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Oil and gas royalties are payments made to mineral rights owners based on a percentage of the revenue from the extraction of oil and gas on their land. <br>For more information visit - https://www.mineralview.com/
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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, non-possessory right to a share of the production, excluding production costs associated with the mineral lease.
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