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Royalty

1/4/2022

 
A royalty interest entitles a mineral owner to certain payments from a lessee if oil & gas are produced from his/her property or from a unit of which his/her property is a part.

Sometimes a mineral interest owner assigns a non-participating royalty interest in a tract to another party. That party will then have a right to receive royalties under any lease covering that property if oil & gas is produced, but they will not have the right to execute a lease themselves.

On the flip side of things, sometimes a lessee assigns an overriding royalty interest in a particular lease to another party or reserves an ORRI when assigning a lease. The party holding the overriding royalty interest will then have the right to receive royalty payments during the life of the lease if oil & gas are produced. Once the lease expires, so does the ORRI.

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  • Happy Landman Friday
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