Royalty interest verses Non Participating RI

#1

Hi, I currently have royalty interest in Martin County, Texas and just received a new division order for Non Participating Royalty Interest for the same wells. Can anyone explain what this means. Also, how can I find out where section 9 block HA is located in Martin County? Thank you!

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#2

Many times they are used interchangeably. The main difference I’ve seen is that often times a “royalty interest” is tied to a specific lease/well, whereas a “non-participating royalty interest” is often times perpetual in nature and applies to all future lease/wells.

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#3

Ok great. Thank you.

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#4

A non-participating royalty interest is typically a royalty that is severed from the mineral estate. Unlike an overriding royalty interest that is typically tied to a lease, an NPRI is tied to the mineral estate so is not subject to loss like an ORRI. NPRI’s are typically non-executory interests so that you are entitled to receive the pro rata portion of the NPRI, but typically do not negotiate leases or receive lease bonuses.

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#5

Thank you. Do you know how I can find where in Martin County section 9, block HA is located?

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#6

Do you have a survey name or any other identifying information for the tract?

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#7

I wonder if you might be able to explain a situation. I had interest in Samba wells operated by Athlon. I inherited from my dad, flied division orders and began receiving royalties. Encana purchased and then began paying royalties. After a year, Encana sends me new division orders to sign, stating that my royalties are nonparticipating and Athlon had it listed as a royalties. Encana then changes my interest to more that what Athlon was paying. I am trying to understand why all the changes. Do you have any insight?

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#8

Thank you for replying. I did find the location.

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#9

HI,

I am looking for some information about a horizontal well through my lease property. I have mineral rights in property in Howard County, section 44, block 32, in TN3.

There are two wells on the property that have been plugged.

There is also a horizontal well that runs through the property that shows to have been producing for two years.

This property was inherited from my father and we were told that because there is no production of the wells, there is no reason to division orders.

My question is, should we be receiving royalties from the horizontal well running though our property?

Thank you so much for your help, Betsy

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#10

Hi Betsy,

Whether you would be entitled to royalties depends on a couple of things. We would need to know whether or not your minerals were pooled into the proration unit in that section. Part of that depends whether your minerals are in all of Section 44 or just certain quarter sections. Additionally, part of the reason that you have not yet received royalties is that the operator may not have known of the transfer and whether your father’s estate was properly probated so that the interest belongs to you.

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