Correction Assignment of Overriding Royalty Interest Correcting Lease Description
Definition and meaning
The Correction Assignment of Overriding Royalty Interest is a legal document used to rectify discrepancies in earlier assignments of royalty interests regarding oil and gas leases. It serves to ensure the accurate representation of lease descriptions, which may have been incorrectly stated in prior documents.
Key components of the form
This form includes essential information such as:
- Assignor: The individual or entity originally granting the royalty interest.
- Assignee: The recipient of the royalty interest.
- Effective Date: The date when the original assignment was executed.
- Description of Leases: The locations and specifics of the oil and gas leases involved.
- Corrected Description: The accurate details of the lease intended to replace any erroneous information.
How to complete a form
To complete the Correction Assignment of Overriding Royalty Interest, follow these steps:
- Fill in the names and addresses of both the Assignor and Assignee.
- Specify the Effective Date of the original assignment.
- Provide the original description as stated in the previous assignment.
- Clearly indicate the corrected lease description that needs to be applied.
- Have both parties sign and date the document to validate it.
Who should use this form
This form is designed for individuals or entities involved in oil and gas agreements who have previously assigned royalty interests but found the need to amend the lease descriptions due to inaccuracies. It is particularly useful for landowners, operators, and legal representatives managing mineral rights.
Common mistakes to avoid when using this form
When completing the Correction Assignment, be mindful of the following common errors:
- Providing an incorrect Effective Date, which could lead to legal disputes.
- Failing to accurately describe the leases, which can render the correction ineffective.
- Not having both parties sign the document, which is crucial for its validity.
- Neglecting to keep copies of the original and corrected assignments for record-keeping.
What documents you may need alongside this one
To effectively use the Correction Assignment, you may need the following documents:
- The original Assignment of Overriding Royalty Interest.
- Records of lease descriptions from county offices, if available.
- Identification for both Assignor and Assignee for notarization purposes.
Form popularity
FAQ
The value of an overriding royalty interest is simple to calculate since it is a percent of the working interest lease. The ORRI value is based on production on the acreage leased by the working interest.
Overriding Royalty Interest (ORRI) a percentage share of production, or the value derived from production, which is free of all costs of drilling and producing, and is created by the lessee or working interest owner and paid by the lessee or working interest owner.
An overriding royalty interest generally entitles the owner of the interest to a specified share of the oil and gas produced under the terms of the lease. In Texas and in many other oil-producing states, overriding royalty interests are generally treated as interests in real estate.
Net revenue is the amount that is shared among the property owners. To determine net revenue interest, multiply the royalty interest by the owner's shared interest. For example, if you have a 5/16 royalty, your net royalty interest would be 25% multiplied by 5/16, which equals 7.8125% calculated to four decimal places.
A gross overriding royalty can be created on a mine which produces a product like petroleum in that it can be sold without alteration of its basic character.The costs of smelting and refining the gold will reduce the proceeds to the mine owner, a percentage of which will be paid as royalty.
An Assignment of an Oil, Gas and Mineral Lease is a document in which the original Lessee, and or their successors, assign either all or part of their working interest and/or net revenue interest that they own in that lease. This is leasehold interest. You can also assign or reserve interest in wellbores.
An overriding royalty interest is the right to receive revenue from the production of oil and gas from a well. The overriding royalty is carved out of the lessee's (operator's) working interest and entitles its owner to a fraction of production.
