Q: What is an Overriding Royalty Interest?


    A: An Overriding Royalty Interest (OR) is an interest which is not connected to an ownership of minerals under the ground.  It is the right to receive revenue from the production of oil and gas from a well. The overriding royalty is carved out of the Lessee’s (operator’s) working interest and entitles its owner to a fraction of production.  It is limited in duration to the terms of a specific existing oil and gas lease, but is not subject to any of the expenses of development, operation or maintenance.  An overriding royalty interest expires once the lease has expired and production has stopped, whereas minerals and royalty owners maintain their ownership after production stops.