Definition - What does Royalty Owner mean?
A Royalty Owner, also known as a royalty interest owner is an individual who is entitled to receive monthly or annual royalty income from operators producing crude oil and natural gas from the leases on which they own interests. These royalty owners also own land, mineral rights, overriding royalties, oil and gas payments or any other rights in the hydrocarbons produced from a participating area.
Petropedia explains Royalty Owner
Royalty owner is used in the mineral and royalty acquisition business of oil and gas leases. There are three types of royalty ownerships that exist in the oil and gas royalty business:
- Working Interest (WI)
- Overriding Royalties (ORRI)
- Royalty Interest (RI)
The working interest is primarily associated only with the operators and oil producing contractors that have the access to drill, develop, produce the hydrocarbons from the oil and gas leases; however, based on the production and sales of the hydrocarbons, they are entitled to pay the monthly payments to the royalty interest owners according to their royalty proportions in a particular lease.