Minnesota Assignment of Overriding Royalty Interest with Proportionate Reduction is a legal document used in the oil and gas industry to transfer the rights to receive overriding royalty payments from one party to another. This type of assignment is specific to the state of Minnesota and includes provisions for proportionate reduction in the assigned interest. In Minnesota, there are two main types of Assignment of Overriding Royalty Interest with Proportionate Reduction: 1. Absolute Assignment: This type of assignment transfers all rights, title, and interest in the overriding royalty interest from the assignor to the assignee. The assignee becomes the new owner of the interest and is entitled to receive all future payments. 2. Partial Assignment: With a partial assignment, the assignor transfers only a portion of their overriding royalty interest to the assignee. This allows the assignor to retain a percentage of the interest while sharing the remaining percentage with the assignee. Both parties are then entitled to receive their respective proportions of future payments. The Minnesota Assignment of Overriding Royalty Interest with Proportionate Reduction typically contains essential clauses to ensure a legally binding agreement: 1. Parties: Identifies the assignor (current holder of the overriding royalty interest) and the assignee (the new owner). 2. Consideration: Specifies the amount or form of consideration provided by the assignee in exchange for the assignment. 3. Description of Interest: Clearly defines the overriding royalty interest being assigned, including any specific wells or leases associated with it. 4. Proportionate Reduction: Outlines how the assignment affects the proportion of the overriding royalty interest held by the assignor and the assignee. This provision ensures that both parties receive their fair share of future payments. 5. Representations and Warranties: Includes statements by the assignor about the validity and ownership of the overriding royalty interest. 6. Governing Law: Specifies that the laws of Minnesota govern the interpretation and enforcement of the assignment. 7. Confidentiality: May include provisions to protect the confidentiality of proprietary information or trade secrets related to the overriding royalty interest. The Minnesota Assignment of Overriding Royalty Interest with Proportionate Reduction provides a mechanism for oil and gas industry stakeholders to transfer their rights and manage their financial interests effectively. Whether through absolute or partial assignment, parties can ensure a fair and legally binding agreement that protects their rights as they navigate the complex world of oil and gas royalties in Minnesota.
Minnesota Assignment of Overriding Royalty Interest with Proportionate Reduction
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FAQ
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.
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
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, ...
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.
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.
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.
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.
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.
