Kansas Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced is a legal agreement that allows an individual or entity to transfer their overriding royalty interest (ORRIS) in an oil and gas property located in Kansas. This assignment becomes effective once the property starts generating revenue, commonly referred to as "payout." The Kansas Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced agreement is specifically designed for situations where the payout is determined by the volume of oil produced. This means that the assignor (the party transferring the ORRIS) will receive payment based on the actual amount of oil extracted from the property. There are different types of Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced in Kansas, including: 1. Fixed Overriding Royalty Interest Assignment: This type of assignment specifies a fixed percentage of the oil production volume as the payout. For example, if the assigned ORRIS is 3%, the assignor will receive 3% of the total amount of oil produced from the property. 2. Differential Overriding Royalty Interest Assignment: In this case, the assignor's payout percentage varies based on the volume of oil produced. For instance, if the oil production is below a certain threshold, the assignor may receive a higher percentage. However, if the volume exceeds that threshold, the percentage may decrease. 3. Graduated Overriding Royalty Interest Assignment: Under this type of assignment, the assignor's payout percentage gradually increases or decreases based on predetermined production milestones. For example, the initial payout percentage may be 1%, but it can increase to 2% when the production reaches a specific threshold. The Kansas Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced offers flexibility to both assignors and assignees, allowing them to negotiate favorable terms based on their specific needs and goals. It provides a mechanism to align the assignor's compensation with the performance of the oil production, ensuring a fair distribution of revenue. It is essential for all parties involved to thoroughly review and understand the terms and conditions of the assignment agreement, including the specific calculation method for determining payout based on the volume of oil produced. Seeking legal advice is crucial to ensure compliance with relevant laws and regulations and to protect the interests of all parties involved in the transaction.
Kansas Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced
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FAQ
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.
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.
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.
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.
Royalty interest in the oil and gas industry refers to ownership of a portion of a resource or the revenue it produces. A company or person that owns a royalty interest does not bear any operational costs needed to produce the resource, yet they still own a portion of the resource or revenue it produces.
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.
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.