Understanding Oil and Gas Royalties
Intoduction Oil and gas royalties are payments made to mineral rights owners for the extraction and production of oil and gas from their land. These royalties are typically calculated as a percentage of the revenue generated from the sale of oil and gas produced on the property..
What Are Oil and Gas Royalties? Royalties are a percentage of the revenue generated from the sale of oil and gas extracted from a property. They are typically paid to mineral rights owners as compensation for allowing companies to access and extract resources from their land.
There are four types of oil and gas royalties Working Interest (WI) Royalty Interest (RI) Non-participating Royalty Interest (NPRI) Overriding Royalty Interest (ORRI)
Working Interest (WI) Exploration and production companies secure subsurface rights through a lease known as Working Interest (WI). WI grants them authority for exploration, drilling, and mineral extraction
Royalty Interest (RI) When a landowner grants a Working Interest (WI) in mineral resources, they receive a Royalty Interest (RI) in return. The RI owner is entitled to a percentage of the revenues generated when a well is in production.
Non-participating Royalty Interest (NPRI) A Non-participating Royalty Interest (NPRI) is a lease granted by the Royalty Interest (RI) owner. The NPRI holder is entitled to a share in royalties generated from production revenues.
Overriding Royalty Interest (ORRI) An Overriding Royalty Interest (ORRI) is established when a Working Interest (WI) owner leases a portion of their WI to a third party. ORRI grants an undivided, nonpossessory right to a share of the production, excluding production costs associated with the mineral lease.
VISIT MINERAL VIEW Mineral-View was founded to provide oil & gas mineral owners, investors, and industry professionals with a robust, easy-to-use online platform.
support@mineralview.com www.mineralview.com 866-646-8439