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The revenue decimal used to calculate the amount of an owner's royalty check is calculated with the following equation: [18] A = Net mineral acres owned; U = Number of mineral acres in the oil and gas drilling unit or pool; R = The royalty assigned to the mineral rights owner by the oil and gas lease covering the minerals
In 2004, mining entrepreneur Ian Telfer created Silver Wheaton which aimed to apply volumetric production payment transactions to the mining sector. [4] The business model came to be known as metal streaming and structures VPP transactions in such a way that an upfront payment is exchanged for a percentage of metal production, with a fixed payment being made for each ounce of metal delivered.
In the oil and gas industry, a farmout agreement is an agreement entered into by the owner of one or more mineral leases, called the "farmor", and another company who wishes to obtain a percentage of ownership of that lease or leases in exchange for providing services, called the "farmee." The typical service described in farmout agreements is ...
The continuous drilling provision was created in order to provide more certainty in the face of inconsistent court rulings. While a continuous drilling provision may provide the parties with a more reliable test to determine whether drilling and operations have been continuously prosecuted (so as to hold a lease past its primary term), the inclusion of the provision could prove fatal to a ...
An Overriding Royalty Interest (ORRI) is an oil and gas interest is separated from the participatory interest of what is called the working interest. It is percentage of gross production that is not charged with any expenses of from an oil and/or gas well. An ORRI is a covenant running with the land between the assignor and assignee. However ...
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The oil depletion allowance in American (US) tax law is a tax break claimable by anyone with an economic interest in a mineral deposit or standing timber. [citation needed] The principle is that the asset is a capital investment that is a wasting asset, and therefore depreciation can reasonably be offset (effectively as a capital loss) against income.
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