This provision provides for the assignor to except from this assignment and reserve an overriding royalty interest of all oil, gas, casinghead gas, and other minerals that may be produced from the lands under the terms of the Leases that are the subject of this assignment.
The Arizona Reservation of Overriding Royalty Interest is a legal concept that represents a specific type of oil and gas interest found in Arizona. It grants the holder a right to receive a percentage of the gross production from a specific lease or well, without the ownership of the mineral rights. An Arizona Reservation of Overriding Royalty Interest is created when the owner of the mineral rights reserves a portion of the royalty interest to a third party, usually in exchange for funding or to incentivize exploration and development. This means that even though the mineral rights' owner receives a royalty payment for the extraction of oil and gas, a portion of that payment is diverted to the holder of the overriding royalty interest. There are different types of Arizona Reservation of Overriding Royalty Interests, including the following: 1. Fixed Overriding Royalty Interest: In this type, the overriding royalty interest is set at a fixed percentage that remains constant regardless of the production levels or monetary values. 2. Floating Overriding Royalty Interest: Unlike the fixed overriding royalty interest, the floating interest fluctuates based on the performance of the lease or well. It is typically calculated as a percentage of the gross production or gross revenue from the leased area. 3. Term Overriding Royalty Interest: A term overriding royalty interest has a defined duration or term. It may expire after a specific period or once certain conditions are met, such as reaching a predetermined production threshold or a specific financial milestone. 4. Convertible Overriding Royalty Interest: This type of overriding royalty interest offers the holder the option to convert it into a different type of interest, such as a working interest or a mineral interest, under specified conditions stated in the agreement. 5. Nonparticipating Overriding Royalty Interest: When an agreement involves a nonparticipating overriding royalty interest, the holder does not have the right to participate in the operations or decision-making processes of the lease or well. They only receive a portion of the royalties from production. It is important to note that the specifics of Arizona Reservation of Overriding Royalty Interests may vary depending on the agreements between the parties involved and the particular circumstances of the oil and gas lease.
