A Utah Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option is a legal document that outlines the transfer of ownership and rights associated with an overriding royalty interest (ORRIS) in an oil and gas lease. This type of assignment allows the assignee to convert their ORRIS into a working interest (WI) at their discretion, providing them with the opportunity to directly participate in the exploration, production, and revenue generation from the oil and gas lease. An overriding royalty interest is a share of the proceeds from the production of oil and gas from a lease. It is usually retained by the lessor or a separate third party investor and is not burdened by the costs and responsibilities associated with exploration and operations. On the other hand, a working interest holder bears the financial and operational obligations and receives a share of the revenues proportionate to their WI percentage. The Utah Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option gives the assignee the flexibility to convert their ORRIS into a WI, thereby assuming a more active role in the lease's operations. This conversion can be triggered by the assignee when they believe that actively participating in exploration and production activities will yield higher returns or when they see potential for mitigating risks associated with the lease. By opting for this type of assignment, the assignee gains the ability to share in the profits and have direct control over operational decisions such as drilling, completion, and marketing strategies. They also become responsible for shouldering the financial burden of these activities, including expenses incurred during drilling, leasing, equipment, and maintenance. In essence, the assignee converts their interest from a passive revenue stream to an active business interest, enabling them to influence the lease's productivity and profitability. It is important to note that there may be variations of the Utah Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option, depending on the specific terms negotiated between the assignor and assignee. These variations may include provisions for royalty rates, WI percentages, diversionary interests, and any other terms deemed necessary to protect the interests of both parties. In conclusion, the Utah Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option is a legal instrument that grants the assignee the right to convert their ORRIS into a WI, giving them the opportunity to actively participate in and potentially benefit from the operations and revenues generated from the oil and gas lease. This type of assignment provides flexibility for the assignee to adapt their ownership interest based on market conditions and their assessment of potential returns.
Utah Assignment of Overriding Royalty Interest Convertible to A Working Interest At Assignee's Option
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FAQ
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, ...
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.
Calculating Overriding Royalty Interest An ORRI is a straight percentage. For example, a 2% override would appear on the royalty statement as 0.02 interest in the proceeds from the sale of the leased hydrocarbons.
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.
If at any time Assignee desires to transfer or dispose of all or any portion of the Overriding Royalty Interest, Assignee must first give to Assignor written notice thereof stating: (a) the amount of the Overriding Royalty Interest offered by Assignee; (b) the form of consideration (which shall be either cash or a ...
Working Interest (WI) Value ? Since the overriding royalty interest (ORRI) is a portion of the working interest, the WI value is the major determinant of the value of overriding mineral rights. The WI owner incurs all of the costs associated with exploration and development activity.
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.