Puerto Rico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) is a legal document that grants an individual or entity the right to receive a portion of the revenue generated from oil, gas, or mineral extraction on a specific lease in Puerto Rico. This type of agreement is typically entered into between a mineral rights owner and an interested party who wants to benefit financially from the lease's production. The overriding royalty interest refers to the share of production revenue that is reserved for the assignee, which is usually a fixed percentage of the gross production or net revenue. In this case, the overriding royalty interest applies to a non-producing lease, meaning that the lease has not yet entered into the production phase but has the potential to do so in the future. It is important to note that there are different types of Puerto Rico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) based on specific terms and conditions. Some variations of this agreement may include additional provisions such as: 1. Duration: This specifies the length of time the Assignment of Overriding Royalty Interest will be in effect. It could be a fixed term or extend indefinitely until certain conditions are met. 2. Royalty Percentage: The agreement may define the exact percentage of production revenue the assignee is entitled to receive. 3. Non-Producing Clause: This clause may outline the circumstances or obligations that need to be fulfilled for the lease to enter into the production phase. It could include requirements like obtaining necessary permits, completing drilling activities, or reaching commercial viability. 4. Single Lease Provision: This provision clarifies that the Assignment of Overriding Royalty Interest only applies to a specific lease and does not extend to other leases or mineral rights owned by the assignor. 5. Right to Pool Reservation: This provision reserves the assignor's right to combine or pool the leased area with other adjacent or contiguous leases if it is deemed beneficial for exploration or production purposes. The Puerto Rico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool) is a legally binding document that safeguards the assignee's interests while allowing them to potentially benefit financially from future production activities. It provides a mechanism for individuals or entities to participate in the potential revenue generation from oil, gas, or minerals in Puerto Rico, even if they do not own the underlying mineral rights.
Puerto Rico Assignment of Overriding Royalty Interest (Non-Producing, Single Lease, Reserves Right to Pool)
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FAQ
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.
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.
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.
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.
To calculate the number of net royalty acres I'm selling, I use this formula: [acres in tract] X [% of minerals owned] X 8 X [royalty interest reserved in lease] X [fraction of royalty interest being sold]. 640 acres X 25% X 8 X 1/4 X 1/2 = 160 net royalty acres.
Calculating Overriding Royalty Interest An ORRI is a straight percentage. For example, a 2% override would appear on the royalty statement as 0.02 interest in the proceeds from the sale of the leased hydrocarbons.
Overriding Royalty Interest Conveyance means an assignment, in the form attached hereto as Exhibit F, pursuant to which Subsidiary Borrower grants to Lender a cost-free overriding royalty interest equal to a percentage determined pursuant to Section 8.5 of the Hydrocarbons and other minerals attributable to Subsidiary ...
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 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.
