Common use of Overriding Royalty Interest Clause in Contracts

Overriding Royalty Interest. Generally, a fractional Nonoperating Interest in the gross production, or the Gross Proceeds therefrom, of oil and gas and other minerals under a lease, in addition to the usual royalty paid to the lessor, free of any expenses of exploration, development, operation and maintenance. An Overriding Royalty Interest is an interest carved out of the Working Interest, as distinguished from the lessor's reserved Royalty Interest. The main characteristics of an Overriding Royalty Interest are that it is limited to the terms of the lease under which it is created and its duration runs concurrently with the term of such lease. Under a Net Profits Agreement, the Partnership will receive from its companion Operating Partnership Overriding Royalty Interests having the particular characteristics described therein.