Kansas Notice of Payout, Election to Convert Interest to Party With Right to Convert An Overriding Royalty Interest to A Working Interest is a legal document that outlines the rights and obligations of parties involved in oil and gas production in the state of Kansas. The Notice of Payout refers to the notification sent by the operator or working interest owner to other interest owners that a well has reached the payout stage. This means that the revenues from the well have exceeded the costs of drilling and completion, and the well is now generating profits. The Notice of Payout is typically accompanied by an Election to Convert Interest. The Election to Convert Interest is a crucial aspect of this document, as it allows the recipient to choose whether they want to convert their interest from an overriding royalty interest (ORRIS) to a working interest (WI). An overriding royalty interest is a non-operating interest that entitles the holder to a percentage of the revenues derived from the well, without incurring any costs. On the other hand, a working interest owner bears the costs of drilling, completion, production, and maintenance, but also receives a proportional share of the revenues. By choosing to convert their ORRIS to a WI, the interest owner becomes more actively involved in the operations of the production. This can provide them with more control over decision-making processes and potentially higher returns if the well continues to perform well. However, it also means they will have to share the associated financial risks and expenses. It's important to note that there might be different types or variations of this Notice of Payout, Election to Convert Interest to Party With Right to Convert An Overriding Royalty Interest to A Working Interest in Kansas, depending on the specific terms and conditions agreed upon by the parties involved. These variations could include different conversion ratios, timelines for the conversion, and other provisions that may be relevant to the agreement. To fully understand the implications and consequences of this document, it is highly recommended consulting with legal professionals experienced in oil and gas law and regulations in Kansas.
Kansas Notice of Payout, Election to Convert Interest to Party With Right to Convert An Overriding Royalty Interest to A Working Interest
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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 agreement is a contract that gives an entity the right to receive revenue from certain productions or sales. The specific type of occurence that royalties are required to be paid on is included in the overriding royalty agreement.
Several factors determine the value of an overriding royalty interest in a working lease. They include: Location ? A mineral interest in high producing shale basins will be more valuable. Producing Wells ? Producing wells are valued higher than non-producing wells.
1. n. [Oil and Gas Business] Ownership in a share of production, paid to an owner who does not share in the right to explore or develop a lease, or receive bonus or rental payments. It is free of the cost of production, and is deducted from the royalty interest.
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.
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.
