The Washington Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease is a legal provision that governs the distribution of royalties in cases where multiple tracts of land are covered by a single oil and gas lease. This stipulation ensures fair compensation for nonparticipating royalty owners, who may not have rights to develop or produce oil and gas but still have a financial interest in the leased area. Under the Washington stipulation, when an oil and gas lease covers segregated tracts of land, each tract is considered separately for royalty purposes. This means that the royalties generated from the production of oil and gas on each tract are allocated proportionally to the owners of that specific tract. The allocation is typically based on acreage or some other agreed-upon method of calculation. The stipulation helps prevent any unfair concentration of royalty payments on certain tracts, ensuring that all nonparticipating royalty owners receive their rightful share of the proceeds. It provides a transparent framework that allows for a clear and consistent distribution of royalties, regardless of the variations in productivity or value among the covered tracts. It is important to note that the Washington stipulation can be modified or adapted to fit specific circumstances. Different variations may exist to accommodate unique situations or preferences of the parties involved. Some potential types or variations of the Washington Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease may include: 1. Acreage-Based Allocation: This variation involves allocating royalties based on the relative acreage of each segregated tract. The larger the acreage, the higher the share of royalties for that particular tract. 2. Productivity-Based Allocation: In this type of variation, the allocation is determined by the productivity of each segregated tract. The higher the production from a particular tract, the larger the share of royalties it receives. 3. Fixed Percentage Allocation: This variation sets predetermined fixed percentages for the allocation of royalties to each segregated tract, regardless of acreage or productivity. This method ensures a consistent distribution without considering variations in tract attributes. 4. Hybrid Allocation: This type of variation combines multiple factors, such as acreage, productivity, and fixed percentages, to determine the allocation of royalties. It offers flexibility in adapting to specific circumstances and objectives. Overall, the Washington Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease exists to protect the interests of nonparticipating royalty owners and provide a fair and equitable distribution of proceeds from oil and gas production on multiple tracts covered by a single lease.
Washington Stipulation Governing Payment of Nonparticipating Royalty Under Segregated Tracts Covered by one Oil and Gas Lease
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Oil and Gas Interest means any oil or gas royalty or lease, or fractional interest therein, or certificate of interest or participation or investment contract relative to such royalties, leases or fractional interests, or any other interest or right which permits the exploration of, drilling for, or production of oil ...
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.
What Is Working Interest? Working interest is a term for a type of investment in oil and gas drilling operations in which the investor is directly liable for a portion of the ongoing costs associated with exploration, drilling, and production.
A stipulation of interest is a contract that consists of mutual conveyances, and therefore, it must conform to the requirements of both a contract and conveyance. Consequently, title to the property interest will be owned as set out in the stipulation, that is if it contains adequate granting language.
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.
There are 6 types of mineral rights, including mineral interest (MI), royalty interest (RI), overriding royalty interest (ORRI), working Interest (WI), non-operated working interest, and net profits interest.
Royalty Payment Clauses A royalty is agreed upon as a percentage of the lease, minus what was reasonably used in the lessee's production costs. This is stipulated in a Royalty Clause. The royalty is paid by the lessee to the owner of the mineral rights, the lessor in the lease.
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.