Iowa Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced An Iowa Assignment of Overriding Royalty Interest (LORI) to Become Effective At Payout, With Payout Based on Volume of Oil Produced is a legal agreement in the state of Iowa that allows the transfer of a portion of the royalties from an oil well to a third party once the well reaches the payback stage. This type of arrangement is commonly used in the oil and gas industry to attract investors and promote the development of oil fields. Key Features: 1. Royalty Interest: A royalty interest is the right to a portion of the revenue generated from the production and sale of oil from a well. In this context, an overriding royalty interest is a type of royalty that is separate from the working interest, which represents the ownership of the well itself. 2. Assignment: The Iowa Assignment of Overriding Royalty Interest refers to the transfer of ownership of the royalty interest to another party. It is a legal document that outlines the terms and conditions of the transfer. 3. Effective At Payout: The assignment becomes effective once the well reaches the payout stage. Payout refers to the point at which the revenues generated by the well cover the initial investment and operating costs, making it profitable. This provision ensures that the assigning party benefits only when the well starts generating income. 4. Payout Based on Volume of Oil Produced: The amount of royalty paid to the assignee is directly linked to the volume of oil produced by the well. This means that the more oil the well produces, the higher the assigned royalty payments will be. This provision incentivizes investors to support efficient and productive oil operations. Different Types: 1. Fixed Percentage LORI at Payout: Under this type, the assignment sets a fixed percentage of the revenue from oil production that will be paid to the assignee once the payout stage is reached. This percentage remains constant regardless of the volume of oil produced. 2. Sliding Scale LORI at Payout: In this type, the royalty percentage paid to the assignee increases on a sliding scale as the volume of oil produced rises. It provides a graduated payment structure, where the assignee receives a higher percentage for larger production levels. 3. Gross Revenue LORI at Payout: This type of assignment bases the payment on a percentage of the total revenue generated from oil sales. The assignee receives a portion of the gross revenue, which includes the price per barrel multiplied by the volume produced. Overall, an Iowa Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced allows investors and individuals to participate in oil and gas industry profits while mitigating risk. It aligns the interests of the assignor and the assignee, as both parties benefit from increased production and the subsequent increase in revenue.