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The overriding royalty interest, for well units, is calculated as follows: (Overriding Royalty Rate) × (Working Interest) × (Mineral Interest) × (Tract Participation Factor) = ORRI [2] Where the terms are defined as follows: Working interest is the ownership interest that would require the participation in production expenses. [3]
The original owner of an oil and gas lease will sometimes retain an overriding royalty as part of a farmout agreement. For any oil and gas property, the total working interests must add up to 100%. The sum of the net revenue interests, royalty interests, and overriding royalty interests, must also add up to 100%.
For the oil and gas terminology of overriding royalty interest, please see Overriding Royalty Interest.. Overriding interest is an English land law concept. The general rule in registered conveyancing is that all interests and rights over a piece of land have to be written on the register entry for that land.
The royalty paid is a function of the net value of the proceeds from the sale of the oil, gas, or other substance, multiplied by the owner's revenue interest decimal, less any amounts deducted for taxes or other deductions. [17] The revenue decimal used to calculate the amount of an owner's royalty check is calculated with the following ...
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ORRI – overriding royalty interest; ORF – onshore receiving facility; OS&D – over, short, and damage report; OS – online survey; OSA _ Offshore Safety Advisor; OSV – offshore supply vessel; OT – a well on test; OT – off tree; OTDR – optical time domain reflectometry; OTIP – operational testing implementation plan; OTL ...
As a royalty it refers to the fraction of net smelter return that a mine operator is obligated to pay the owner of the royalty agreement. The royalty is paid in variable or fixed payments based on sales revenue received by a mining operator in return for mining output. It is contingent only on the sales price and quantity of product sold. [1]
Simple interest vs. compound interest. Simple interest refers to the interest you earn on your principal balance only. Let's say you invest $10,000 into an account that pays 3% in simple interest ...