This lease rider form may be used when you are involved in a lease transaction, and have made the decision to utilize the form of Oil and Gas Lease presented to you by the Lessee, and you want to include additional provisions to that Lease form to address specific concerns you may have, or place limitations on the rights granted the Lessee in the “standard” lease form.
The Colorado Reservation of Additional Interests in Production refers to a legal concept in the state of Colorado that allows individuals or entities to reserve a specific interest in the production of minerals or resources on a property. This reservation grants the holder the right to receive a certain percentage of the production proceeds, royalties, or profits from the extraction or utilization of natural resources found on the property. One of the primary purposes of the Colorado Reservation of Additional Interests in Production is to provide a means for mineral rights owners to retain a financial interest in the resources beneath their land, even if they do not have direct control over the production or extraction process. This reservation is often included in contracts, leases, or agreements between the mineral rights owner and the party responsible for the development or operation of the property. Several types of Colorado Reservation of Additional Interests in Production commonly exist: 1. Overriding Royalty Interest (ORRIS): An ORRIS is a percentage of production proceeds or royalties that is reserved by the mineral rights' owner. It is usually fixed and typically applies to a specific mineral or resource. The ORRIS does not involve ownership or control over the property or production operations but entitles the holder to a specific portion of the revenue generated. 2. Net Profits Interest (NPI): NPI is similar to an ORRIS but is calculated based on net profits rather than gross production proceeds. It allows the holder to receive a share of the profits after deducting production costs, operating expenses, and royalties paid to the mineral rights' owner. 3. Working Interest (WI): Unlike Orris and NPS, a working interest is a property ownership interest that includes both the right to a percentage of production proceeds or profits and the responsibility for a proportionate share of operating costs and expenses. The working interest represents an active role in the operation and management of the production activities. In summary, the concept of Colorado Reservation of Additional Interests in Production provides a mechanism for mineral rights owners to retain a financial stake in the extraction or utilization of natural resources on their property. Whether through an ORRIS, NPI, or WI, these reservations allow individuals or entities to benefit from the production proceeds, royalties, or profits generated from the exploitation of the resources.
