Legacy Royalties provides competitive purchase prices for oil and gas royalties.

Helpful Oil & Gas Definitions

HELPFUL TERMS

Listed below are general definitions commonly used in the oil and gas industry:

 

GENERAL OIL & GAS DEFINITIONS

 

ASSIGNMENT

The legal instrument whereby Oil and Gas Leases or Overriding Royalty interests are assigned/conveyed.

ASSIGNEE

The person to whom Oil and Gas Leases or Overriding Royalty are assigned.

ASSIGNOR

Person conveying Oil and Gas Leases or Overriding Royalty in an Assignment.

BONUS

Cash consideration paid to a landowner or mineral owner on the execution of an Oil, Gas and Mineral Lease.

CHECK STUB

Stub attached to a check disclosing well name, month of production, price received and total volumes produced.

DELAY RENTAL

Yearly payments paid during primary term to Lessor to delay drilling.

DEPOSITORY BANK

A bank designated in an Oil, Gas and Mineral Lease to receive and distribute delay rentals.

DIVISION ORDER

A schedule of owners and their decimal share in revenues of the well derived from the sale of oil or gas.

GRANTOR

A person who grants or conveys lands, minerals, etc.

GRANTEE

The person receiving the grant of lands, minerals, etc.

GROSS WORKING INTEREST

Same as Working Interest.

JOINT OPERATING AGREEMENT

An agreement among working interest owners describing how a well is to be operated.

LANDMAN

The person who secures leases and handles damages for oil companies who are drilling new wells or laying pipelines.

LANDOWNER

The person who generally owns all or part of the minerals under his lands and is entitled to lease the same.

LEASE

Another name for Oil, Gas and Mineral Lease.

LESSEE

The purchaser of an Oil, Gas and Mineral Lease.

LESSOR

The party who grants an Oil, Gas and Mineral Lease.

MINERAL OWNER

Generally one who owns only minerals under a tract of land (but no surface) along with the right to execute a lease on the same.

MINERALS

Same as Participating Royalty. Also Known As Mineral Interest.

NET REVENUE INTEREST

An owner’s interest in the revenues of a well.

NON-OPERATING INTEREST

A working interest owner in a well, but is not Operator.

NON-PARTICIPATING ROYALTY

A royalty interest which “participates” in any oil or gas found but does not “participate” in lease bonuses or rentals.

NORM

Normal Occurring Radioactive Material.

OIL, GAS & MINERAL LEASE

The agreement outlining the basic terms of developing lands or minerals such as royalty to be paid, length of time, description of lands.

OIL & GAS LEASE

Same as an Oil, Gas and Mineral Lease.

OPERATING AGREEMENT

Same as Joint Operating Agreement.

OPERATING EXPENSES

The costs of operating a well.

OPERATING INTEREST

A working interest owner who is also the well operator.

OPERATOR

The party designated in the Operating Agreement to conduct the operations of the well.

OVERRIDING ROYALTY

Ownership of a portion of the revenues generated from oil and gas production. Ownership expires when the lease has been abandoned.

PAID-UP LEASE

An Oil and Gas Lease where rental payments are paid along with bonus.

PARTICIPATING ROYALTY

A royalty interest giving its owner the right to “participate” in bonuses received in leasing along with the right to “participate” in any oil or gas found.

PRIMARY TERM

The initial period in an Oil and Gas Lease to develop the property.

PUGH CLAUSE

A clause added to an Oil Lease to limit holding non-producing lands or depths beyond primary term of lease.

ROYALTY

Funds received from the production of oil or gas, free of costs, except taxes.

RUN STUB

Stub attached to a check disclosing well name, month of production, price received and total volumes produced.

SALT WATER DISPOSAL WELL

A well into which oilfield salt water is disposed.

SEVERANCE TAX

A tax due the state on oil or gas produced or “severed” from the earth.

SEVERED MINERALS

Minerals whose title has been severed from the surface title.

SHUT-IN

An oil or gas well which is inactive.

SURFACE OWNER

Usually a landowner who owns no minerals under his land.

UNLEASED MINERAL INTEREST

A mineral interest not subject to an Oil Lease.

WORKING INTEREST

Interest in a well which bears the drilling and operating expenses.

Steve Smith is the founder and president of Legacy Royalties. Since 1994, Mr. Smith has worked as an independent oil and gas operator, mineral manager and petroleum engineering consultant.

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