Title: Understanding the Oklahoma Assignment of Overriding Royalty Interest in Working Interest Owner, Single Lease, Stated Percentage Introduction: In the oil and gas industry, the Oklahoma Assignment of Overriding Royalty Interest in Working Interest Owner, Single Lease, Stated Percentage plays a crucial role in defining ownership rights and financial obligations. This article aims to provide a detailed description of this specific type of assignment, including its implications, benefits, and potential variations. Keywords: Oklahoma, Assignment of Overriding Royalty Interest, Working Interest Owner, Single Lease, Stated Percentage 1. What is an Oklahoma Assignment of Overriding Royalty Interest? An Oklahoma Assignment of Overriding Royalty Interest refers to the transfer of a portion of royalty ownership from a working interest owner to another party. It is a legally binding document that outlines the terms and conditions of this transfer within the context of the state's oil and gas operations. 2. Understanding the Working Interest Owner: The working interest owner is typically an individual or company who holds the rights to explore, drill, develop, produce, and operate an oil or gas well. They have the financial responsibility for exploration and production costs and, in return, are entitled to a portion of the net profits generated from the production. 3. Overview of a Single Lease: A single lease refers to an agreement between an oil or gas producer, known as the lessee, and the mineral rights' holder, known as the lessor. It grants the lessee exclusive rights to explore and produce hydrocarbons within the defined lease boundaries. 4. Stated Percentage: The 'stated percentage' commonly refers to the specific portion of the overriding royalty interest that is being assigned by the working interest owner. The percentage is often determined based on negotiation and can vary depending on factors like the market conditions, production potential, and royalty obligations. 5. Potential Variations of the Assignment: Different variations of the Oklahoma Assignment of Overriding Royalty Interest in Working Interest Owner, Single Lease, Stated Percentage may include: a) Assignment with Applicable Time Frame: An assignment specifying a fixed term, after which the overriding royalty interest reverts to the initial working interest owner. b) Assignment with Enhanced Royalty Rates: Assignments where the overriding royalty interest percentage is higher than the regular prevailing rates due to specific lease conditions or production expectations. c) Assignment with Specific Restrictions: Assignments that indicate limitations or exclusions on certain activities or subleases associated with the overriding royalty interest. Conclusion: The Oklahoma Assignment of Overriding Royalty Interest in Working Interest Owner, Single Lease, Stated Percentage is a critical aspect of the oil and gas industry in the state. It allows for the transfer of a portion of royalty ownership, ensuring effective collaboration, risk sharing, and financial benefits for all parties involved. Understanding the nuances and potential variations of this assignment is crucial for both working interest owners and potential assignees.
Oklahoma Assignment of Overriding Royalty Interest by Working Interest Owner, Single Lease, Stated Percentage
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FAQ
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.
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.
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
NRA = 40.00 net mineral acres x ([1/5] Lease Royalty Rate / [1/8] Standard Royalty Rate) NRA = 40.00 x (0.20 / 0.125) NRA = 40.00 x 1.60 NRA = 64.00 Net Royalty Acres This mathematical concept can also be used inversely to calculate your net mineral acres in a parcel based on the Net Revenue Interest (NRI) you are ...
If there is an NPRI that exists, you would have to determine the # of net royalty acres by taking your royalty rate and subtracting the NPRI from it and then dividing by 12.5%.
Overriding Royalty Interest (ORRI) 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.
To calculate the NMA, you need the gross number of acres and the percentage of your mineral interest. To complete the calculation, simply multiply the gross acreage by your mineral interest. For example, if you owned 25% interest on the minerals under a 400-acre tract of land, you would have 100 NMA.
