Plain-language
definitions.
Mineral ownership has its own vocabulary. Working interest, royalty interest, NPRI, ORRI, division order, decimal interest, paying quantities. Here is each one explained without jargon, with cross-references to the related concepts that come up in real conversations.
Ownership Types
Decimal Interest
The decimal-formatted share of production revenue listed on a division order, used by operators to calculate exact payments.
Read →Executive Rights
The right to negotiate and sign oil and gas leases on a property, including the right to collect lease bonus payments and decide whether to lease at all.
Read →Net Revenue Interest (NRI)
The owner's actual share of revenue after royalties and other burdens are deducted, as a percentage of total production.
Read →Non-Participating Royalty Interest (NPRI)
A royalty interest that receives production revenue but does not have the right to sign leases, collect bonus payments, or participate in lease decisions.
Read →Overriding Royalty Interest (ORRI)
A royalty interest carved out of a working interest rather than the mineral estate, lasting only as long as the underlying lease.
Read →Royalty Interest (RI)
An ownership share that receives a percentage of production revenue from a well without bearing any of the drilling or operating costs.
Read →Working Interest (WI)
The ownership share of a well that pays the costs of drilling and operating in exchange for a share of revenue, after royalties.
Read →Lease Terms
Held By Production (HBP)
The status of an oil and gas lease whose primary term has expired but which remains in force because at least one well on the property continues to produce in paying quantities.
Read →Lease Bonus
The upfront, per-acre cash payment from an operator to a mineral owner at the time of signing an oil and gas lease.
Read →Pooling
The process of combining multiple mineral tracts into a single drilling unit so that one well can produce from the combined acreage and royalties are shared by acreage contribution.
Read →Primary Term
The fixed initial period during which an operator has the right to drill on a leased property, typically three to five years.
Read →Production
Paying Quantities
The legal threshold of well production that determines whether a lease remains held by production, generally meaning revenue exceeds operating expenses over a reasonable period.
Read →Shut-In
A status where a well has been temporarily taken offline for mechanical, economic, or regulatory reasons while the underlying lease remains in force.
Read →Regulatory
Force Pooling
A state-administered process that brings unleased or non-consenting mineral acreage into a drilling unit so that development can proceed without unanimous consent.
Read →Severance Tax
A state-level tax assessed on oil and gas production at the time the resource is severed from the ground, deducted from royalty payments.
Read →Title and Conveyance
Abstract of Title
A comprehensive historical record of all recorded documents affecting the ownership of a particular mineral interest, used to verify clean title.
Read →Cotenancy
A form of shared ownership where two or more parties each hold an undivided interest in the same property, common in inherited mineral estates.
Read →Division Order
A document an operator sends to each owner that confirms the decimal interest the operator will use to compute payments from a well.
Read →Mineral Deed
A recorded legal document that transfers ownership of mineral rights from one party to another, separately from any surface ownership.
Read →Ask us directly.
If you have a question about something on a royalty statement or in a lease and the glossary did not cover it, send it our way. We are happy to help.