Inherited Overriding Royalty Interest - Decision to Make

General Mineral Rights Discussion
21

I know my post is late in the game, but Dirk can you please, explain to me (in very layman terms) what an overriding interest actually is and how an overriding interest would come about?

Whenever you get a free moment, no big rush.

Thanks!



Dirk Dieterich said:

Bill, sounds like you at in a bit of a dilemma. If you would like to friend me and contact me I will be glad to help guide you gratis.

Dirk

22

Kaye, an overriding royalty is a non cost bearing interest that is given out from a working interest owner and is tied to an oil & gas lease. Generally it is in percentages like 1%, 2%, etc. and assigns to the assignee that percentage of the oil & gas production from the lease that it pertains to.

Unlike minerals and royalties which are real property like surface, the ORRI is personal property and expires when the lease expires.

I hope that helps.

Dirk

23

Thanks again Dirk! I've often wondered and kept forgetting to ask until, looking over a lot of your comments last night I saw that you guy were talking about it.

I may have another question, but I need to get busy.

Thanks again!

24

My initial thought after reading the original post was identical to R. W.'s suspicion: "In your place I would consider that they might just want me out of the picture before doing some remedial action like a refrack. The could also want to obtain your part cheap prior to selling out themselves for added profit." Trust NOBODY entirely! I liked Dirk's definition of ORRI.