Maine Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced

• Category: Oil Gas and Minerals - Assignments
• State: Multi-State
• Control #: US-OG-283
• Format: Word; Rich Text

Description

This form is used by the Assignor to transfer, assign, and convey to Assignee an overriding royalty interest in a Lease, to be effective at payout. Maine Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced: Explained In the oil and gas industry, an Assignment of Overriding Royalty Interest (ORRIS) refers to the rights of an individual or entity to receive a percentage of the revenue generated from the sale of oil and gas produced from a particular well or lease. This article will delve into the details of the specific type of ORRIS agreement that is known as "Maine Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced." The Maine Assignment of Overriding Royalty Interest to Become Effective At Payout involves a contractual agreement between the assignor (usually the working interest owner) and the assignee (the individual/entity acquiring the ORRIS). This type of ORRIS arrangement is unique because it becomes effective only when the payout threshold is reached. The payout threshold is usually determined based on a predetermined amount of revenue or the recovery of certain costs incurred in the drilling and production of the oil well. The pivotal factor that distinguishes the Maine Assignment of Overriding Royalty Interest from other types of ORRIS is the fact that the payout is directly tied to the volume of oil produced. This means that the assignee will receive a predetermined percentage of the revenue generated from the sale of oil and gas, specifically based on the volume of oil produced rather than the sales price or net revenues. By linking the payout to the actual volume of oil produced, the Maine Assignment of Overriding Royalty Interest aligns the interests of both the assignor and the assignee. The assignee benefits directly from increased production levels, as their royalty payments will increase proportionally. On the other hand, the assignor gains by incentivizing the assignee to optimize production techniques and maximize oil recovery to receive higher payouts. It is important to note that the Maine Assignment of Overriding Royalty Interest to Become Effective At Payout can have different variations or subtypes, depending on the specific terms negotiated between the assignor and the assignee: 1. Fixed Percentage Assignment: In this subtype, the assignee is entitled to a set percentage of the revenue based on the volume of oil produced. For example, if the assigned royalty interest is 2% and the assigned well produces 1,000 barrels of oil, the assignee will receive a royalty payment based on 20 barrels (2% of 1,000 barrels). 2. Scaling Percentage Assignment: In this variation, the assignee's royalty percentage increases gradually as the volume of oil production surpasses certain thresholds. For instance, the assignee may receive a 1% royalty for the first 500 barrels produced, 2% for the next 500 barrels, and 3% for anything above that. 3. Step-Up Percentage Assignment: This subtype involves predefined step increases in the assignee's royalty percentage based on specific production milestones. For instance, the assignor and assignee may agree on a 1% royalty for the first 500 barrels, and a 2% royalty for every barrel produced thereafter. In conclusion, the Maine Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced is a type of contractual arrangement wherein an assignee receives a percentage of oil and gas revenues based on the volume of oil produced. This approach creates an incentive for the assignee to focus on maximizing production while providing the assignor with the reassurance of lower upfront costs and the potential for increased oil recovery.

Maine Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced: Explained In the oil and gas industry, an Assignment of Overriding Royalty Interest (ORRIS) refers to the rights of an individual or entity to receive a percentage of the revenue generated from the sale of oil and gas produced from a particular well or lease. This article will delve into the details of the specific type of ORRIS agreement that is known as "Maine Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced." The Maine Assignment of Overriding Royalty Interest to Become Effective At Payout involves a contractual agreement between the assignor (usually the working interest owner) and the assignee (the individual/entity acquiring the ORRIS). This type of ORRIS arrangement is unique because it becomes effective only when the payout threshold is reached. The payout threshold is usually determined based on a predetermined amount of revenue or the recovery of certain costs incurred in the drilling and production of the oil well. The pivotal factor that distinguishes the Maine Assignment of Overriding Royalty Interest from other types of ORRIS is the fact that the payout is directly tied to the volume of oil produced. This means that the assignee will receive a predetermined percentage of the revenue generated from the sale of oil and gas, specifically based on the volume of oil produced rather than the sales price or net revenues. By linking the payout to the actual volume of oil produced, the Maine Assignment of Overriding Royalty Interest aligns the interests of both the assignor and the assignee. The assignee benefits directly from increased production levels, as their royalty payments will increase proportionally. On the other hand, the assignor gains by incentivizing the assignee to optimize production techniques and maximize oil recovery to receive higher payouts. It is important to note that the Maine Assignment of Overriding Royalty Interest to Become Effective At Payout can have different variations or subtypes, depending on the specific terms negotiated between the assignor and the assignee: 1. Fixed Percentage Assignment: In this subtype, the assignee is entitled to a set percentage of the revenue based on the volume of oil produced. For example, if the assigned royalty interest is 2% and the assigned well produces 1,000 barrels of oil, the assignee will receive a royalty payment based on 20 barrels (2% of 1,000 barrels). 2. Scaling Percentage Assignment: In this variation, the assignee's royalty percentage increases gradually as the volume of oil production surpasses certain thresholds. For instance, the assignee may receive a 1% royalty for the first 500 barrels produced, 2% for the next 500 barrels, and 3% for anything above that. 3. Step-Up Percentage Assignment: This subtype involves predefined step increases in the assignee's royalty percentage based on specific production milestones. For instance, the assignor and assignee may agree on a 1% royalty for the first 500 barrels, and a 2% royalty for every barrel produced thereafter. In conclusion, the Maine Assignment of Overriding Royalty Interest to Become Effective At Payout, With Payout Based on Volume of Oil Produced is a type of contractual arrangement wherein an assignee receives a percentage of oil and gas revenues based on the volume of oil produced. This approach creates an incentive for the assignee to focus on maximizing production while providing the assignor with the reassurance of lower upfront costs and the potential for increased oil recovery.