How to Calculate Override Royalty Interest

When mining or pumping operations retrieve mineral or petroleum deposits from a certain piece of land, various parties may have claim on the revenues coming from the sale of those deposits other than the parties who directly own the mineral rights. When someone has overriding royalty interest on a piece of land, he does not own the actual mineral rights for that piece of land, but he does have the right to collect on a certain percentage of all oil or mineral revenue that comes from that piece of land during a specific period of time.

Instructions

    • 1

      Calculate the total revenue for the sale of the natural resources coming from the land in question for which the party owning the overriding royalty interest has claim. Do not subtract costs for drilling, transportation or labor; this figure comes from the total gross revenue of sales before expenditures.

    • 2

      Convert the overriding royalty interest percentage stipulated in the contract to a decimal. For instance, if the party in question holds a 3 percent overriding royalty interest, convert this into the figure .03.

    • 3

      Multiply the decimal representing the overriding royalty interest by the total revenue for the period in question.

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