Title: Utah Assignment of Overriding Royalty Interest Limited As to Depth — Explained Description: In the realm of oil and gas exploration, the Utah Assignment of Overriding Royalty Interest Limited as to Depth plays a crucial role. This detailed description will provide an in-depth understanding of what this assignment entails, highlighting its significance and types. Keywords: Utah Assignment, Overriding Royalty Interest, Limited As to Depth, oil and gas exploration, significance, types 1. Definition: The Utah Assignment of Overriding Royalty Interest Limited as to Depth refers to a legal agreement between parties involved in oil and gas exploration. This assignment allows the transfer of certain rights related to the extraction and production of oil and gas resources under specific depth conditions. 2. Significance: By granting overriding royalty interest, this assignment empowers the assignee to receive a portion of the revenue generated from oil and gas production, overriding the net profits or royalties received by the original interest holder. The limited depth aspect specifies the range within which this overriding interest applies. 3. Types of Utah Assignment of Overriding Royalty Interest Limited as to Depth: a. Vertical Limitations: This type of assignment imposes restrictions based on vertical depth measurements, designating specific depths from which the overriding royalty interest is granted. For instance, an assignment may limit the interest to depths between 5,000 feet and 10,000 feet. b. Depth and Formation Limitations: Unlike the vertical limitations, depth and formation limitations encompass both depth measurements and particular rock formations. This type restricts the overriding royalty interest to specific depths as well as particular formations identified as productive or valuable. c. Geographic Location Limitations: In some instances, the assignment may restrict the overriding royalty interest based on certain geographic locations. This allows the assignee to benefit solely from oil and gas production occurring within specific coordinates or boundaries. d. Combination of Limitations: Assignments can also combine different limitations to create a comprehensive framework. For example, a single assignment can restrict the overriding royalty interest to depths between 2,000 and 5,000 feet within a defined geographic area. 4. Procedure: To execute a Utah Assignment of Overriding Royalty Interest Limited as to Depth, interested parties must draft a formal agreement outlining the terms and conditions, including the specific depth limitations. Legal experts are often consulted to ensure compliance with relevant laws and regulations. In conclusion, the Utah Assignment of Overriding Royalty Interest Limited as to Depth encompasses the transfer of rights to receive a portion of the revenue from oil and gas production, restricted within specific depth limits. Understanding the types and nuances of these assignments is crucial for parties involved in oil and gas exploration and production.
Utah Assignment of Overriding Royalty Interest Limited As to Depth
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How to fill out Assignment Of Overriding Royalty Interest Limited As To Depth?
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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 ...
However, unlike royalty and working interests, an overriding royalty interest cannot be fractionalized unlike royalty and working interests. The ORRI is a non-possessory, undivided right to a share of the oil and gas production, but it excludes the production costs of the mineral lease.
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.
Royalty interest in the oil and gas industry refers to ownership of a portion of a resource or the revenue it produces. A company or person that owns a royalty interest does not bear any operational costs needed to produce the resource, yet they still own a portion of the resource or revenue it produces.
Essentially, NPRI is the royalty severed from minerals just as minerals are severed from the surface interest. Unlike mineral owners, non-participating royalties do not have executive rights in lease negotiations, leasing incentives, or rental payments. They just receive the actual production proceeds.
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.
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.
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
