Virgin Islands Assignment of Overriding Royalty Interest for Multiple Leases — Interest Assigned Is Difference Between Specified Percentage and Existing Leasehold Burdens: A Comprehensive Guide Overview: The Virgin Islands Assignment of Overriding Royalty Interest for Multiple Leases is a legal document that allows for the transfer of a specific percentage of the overriding royalty interest (ORRIS) from one party to another. This transfer entails the difference between the specified percentage and the existing leasehold burdens, affecting multiple leases in the Virgin Islands' oil and gas industry. Different types of assignments can occur based on the nature of the ORRIS, lease agreements, and the parties involved. Types of Virgin Islands Assignment of Overriding Royalty Interest for Multiple Leases: 1. Partial Assignment: This type of assignment involves transferring a portion of the overriding royalty interest to a new party, while the existing owner retains the remaining percentage. Example: Party A assigns 30% of their ORRIS to Party B, while Party A still retains 70% ownership. 2. Full Assignment: In a full assignment, the entire overriding royalty interest is transferred from one party to another, relinquishing all rights and ownership. Example: Party X assigns their entire ORRIS of 50% to Party Y, resulting in Party X having no further ownership or interest. 3. Proportional Assignment: Proportional assignments involve distributing the ORRIS based on the specified percentage and the leasehold burdens across multiple leases. Example: Party M assigns 20% of their ORRIS to Party N for Lease 1 and 40% of their ORRIS to Party O for Lease 2, ensuring proportional distribution of interests based on the lease terms. 4. Differential Assignment: This type of assignment occurs when the difference between the specified percentage and the existing leasehold burdens varies across the multiple leases. Example: Party T assigns 25% of their ORRIS for Lease 3, where the existing leasehold burden is 10%, resulting in the net interest assigned being 15%. Similarly, for Lease 4, where the existing leasehold burden is 30%, the net interest assigned would be -5%. Key Elements of a Virgin Islands Assignment of Overriding Royalty Interest for Multiple Leases: 1. Parties Involved: The assignment document should clearly identify the assignor (the party transferring the ORRIS) and the assignee (the party receiving the ORRIS). 2. Lease Identification: Each lease affected by the assignment should be clearly stated, including lease numbers, descriptions, and relevant terms. 3. Specified Percentage: The specific percentage of the ORRIS being assigned should be explicitly mentioned to avoid ambiguity. 4. Existing Leasehold Burdens: The assignment should account for the existing leasehold burdens, i.e., any obligations or encumbrances associated with the leases. 5. Consideration: The consideration, such as monetary payment or other assets, exchanged between the assignor and assignee for the assignment, needs to be specified. Conclusion: The Virgin Islands Assignment of Overriding Royalty Interest for Multiple Leases is a detailed legal process that involves the transfer of specific percentages of ORRIS and the consideration of existing leasehold burdens. Understanding the various types of assignments and their implications is essential when engaging in transactions related to the oil and gas industry in the Virgin Islands.
Virgin Islands Assignment of Overriding Royalty Interest for Multiple Leases - Interest Assigned Is Difference Between Specified Percentage and Existing Leasehold Burdens
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FAQ
ORRIs are created out of the working interest in a property and do not affect mineral owners. An overriding royalty interest (ORRI) is often kept or assigned to a geologist, landman, brokerage, or any entity that was able to reserve an interest in the properties.
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.
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.
Overriding Royalty Interest: A given interest severed out of the record title interest or lessee's share of the oil, and not charged with any of the cost or expense of developing or operation. The interest provides no control over the operations of the lease, only revenue from lease production.
Overriding Royalty Interest Conveyance means an assignment, in form and substance acceptable to Lender, pursuant to which Borrower grants in favor of Lender an overriding royalty interest equal to six and one-fourth percent (6.25%) of Hydrocarbons produced, saved and sold or used off the premises of the relevant Lease, ...
How to calculate the overriding royalty interest? ORRI = NRI * 5 percent. $750,000 * 0.005 = $3,750.
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.
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.
