A New Mexico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) is a legal document that transfers a percentage of the overriding royalty interest from one party to another. This assignment is specifically applicable to non-producing properties in New Mexico, where the right to pool multiple leases is reserved. In the oil and gas industry, an overriding royalty interest refers to a share of the revenue or production obtained from a lease, typically reserved for the leaseholder or a third-party mineral interest owner. This interest is calculated separately from the working interest, which encompasses the cost and risk associated with drilling and operating the well. The purpose of the New Mexico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) is to define the terms and conditions of the transfer between parties involved. The document outlines the specific percentage of the overriding royalty interest being assigned, along with any related terms such as consideration or compensation, effective date, and duration of the assignment. This type of assignment assumes that the assigned overriding royalty interest is associated with a non-producing property. In other words, there is currently no active production occurring on the leased property. This could be due to various reasons such as exploration, lack of viable resources, or temporary suspension of production. The assignment serves as a mechanism to facilitate the transfer of this interest to another party who may have greater expertise or resources to develop the property further. Moreover, the New Mexico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) specifically reserves the right to pool the assigned lease with other leases. Pooling refers to the practice of combining multiple leases or interests to maximize efficiency and operational effectiveness in oil and gas exploration and production. By reserving this right, the assignor ensures that the assigned interest will not hinder any future pooling activities that may become necessary or beneficial. In summary, the New Mexico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) is a legal transfer document for assigning a portion of the overriding royalty interest associated with a non-producing property in New Mexico. It ensures the smooth transfer of this interest while preserving the right to pool the lease with other properties. Other variations or types of assignments may exist, such as those related to producing properties or different lease or pooling arrangements, but the focus here is on this specific type of assignment in New Mexico.
New Mexico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool)
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FAQ
A royalty interest is a property interest that entitles the owner to receive a share of the production revenue. An individual or company that owns a royalty interest does not have to pay for any of the operational costs required to produce the resource, but they still own a portion of the revenue produced.
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.
Typically, NPRIs are created by an express grant or reservation in a deed and are entirely different from a ?leasehold? royalty. The holder of a NPRI has no power to negotiate or execute an oil and gas lease and has no power to enter upon the land to extract the hydrocarbons.
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.
Royalty interest in the oil and gas industry refers to ownership of a portion of a resource or the revenue it produces. A company or person that owns a royalty interest does not bear any operational costs needed to produce the resource, yet they still own a portion of the resource or revenue it produces.
Participating Royalty Interest (NPRI) is an interest in oil and gas production which is created from the mineral estate. Like the plain ?royalty interest? it is expensefree, bearing no operational costs of production.
An overriding royalty interest (ORRI) is similar to a royalty interest in that it is also a portion of the proceeds from the sale of production. However, it is not retained under the terms of the oil and gas lease. An ORRI is granted, assigned and created under the terms of a separate document.
What Determines the Value of an Overriding Royalty Interest? Mineral interest location. One in a shale basin with high production is worth more. Producing oil and gas wells. Wells currently producing are valued more. ... Production reserves and levels. ... Prices.
The formula to calculate NPRI without proportionate share reduction is LRR ? RI = NPRI. As an example, reducing your revenue interest from 25% LRR results in 1/16 NPRI, leaving 75% NRI for working interest owners. The formula using proportionate reduction is LRR * RI = NPRI.
An overriding royalty interest (ORRI) is an undivided interest in a mineral lease giving the holder the right to a proportional share (receive revenue) of the sale of oil and gas produced. The ORRI is carved out of the working interest or lease.
