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Permalink Reply by Billy Park Whyde on March 1, 2012 at 3:16am

 The use is loosely  used to describe a payment of the proceeds from a well to a designated person or firm.  In many older leases the Landsman that obtained a lease as a agent for a O&G company from a land owner would be paid by attaching a OVER RIDING ROYALTY of 1/64 of the well.  The amount can change as now lease flippers including companies use this when they reassign a lease.

 Some one here might know if that over riding royalty is based upon 100% of the production before the landowner gets their royalty or if it comes after the landowners share or if is just added into the combination of landowner with the over ride and then taken from the production.   

 

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Permalink Reply by Jack Straw on March 18, 2012 at 11:24am

Typically it is a full interest "based upon 100% of the production before the landowner gets their royalty".

To be clear, I will provide a hypothetical example:

O&G rights owner (typically also land owner) receives a 1/8th (12.5%) Royalty.

And an individual (or company) has a 1/64th (1.5625%) ORRI (over riding royalty interest).

The O&G Operator then has a 55/64th (85.9375%) Working Interest.

The presence (or absence) of an ORRI does not alter the amount the Royalty Owner (O&G rights owner) receives.

The ORRI comes out of the The O&G Operator's pocket.

 

JS

 

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