Madrona Energy
Oil Royalties

Oil and Gas Royalties FAQ:

What are oil and gas mineral, royalty and overriding royalty interests?

Mineral and royalty interests are similar in that both involve ownership of minerals under the ground and they receive a portion of the income from the production of oil and gas. They differ in that the owner of a mineral interest also has the right to execute leases and collect bonus payments. Both mineral and royalty owners receive income once the well is producing, but only the mineral owner receives the up-front bonus payment.

Like mineral and royalty owners, the owner of overriding royalty interests receives a portion of the income from the production of oil and gas. The main difference is that the owner of an overriding royalty does not own the minerals under the ground, only proceeds from the production of minerals. Once the lease has expired and production has ceased, the overriding royalty interest expires. Conversely, the owners of minerals and royalties maintain their ownership after production ceases.

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