Title: Exploring the New Mexico Assignment of Overriding Royalty Interest For A Term of Years Introduction: The New Mexico Assignment of Overriding Royalty Interest (ORRIS) for a Term of Years is a crucial legal instrument used in the oil and gas industry. This assignment allows mineral rights owners to transfer or assign their ORRIS to another party for a specific duration. In this article, we will delve into the details of this assignment and shed light on its different types. 1. Understanding the New Mexico Assignment of Overriding Royalty Interest: The Assignment of Overriding Royalty Interest in New Mexico refers to the transfer of a specific portion or interest in the oil or gas present on a particular property. ORRIS grants the assignee the right to receive revenue from the property's production, typically without bearing the costs of extraction or development. 2. Key Components and Provisions: a. Granter and Grantee: The assignment involves the transfer of the ORRIS from the granter (original owner) to the grantee (new owner). b. Royalty Interest Percentage: The assignment specifies the percentage of the ORRIS being transferred. c. Valuation and Consideration: The assignment states the monetary value or consideration exchanged for the ORRIS transfer. d. Term of Years: The assignment outlines the duration for which the ORRIS is being assigned, commonly referred to as the "Term of Years." 3. Types of New Mexico Assignment of Overriding Royalty Interest for a Term of Years: a. Fixed-Term Assignment: This type involves the transfer of ORRIS from the granter to the grantee for a specific and predetermined duration, after which the ORRIS reverts to the granter. b. Floating-Term Assignment: In this type, the duration of the assignment is contingent upon the occurrence of a specific event or condition, typically related to production levels or revenue thresholds. c. Renewable Assignment: This variation allows the grantee to renew the assignment for an additional term or terms if certain conditions, such as maintaining production levels, continue to be met. 4. Importance and Benefits: a. Immediate Cash Flows: The New Mexico Assignment of Overriding Royalty Interest allows mineral rights owners to unlock the value of their future revenue streams by receiving immediate cash payments in exchange for the assignment. b. Risk Mitigation: By transferring the ORRIS, the original owner minimizes the risks associated with fluctuating market conditions, operational expenses, and regulatory compliance. c. Portfolio Diversification: Assigning ORRIS offers investors an opportunity to diversify their energy portfolios by acquiring interests in multiple properties and operators. Conclusion: The New Mexico Assignment of Overriding Royalty Interest For A Term of Years is a contractual agreement enabling the transfer of ORRIS from one party to another for a specified duration. Its various types, such as fixed-term, floating-term, and renewable assignments, provide flexibility to both mineral rights owners and assignees. Understanding the details of this assignment is crucial for anyone involved in the oil and gas industry, as it offers substantial financial benefits and risk mitigation opportunities.
New Mexico Assignment of Overriding Royalty Interest For A Term of Years
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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.
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.
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.
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, ...
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
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.
