Different types of royalties

Different types of royalties

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Different types of royalties
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The oil and gas industry is known for its high returns and attractive royalties. There are four common types of these…

1. Royalties. These are a percentage of production revenue paid to the mineral rights holder, less drilling costs.

2. Overriding Royalty Interest (ORRI) is reserved for the geologist, engineer or other technical expert who worked on the project. Their income is comparable to that of the mineral rights holder, as they do not bear any costs for the drill holes.

3. The net profit share or non-operating share (NonOp) is based on the net profit from oil and gas production and does not include any share of net losses.

4. The Net Royalty Interest (NRI) goes to the Working Interest, which is the ownership interest in the well, which bears all costs of the well as the costs of plugging and abandoning the well at the end of its life. The Working Interest is entitled to a share of what is left of the production proceeds.

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https://www.eia.gov/tools/glossary/index.php

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