Keywords: Virginia Assignment of Overriding Royalty Interest, Proportionate Reduction, Oil and Gas Leases, Mineral Rights, Royalty Payments, Landowners, Producers. Description: The Virginia Assignment of Overriding Royalty Interest with Proportionate Reduction is a legal instrument used in the state of Virginia to transfer and assign the rights to receive overriding royalty interest (ORRIS) from one party to another. This agreement is commonly utilized in the oil and gas industry, particularly in relation to oil and gas leases. When a landowner enters into an oil and gas lease agreement with a producer, they grant the producer the right to explore, extract, and produce oil and gas resources on their property. In return, the landowner is entitled to receive a royalty percentage of the proceeds generated from the production and sale of oil and gas. The assigned ORRIS provides a mechanism for landowners to further benefit from these leases by transferring a portion of their royalty interest to a third-party assignee. The Virginia Assignment of Overriding Royalty Interest with Proportionate Reduction outlines the terms and conditions under which the assignment takes place. It includes details such as the effective date, the parties involved, and the description of the oil and gas lease. The agreement also specifies the percentage of the overriding royalty interest being assigned and the consideration provided by the assignee to the assignor. The clause of "Proportionate Reduction" is an integral part of this agreement. It states that if the producer receives less revenue from the leased property due to any reason, such as downturns in oil prices or a decrease in production, the overriding royalty interest will be proportionally reduced. This provision ensures that the assignee shares both the profits and the risks associated with the oil and gas lease. Types of Virginia Assignment of Overriding Royalty Interest with Proportionate Reduction may include variations based on the specific lease terms or assignment conditions. For instance, an assignment may feature additional provisions for determining the proportionate reduction in case the leased property undergoes substantial changes, such as mergers, acquisitions, or lease expirations. Additionally, assignments might address certain circumstances when the ORRIS is automatically terminated or reassigned to the original assignor. In summary, the Virginia Assignment of Overriding Royalty Interest with Proportionate Reduction is a legal agreement that permits landowners to transfer a portion of their royalty interest to a third party. It enables landowners to benefit from their oil and gas leases while allowing assignees to share in the profits and risks of the lease. The inclusion of a proportionate reduction clause ensures fairness in case of revenue fluctuations. Landowners, producers, and assignees often utilize various types of assignments to tailor the terms based on their individual circumstances and needs.
Virginia Assignment of Overriding Royalty Interest with Proportionate Reduction
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FAQ
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.
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.
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.
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.
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, ...
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
You may convey overriding royalty interest on either an Assignment of Record Title Interest (Form 3000-3), a Transfer of Operating Rights (Form 3000-3a), or on a private assignment. We only require filing of one signed copy per assignment plus a nonrefundable filing fee found at 43 CFR 3000.12.
