Mineral Rights
Mineral Rights
The legal rights to explore for and produce the minerals beneath the surface of a property, including oil, gas, coal, and other subsurface resources.
Royalty Interest
Royalty Interest
A non-operating interest that entitles the owner to a percentage of production or revenue from oil and gas without bearing any costs of drilling or operating the well.
Working Interest
Working Interest
The ownership interest that bears the cost of exploration, drilling, and production. Working interest owners receive a share of the production revenues after royalties are paid.
Lease Bonus
Lease Bonus
An upfront payment made by an oil and gas company to a mineral owner when signing a lease, paid per acre.
Shut-in Royalty
Shut-in Royalty
A payment made to royalty owners when a well is capable of producing but is temporarily not operating, usually due to a lack of infrastructure or market.
Division Order
Division Order
A document sent to owners of mineral or royalty interests that outlines how proceeds from production will be divided among stakeholders.
Net Mineral Acres (NMA)
Net Mineral Acres (NMA)
The portion of mineral acres owned by an individual, accounting for fractional ownership. For example, owning 25% of 100 acres = 25 NMA.
Net Revenue Interest (NRI)
Net Revenue Interest (NRI)
The percentage of production revenue a royalty owner receives after deducting royalties and other burdens from the working interest.
Pugh Clause
Pugh Clause
A lease clause that limits the holding of non-producing acreage under lease once the primary term expires unless the acreage is producing.
Pooling
Pooling
Combining multiple tracts of land to create a drilling unit allows for more efficient development and shared production among all unit owners.
Unitization
Unitization
Similar to pooling, it is typically on a larger scale, often encompassing an entire reservoir, and is used to maximize recovery through coordinated operations.
Depth Severance
Depth Severance
The separation of mineral rights based on depth allows different owners or lessees to control different underground layers.
Overriding Royalty Interest (ORRI)
Overriding Royalty Interest (ORRI)
A royalty interest carved out of the working interest that does not affect the mineral owner’s royalty. Typically temporary and associated with a specific lease.
Held by Production (HBP)
Held by Production (HBP)
A lease term indicating that as long as a well on the property continues to produce in paying quantities, the lease remains active beyond its primary term.
Primary Term
Primary Term
The initial fixed period of an oil and gas lease during which the lessee must commence drilling or the lease expires.
Secondary Term
Secondary Term
The extended lease term beyond the primary term, usually lasting as long as production continues.
Title Opinion
Title Opinion
A legal document prepared by an attorney that verifies the ownership of mineral rights and identifies any encumbrances or title defects.
Delay Rental
Delay Rental
A payment made to the mineral owner to keep a lease in effect during the primary term when no drilling has occurred.
Force Majeure
Force Majeure
A lease clause that protects the lessee from defaulting on obligations due to unforeseen circumstances (e.g., natural disasters, war).
Check Stub / Revenue Statement
Check Stub / Revenue Statement
A detailed statement provided to royalty owners showing payment information, including volumes produced, price received, taxes, and deductions.