibilities associated with a working interest. However, if the assignee believes that assuming a working interest would be more profitable in the long run, they have the option to convert their ORRIS into a WI. There are different variations of Illinois Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option, depending on the specific terms and conditions agreed upon by the parties involved. Some of these variations may include: 1. Percentage of Convertibility: This specifies the percentage of the overriding royalty interest that can be converted into a working interest in the assignee. It can range from a partial conversion to a full conversion, depending on the negotiating power of the assignee and the agreement reached. 2. Conversion Terms: This section of the assignment outlines the terms and conditions for converting the overriding royalty interest to a working interest. It may include specifics such as the timeline for exercising the conversion option, the method for calculating the assignee's working interest, and any additional considerations for the conversion process. 3. Consideration: The assignment may also address the consideration provided by the assignee in exchange for the overriding royalty interest and the option to convert. This consideration can take various forms, such as a lump-sum payment, future installment payments, or a combination of both. 4. Responsibilities and Liabilities: The assignment typically clarifies the responsibilities and liabilities associated with both the ORRIS and the WI. It distinguishes the rights and obligations of an overriding royalty interest holder from those of a working interest owner, ensuring that each party understands their respective roles and legal obligations. In summary, the Illinois Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option is a legal document that allows for the transfer of an ORRIS to an assignee, granting them the right to receive a portion of the profits generated by an oil and gas lease. It also provides the assignee with the flexibility to convert their ORRIS into a WI, potentially increasing their investment returns. The specific terms and conditions of this assignment can vary, depending on the negotiation between the parties involved.
Illinois 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, ...
To calculate the number of net royalty acres I'm selling, I use this formula: [acres in tract] X [% of minerals owned] X 8 X [royalty interest reserved in lease] X [fraction of royalty interest being sold]. 640 acres X 25% X 8 X 1/4 X 1/2 = 160 net royalty acres.
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.
A gross overriding royalty entitles the owner to a share of the market price of the mined product as at the time they are available to be taken less any costs incurred by the operator to bring the product to the point of sale.
You may convey overriding royalty interest on either an Assignment of Record Title Interest (Form 3000-3), a Transfer of Operating Rights (Form 3000-3a), or on a private assignment. We only require filing of one signed copy per assignment plus a nonrefundable filing fee found at 43 CFR 3000.12.
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
An overriding royalty interest (ORRI) is an interest carved out of a working interest. It is: A percentage of gross production that is not charged with any expenses of exploring, developing, producing, and operating a well.