This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the “standard” lease form.
The Michigan Reservation of Additional Interests in Production (RIO or RAI) refers to a legal provision that allows certain parties to reserve additional interests in the production of oil and gas from a particular property or lease in the state of Michigan. This provision is often included in oil and gas leases to protect the interests of different stakeholders involved in the production process. When a Michigan RIO is enacted, it grants the party holding the reservation the right to receive a share of the oil and gas production from the property or lease, in addition to the usual leasehold interest. These additional interests are typically laid out in the lease agreement and can vary depending on the specific terms negotiated between the parties involved. The purpose of the Michigan RIO is to provide a mechanism for sharing the production revenues equitably among multiple stakeholders or to incentivize specific parties to participate in the exploration, development, or financing of the oil and gas project. It can serve as a means to protect the rights of landowners, mineral rights holders, or other parties who have a vested interest in the property's production potential. There are various types of Michigan RIO that may be used depending on the circumstances and negotiations involved. Some common types include: 1. Overriding Royalty Interest (ORRIS): This type of reservation entitles the holder to a fixed percentage of the oil and gas production, often free of any costs associated with exploration and production. It is commonly used to compensate mineral rights owners or landowners who have severed their mineral rights from their surface rights. 2. Working Interest (WI): A working interest reservation grants the holder a share of both the revenue and the expenses related to the oil and gas production from the property. The holder is responsible for their proportionate share of drilling, development, and operational costs. 3. Carried Interest: In this type of RIO, one party (often an investor or financier) bears the costs of exploration and development on behalf of another party, in exchange for an overriding royalty or working interest. The carrying party recoups its costs from the revenue generated by the production before sharing it with the carried party. It is important to note that the specifics of a Michigan RIO can vary greatly depending on the particular lease agreement and negotiations between the parties involved. These reservations of additional interests in production are crucial in ensuring fair compensation and facilitating collaboration among different stakeholders in the oil and gas industry within Michigan.
