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Oil/Gas/ORRI calculations


I have a Term Assignment for Lea County, NM. Assignor is assigning a conveying to the Assignee all right, title and interest in a lease that Assignor has. Assignor is retaining an ORRI equal to the difference between existing leasehold burdens and 25% of eight-eights. These are the figures below that Assignor has on this acreage
Mineral Int. .00532710
GWI - 1.000000
RI - .25000000
ORRI Burdens - 0.0000000
Net WI - .750000000
Company RI - 0.00000000
Company ORRI - 0.0000000
NRI .7500000000

My issue is that if I calculate the ORRI for the existing burdens I am coming up with 0.000000 (.25 - .25 = 0.00)
So does this mean actually that Assignor gets ZERO ORRI due to the royalty being .25?

If the royalty reserved in the lease is stated as 1/4 or 25%, then yes, the overriding royalty reserved in this case would be zero. You will find that often times an assignor will use a particular assignment form because it contains specific language in other parts of it that they want to include. They don't stop to remove the override reservation when, as in this case, the difference between existing burdens (as of the date the assignment was delivered) results in zero, if the assignment conveys only this one lease. If this lease is included among others in an Exhibit A attached to and included in the Assignment, and other leases listed in the Exhibit have less than a 25% lease royalty reserved to the Lessor, the Assignor would receive an override in those other leases if their total burdens on the date of transfer were less than 25% burdening the working interest.


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Marsha Breazeale, M.Ed., CDOA, CPLTA


All questions regarding division orders; ownership decimal calculations; title ownership and payer record changes (testate/intestate inheritance; deed; assignment; court order); oil and gas lease analysis for record-keeping and purposes of payment by operator or payer; pooling, horizontal wells, horizontal well allocation units; unclaimed property reporting; royalty owner relations questions. All questions concerning administration of surface land contracts and payment questions, such as for Surface Right-of-Way, Sub-Surface Right-of-Way, Easement, Surface Use Agreement. All questions regarding industry-standard and company-specific policies that affect land owners.


Sr. Staff Division Order Analyst. Certified Division Order Analyst (CDOA, National Association of Division Order Analysts) and Certified Lease Analyst (CPLTA, National Association of Professional Lease and Title Analysts) with 35 years of experience as a combination division order analyst and lease analyst in exploration and production in the oil and gas industry.

National Assoc. of Division Order Analysts (NADOA), National Association of Division Order Analysts (NALTA), American Association of Professional Landmen (AAPL), American Society of Trainers and Developers (ASTD)

"How an Oil & Gas Exploration & Production Company Operates" and "Principles of Oil & Gas Lease Analysis: Standard Clauses", Oil Patch Press; Articles in NADOA Magazine; LandFocus EDU Professional Training Manuals

Education/Credentials Management from Our Lady of the Lake University in San Antonio; M.Ed. in Instructional Design from WGU Texas.

Past/Present Clients
Past 15 years: GeoSouthern Energy Corporation; Contango Oil Co./Crimson Exploration & Operating Inc.; Apache Corporation; BP America; Marathon Oil; Newfield Exploration

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