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Overriding Royalty Interest, ORRI | definition

A royalty in excess of the royalty provided in the Oil & Gas Lease. Usually, an override is added during an intervening assignment.

ORRIs are created out of the working interest in a property and do not affect mineral owners. An overriding royalty interest (ORRI) is often kept or assigned to a geologist, landman, brokerage, or any entity that was able to reserve an interest in the properties.

When are Overriding Royalty Interests Assigned?

Overrides, as they are called by the industry, are commonly assigned by a person or entity that assembles a prospect, previous owners of a property who sold and want to retain an interest, or royalty interests can be sold as a means of raising capital.

What are the limits of an Overriding Royalty Interest?

An ORRI is a fractional, undivided interest with the right to participate or receive proceeds from the sale of oil and/or gas. It is not an interest in the minerals, but an interest in the proceeds or revenue from the oil & gas minerals sold. The interest is limited to a specific tract of land and is bound to the terms limits of the existing lease. If a lease is allowed to expire, an ORRI is dissolved or expires with the lease. Overrides expire and don’t not continue into perpetuity in the same form as mineral or royalty interests.

ORRI are not bound to carry their portion of development or operating costs.

Return to the Glossary of O Terms or the Index of Oil & Gas Terms to search the oilfield glossary