This form is used when an Assignor assigns, transfers, and conveys to Assignee an overriding royalty interest in the Lease and all of the oil and gas produced, saved and marketed from the Lease, out of the interest owned by Assignor, with proportionate reduction (the Override ).
Puerto Rico Assignment of Overriding Royalty Interest for Single Lease — Proportionate Reduction: Detailed Description and Types In the realm of oil and gas leasing, a Puerto Rico Assignment of Overriding Royalty Interest for Single Lease with the provision of proportionate reduction is a vital legal agreement that determines the distribution of royalties among different parties involved in the exploration and production of natural resources. This document empowers oil and gas operators or leaseholders in Puerto Rico to assign a portion of their overriding royalty interest (ORRIS) to another party under specific conditions, while ensuring fairness and accountability in royalty allocations. The assignment of overriding royalty interest allows a third party to earn a share of the revenues generated from the sale or production of oil, gas, or other hydrocarbon resources obtained under a single lease in Puerto Rico. The proportionate reduction aspect ensures that royalties are proportionally adjusted based on the participating parties' assigned interest. There are various types of Puerto Rico Assignment of Overriding Royalty Interest for Single Lease — Proportionate Reduction, including: 1. Traditional Proportionate Reduction: This type of assignment applies a uniform percentage reduction to all parties involved proportionate to their assigned ORRIS. For instance, if Party A has a 50% ORRIS assigned, their royalties will be reduced by 50% of the proportionate reduction. 2. Differential Proportionate Reduction: In this variation, the proportionate reduction calculates different percentages of reduction based on the assigned ORRIS. High-value Orris may have a smaller proportionate reduction percentage, ensuring a fair distribution of royalty obligations. 3. Variable Proportionate Reduction: This type of assignment allows for a flexible proportionate reduction based on specific factors, such as production volumes, commodity prices, or other predetermined criteria. It enables parties to customize the allocation of royalties based on unique circumstances. 4. Time-Based Proportionate Reduction: This variation involves a pre-determined reduction in ORRIS percentages over time. For instance, parties involved might agree on gradually reducing their assigned Orris, resulting in a corresponding reduction in royalties. Regardless of the specific type, the Puerto Rico Assignment of Overriding Royalty Interest for Single Lease — Proportionate Reduction serves as an essential legal instrument for regulating the allocation of rewards derived from hydrocarbon exploration and production activities. It ensures that all parties with an assigned ORRIS receive a fair proportion of the royalties generated, considering their contractual agreements and the overall performance of the lease. In conclusion, a Puerto Rico Assignment of Overriding Royalty Interest for Single Lease with a provision for proportionate reduction provides a framework for equitable distribution of royalties among parties involved in oil and gas exploration. The outlined types demonstrate the flexibility and adaptability of these assignments, allowing for tailored solutions according to the specific circumstances of the lease.
