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Oil/Gas/Overriding royalty interest

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Question
QUESTION: Will your Owner Decimal Interest decrease overtime, even if the well is still producing?

ANSWER: The decimal on an overriding royalty interest (an interest carved out of the lessee's share) will not decrease over time unless that was part of your agreement with the lessee, but the production can and will decrease over time, the effect being that your checks will get smaller as time goes on.

Once there is no longer any production from the leased premises, your ORRI will cease to exist, since it was carved from the lessee's share of the production given them in the oil and gas lease (which expires when production ceases.)

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
www.mineralhub.com
The Mineral Hub



---------- FOLLOW-UP ----------

QUESTION: Thank you, I have one more question The lease I have covers a lot of land with 3000 new wells to be drilled over the next 10 years. Am I covered for all of these New wells under the old lease that dates back to 1960?

Answer
Yes, as long as the 1960 doesn't expire before they drill them, and covers all the formations/depths they plan to drill (it probably does.) You'd also want to make sure your ORRI is not a "term" interest (i.e. only good for so many years, rather than good until the lease expires.)

Frederick M. Scott CMM, RPL
The Mineral Hub

Oil/Gas

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Frederick M. Scott

Expertise

Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.

Experience

I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written several articles which have appeared in various oil and gas industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and landwork over the past ten years, and also worked as a professional landman and lease buyer for a time. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

Organizations
National Association of Royalty Owners (NARO); American Association of Professional Landmen (AAPL)

Publications
National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Education/Credentials
Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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