Overriding Royalty Interests (ORRI)

An overriding royalty interest exists only as long as the lease it rides on exists, which is the single fact that separates it from every other interest we buy.

ORRIs are usually created out of the working interest, an operator or landman reserves an override when assigning a lease, or a geologist, broker, or investor is paid in override rather than cash. Whatever its origin, an ORRI is carved from and dependent on a specific lease, not the mineral estate itself.

We buy ORRIs directly, transferring by assignment rather than deed, and we price the lease-dependency risk explicitly rather than treating an override like a standard royalty interest with indefinite life.

Why an ORRI is not the same asset as a royalty interest

A landowner's royalty or an NPRI attaches to the mineral estate and effectively continues indefinitely, surviving lease after lease over decades. An ORRI attaches to one specific lease and terminates when that lease terminates, whether by expiration, release, or the well being plugged, with no automatic right to override on any replacement lease.

This makes the remaining life of the underlying lease a central input to what an ORRI is worth, alongside the well's production decline. A high-royalty override on a lease near the end of its economic life is worth less than the same override percentage on a lease with years of productive life ahead.

How an ORRI closes: assignment, not deed

Because an ORRI is an interest in a lease rather than in the minerals themselves, it transfers by assignment of overriding royalty interest, a document distinct from a mineral or royalty deed. We prepare and record that assignment directly with you as the assignor and us as the assignee, one instrument, one signature, filed with the county.

This matters for closing certainty. Some ORRIs originated through a chain of prior assignments, an override created by one party, assigned to a second, then a third, before reaching you. We confirm your position at the end of that chain is clean before closing, so the assignment we record does not inherit ambiguity from an earlier link.

Why we buy ORRIs directly instead of through paper chains

Some ORRI transactions in this market involve a buyer who is itself planning to reassign the override to a third party after closing, effectively adding another link to an already layered chain of paper. That structure adds counterparty risk for you as the seller and complicates any future title question about who actually holds the override.

We close as the actual holder of record, recording the assignment directly to us rather than positioning ourselves as an intermediate link that reassigns later. That keeps the chain of title as short and traceable as possible going forward.

Valuing an ORRI

We start from the well's current production and decline trend, the same as any royalty valuation, then discount for the underlying lease's remaining term and the likelihood of continued production through that term. An override on a held-by-production lease with a long-producing well carries different risk than an override on a lease closer to its primary term expiration.

ORRI on multiple wells under one lease

Where the underlying lease covers a unit with several wells, or the operator has drilled multiple wells under the same agreement, the override typically applies across all of them, and the lease stays held by production as long as any one well continues producing in paying quantities. We value the combined production across every well the override touches rather than treating each one separately, since termination risk for the ORRI depends on the lease as a whole staying held, not any single well.