ORRI Question, if a lease is bogged down with a lot of ORRIs and it has not produced for over 2 years and has been just shut in, transferred operators several times and is also listed as orphan well, what are my options to get these ORRIs removed? I have reached out to several of the assignment owners but some info is not correct they have moved etc etc. not looking to take money away from anyone but these are small stripper wells barely would do 2 bbls /day, and with all the ORRIs on them no one will take them on because your NRI is nearly below 60%. Just not a lot of profit to be made the way they are set up. So just looking for someone who knows and understand ORRIs. I have done a ton of research and found all the information I can on who got what. Is there a website that I can go to to give me updated pay deck on each well?
Only the operator will have the actual pay deck. You can track the production at the OK tax site. Gross Production
Ok I’ll check that out. Anything on the ORRI question?
Thank you for that website link I was curious where I could find that information on production!
Unless some of the assignments specify that the orri applies to extensions and renewals, the release of the underlying lease, will cause the orris to be released. The new lease will not be burdened by the old orris. A thorough review of the the assignments and reservations should be done.
Thank you Tim, so the language I should look for is orri applies to extensions and renewals, and if it doesn’t have that then when the new operator takes over the previous ORRIs should go away? and when you say release of underlying lease does that mean since the lease went orphaned status that it should remove the ORRIs that were previously done?
that is not extensions and renewal language.
further explanation and an example is as follows:
An “extension or renewal clause” for purposes of this discussion is a provision in an assignment or reservation of an overriding royalty interest or other nonoperating interest that protects the owner against a “washout.” A “washout” is the elimination of the nonoperating interest as a result of the termination or surrender of the burdened lease, and the subsequent reacquisition of a lease on the same lands by the lessee or its agent with the intention of taking the lease free of the burden of that nonoperating interest. An example of an extension or renewal clause is as follows:
The overriding royalty interest reserved by Assignor in the leases subject to this assignment (the “subject leases”) shall apply to every extension, renewal or modification of any of the subject leases, or any portion thereof, taken by Assignee or its successors, assigns, agents or employees (hereinafter referred to as the “Assignee”), and to any new lease taken by Assignee on the lands, or any portion of the lands, covered by the subject leases within one year of the expiration, termination or surrender of any of the subject leases.
Great explanation Tim! So if I don’t have that language on the ORRI Assignments what is my next step do I have to file something showing that the wells are orphaned and there has been no production in over 2 years, and then I take them over? I just want to make sure I understand it all right so that I don’t take them on and then the ORRIs are still there. I have been told another option is to file an affidavit of non production and then contact all the mineral owners and start over. That seems like a lot of work and that is why I am probing this route because given there has been no production in over 2 years and wells are on orphaned list I would the all the ORRIs would terminate when I take lease over.
Are you an operator authorized to operate in Oklahoma proposing to take over operations of wells which may have expired leases? Or are you an individual who plans to become a licensed operator and assume financial responsibility for the wells? Or is a current non-operating working interest owner in these wells trying to sell the liabilities to you? I am not familiar with the liability laws in Oklahoma, but you should not become a working interest owner, whether operator or non-operator, without fully understanding the financial obligations. If you are instead the mineral owner under the lease, then ask the operator for a release and the overrides connected with that particular lease will terminate. You need to thoroughly research these issues and have legal counsel in Oklahoma before taking on operations. Responses on this site are by definition very general and based on the limited information provided. No one can give you the level of legal and financial advice needed to take over wells without a thorough review of all related documents, including the JOA.
I have been pumping wells for years, and been in the industry since 2006. I will be becoming a licensed operator soon. I am fully aware of all cost associated to operate and maintain wells. The tricky part is all the mumbo jumbo jargon on the Royalty/ORRI side. I am fully aware that a through investigation into all documents needs to be done. It was my hopes someone with knowledge would be able to steer me in right direction, either to land man or other who could better help me navigate these waters. There isn’t a current operator because the wells have been placed on the “Orphaned” status page. They have not produced oil since 2017. I am familiar with them from previous experience and that’s why I want them.
After discussions with several well respected folks in the industry it had been decided the best option is to pay to have a updated ownership of title done to clear up the mess that the previous owners left. Appreciate the feedback given was trying to find a shortcut around having to approach it that way but in the end it’s best option to do.
This topic was automatically closed after 90 days. New replies are no longer allowed.