land_ownership · ownership
Overriding Royalty Interest (ORRI)
Total Royalty Burden = Lease Royalty + ORRI; NRI = WI × (1 - Total Royalty Burden)
click formula to derive ↑
Inputs
fraction
fraction
fraction
Description
Itemizes a lease's royalty burden into its lease-royalty and overriding-royalty-interest (ORRI) components, then computes the resulting working interest owner's Net Revenue Interest using the identical NRI formula the Net Revenue Interest calculator applies to a single combined burden figure. Directly fills the gap that calculator's own limitations flag: it does not decompose a combined burden into its lease-royalty and ORRI parts.
Variables
| Symbol | Unit | Description |
|---|---|---|
| RB | fraction | Total Royalty Burden |
| NRI | fraction | Net Revenue Interest |
| WI | fraction | Working interest fraction, expressed relative to the full (100%, or '8/8') leasehold — same convention as Net Revenue Interest. |
| R_L | fraction | The base landowner lease royalty, as a fraction of gross (8/8) production revenue. |
| ORRI | fraction | The overriding royalty interest, stated as a fraction of gross (8/8) production revenue — the standard construction (not a fraction carved from the working interest owner's own revenue share). |
Assumptions
- ORRI is stated as a fraction of gross (8/8) production revenue — the standard construction — not as a fraction carved specifically from the working interest owner's own revenue interest (a less common alternative construction some assignments use).
- Lease Royalty and ORRI stack by simple addition, matching Net Revenue Interest's existing 'Total Royalty Burden' convention exactly — this calculator does not introduce a different stacking rule.
Limitations
- Does not model an ORRI stated as a fraction of the working interest owner's revenue interest instead of gross production — confirm which construction a specific ORRI assignment actually uses (the assignment or lease language will say '% of 8/8' for the standard case) before relying on this calculator.
- Only combines two royalty-type burdens (lease royalty and one ORRI); a lease with multiple stacked ORRIs from successive assignments must have them pre-summed into a single ORRI fraction before entering it here.
Use Cases
- → Royalty burden itemization: Break a combined royalty burden figure into its lease-royalty and ORRI components before computing NRI, instead of having to add them by hand.
- → New ORRI assignment impact: Check how much a proposed new overriding royalty assignment would reduce a working interest owner's NRI, holding the existing lease royalty fixed.
Related Calculations
Region Notes
General (U.S. onshore)
ORRIs commonly range from 1-5% in many onshore deal structures (e.g., a landman or geologist retaining a small override on a prospect they generated), but are entirely negotiation-specific — always confirm the actual stated fraction and its construction (percent of 8/8 vs. of WI) from the assignment document.
References
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