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    InterestDefinitions

    Uploaded by

    Aidan Holwerda

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    © All Rights Reserved
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    InterestDefinitions

    Uploaded by

    Aidan Holwerda
    2 views1 page

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    © © All Rights Reserved

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    2 views1 page

    InterestDefinitions

    Uploaded by

    Aidan Holwerda

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Non-Participating Royalty Interest (NPRI)

    A Non-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 expense-free, bearing no operational costs of
    production. The term “non-participating” indicates that the interest owner does not share in the bonus, rentals
    from a lease, nor the right (or obligation) to make decisions regarding execution of those leases (i.e.,
    no executive rights). The owner of a NPRI has fewer rights than does the ‘regular’ royalty owner, who
    participates in at least one, if not all, of the aforementioned activities.

    Overriding Royalty Interest (ORRI)


    A royalty in excess of the royalty provided in the Oil & Gas Lease. Usually, an override is added during an
    intervening assignment. 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.

    When are Overriding Royalty Interests Assigned?


    Overrides, as they are called by the industry, are commonly assigned by a person or entity that assembles a
    prospect, previous owners of a property who sold and want to retain an interest, or royalty interests can be sold
    as a means of raising capital.
    What are the limits of an Overriding Royalty Interest?
    An ORRI is a fractional, undivided interest with the right to participate or receive proceeds from the sale of oil
    and/or gas. It is not an interest in the minerals, but an interest in the proceeds or revenue from the oil & gas
    minerals sold. The interest is limited to a specific tract of land and is bound to the term limits of the existing
    lease. If a lease is allowed to expire, an ORRI is dissolved or expires with the lease. Overrides expire and don’t
    not continue into perpetuity in the same form as mineral or royalty interests. ORRI are not bound to carry their
    portion of development or operating costs.

    Royalty Interest (RI)


    An interest in an oil and natural gas lease that gives the owner of the interest the right to receive a portion of the
    production from the leased acreage (or of the proceeds of the sale thereof), but generally does not require the
    owner to pay any portion of the costs of drilling or operating the wells on the leased acreage.

    Working Interest (WI)


    Interest(s) in a mineral property. A percentage of ownership in an oil and gas lease granting its owner the right
    to explore, drill and produce oil and gas from a tract of property. Working interest owners are obligated to pay a
    corresponding percentage of the cost of leasing, drilling, producing and operating a well or unit.

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