Title: Illinois Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) — Explained Introduction: An Illinois Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) is a legally binding agreement that allows the assignment of a non-producing overriding royalty interest (ORRIS) in a single lease. This type of assignment has significant implications for both parties involved and is governed by Illinois state laws and regulations. This article delves into the details of this peculiar assignment, highlighting its key elements, benefits, and potential variations. Keywords: Illinois assignment, overriding royalty interest, non-producing, single lease, reserves right to pool Key Elements of the Assignment: 1. Overriding Royalty Interest (ORRIS): An ORRIS refers to a share in the proceeds derived from the sale or development of minerals or hydrocarbons, separate from the lessee's working or operating interest. In this assignment, the ORRIS is classified as non-producing, meaning that the minerals or hydrocarbons within the lease are not currently being extracted. 2. Single Lease: The assignment pertains to a specific lease agreement encompassing mineral or hydrocarbon rights. Focusing on a single lease allows for greater clarity in terms of ownership and royalty interest allocation. 3. Right to Pool: The assignment reserves the right to pool, which enables the combining of contiguous leases or tracts of land for the purpose of drilling and extraction. This provision ensures the assigned ORRIS remains in effect even if pooling occurs within the lease. Benefits of an Illinois Assignment of Overriding Royalty Interest: 1. Passive Income Potential: By assigning a non-producing ORRIS, the assignor can generate passive income from potential future production on the leased property without actively participating in the extraction process. 2. Risk Mitigation: Assignors mitigate the financial and operational risks associated with exploration, drilling, and production activities. They only bear the risk of non-extraction but retain the opportunity for future royalties if production resumes. 3. Increased Flexibility: The assignee gains the flexibility to pool the lease with other contiguous tracts, maximizing the chances of productive extraction while maintaining the assigned ORRIS. Different Types of Illinois Assignment of Overriding Royalty Interest: While the core elements of the Illinois Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) remain constant, variations may occur based on specific provisions. Some potential types include: 1. Varying ORRIS Percentage: Assignments may involve different ORRIS percentages, allowing flexibility in negotiating the assigned share of royalties. 2. Term-Based Assignments: Assignors and assignees might agree upon a time-limited assignment, defining a specific duration during which the assignor receives royalty payments. After the term expires, the assignor's rights revert to the original owner. Conclusion: In summary, an Illinois Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) enables parties to leverage non-producing overriding royalty interests and generate passive income potential from future extraction activities. This agreement provides flexibility through the reservation of the right to pool, allowing optimization of production efforts while protecting the assigned ORRIS. By understanding the intricacies and variations of this assignment, both assignors and assignees can make informed decisions regarding their mineral asset investments. Note: It's important to consult a legal professional or landsman before entering into any assignment agreement, as specific provisions and regulations may vary.
Illinois Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool)
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FAQ
An overriding royalty interest (ORRI) is an undivided interest in a mineral lease giving the holder the right to a proportional share (receive revenue) of the sale of oil and gas produced. The ORRI is carved out of the working interest or lease.
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, ...
An overriding royalty interest (ORRI) is an undivided interest in a mineral lease giving the holder the right to a proportional share (receive revenue) of the sale of oil and gas produced. The ORRI is carved out of the working interest or lease.
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.
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.
Calculating Overriding Royalty Interest An ORRI is a straight percentage. For example, a 2% override would appear on the royalty statement as 0.02 interest in the proceeds from the sale of the leased hydrocarbons.
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.
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.
