We have a overriding royalty interest carved out of another companies non operating working interest. The operator is proposing a new well. If the non operating working interest owner elects to go non consent, will we also not get ORRI revenue until the operator gets paid back the share of the cost of the non operating working interest owner for drilling and completing the well? This is in Oklahoma. Would the answer be the same if the interest was forced pooled vs under a standard JOA (joint operating agreement)? Appreciate anyones insight.
You “should” get your ORRI. However, there is the timing issue of when the ORRI was carved out as the JOA & Pooling Order can take precedence over the Non-op’s interest depending on when all of the events occurred. The newest terminology being used is- Is the interest a “vested” or “non-vested” interest? Hope this helps.
If the well is drilled, it means that all non-consented interests were assumed by some or all of the participating parties. The parties that elect to pick up the non-consented interest are responsible for payment of the ORR burdening the interest, beginning with the date of first production.
rwwor- I appreciate what you have said, but timing of the carving out of the ORRI is important because it is a subsequently created interest. The terms of the binding document that the lease is subject to will determine when & if the ORRI is paid. JOA’s are very precise in that regard and Oklahoma Pooling Orders have become sticky as well.