West Virginia Assignment of Overriding Royalty Interest is a legal contract that involves the transfer of the interest in the royalties from an oil and gas lease in West Virginia. This type of assignment allows the assignee to receive a share of the royalties generated from the production and sale of oil and gas without any proportionate reduction. In West Virginia, there are two main types of Assignment of Overriding Royalty Interest (No Proportionate Reduction): 1. Non-participating Royalty Interest (NPR): This type of assignment grants the assignee a specified percentage of the royalty interest, without giving them any rights to explore or lease the property. The assignee is entitled to receive their share of the royalties, but they do not bear any cost or risk associated with the operations. 2. Overriding Royalty Interest (ORRIS): This type of assignment provides the assignee a share of the royalties from the production without any proportionate reduction. The assignee does not have the right to explore or lease the property, but they receive a percentage of the royalty generated from the lease, usually for a specific duration or until a specified volume of production is reached. The West Virginia Assignment of Overriding Royalty Interest (No Proportionate Reduction) is a crucial document in the oil and gas industry as it allows for the efficient transfer of royalty interests. It provides a means for individuals or companies to participate in the profits generated from oil and gas production without the requirement of engaging in the complexities of exploration and leasing. In summary, the West Virginia Assignment of Overriding Royalty Interest (No Proportionate Reduction) is a legal contract that permits the transfer of royalty interests in West Virginia's oil and gas leases. It includes two main types: Non-participating Royalty Interest (NPR) and Overriding Royalty Interest (ORRIS), each with unique characteristics and benefits. This type of assignment offers opportunities for individuals and companies to participate in the revenue generated by oil and gas production without the need for exploration or leasing efforts.
West Virginia Assignment of Overriding Royalty Interest (No Proportionate Reduction)
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FAQ
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.
An overriding royalty interest (ORRI) is an undivided interest in a mineral lease giving the holder the right to a proportional share (receive revenue) of the sale of oil and gas produced. The ORRI is carved out of the working interest or lease.
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.
A gross overriding royalty entitles the owner to a share of the market price of the mined product as at the time they are available to be taken less any costs incurred by the operator to bring the product to the point of sale.
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 Interests To calculate the ORRI, multiply the gross production revenue by the ORRI interest percentage, and the figure gotten is what the ORRI owner is entitled to.
To calculate the number of net royalty acres I'm selling, I use this formula: [acres in tract] X [% of minerals owned] X 8 X [royalty interest reserved in lease] X [fraction of royalty interest being sold]. 640 acres X 25% X 8 X 1/4 X 1/2 = 160 net royalty acres.