# Overriding Royalty Interest (ORRI): What It Is and What It's Worth > What an overriding royalty interest is, how an ORRI differs from a mineral royalty, why it dies when the lease dies, how to value one, and how to sell it. Source: https://www.berlinroyalties.com/overriding-royalty-interest/ Publisher: Berlin Royalties, a veteran-owned oil and gas mineral and royalty buyer in Tulsa, Oklahoma, buying for its own account since 2014. Call or text 918-984-1645. License: free to quote and cite with attribution to Berlin Royalties and a link to the source URL. Interest Types ยท Plain English ## Overriding royalty interest, explained. An ORRI pays like a royalty and dies like a lease. Understanding that one sentence is most of what separates owners who price these correctly from owners who do not. ## What is an overriding royalty interest? An overriding royalty interest is a share of production carved out of the **working interest** under an oil and gas lease, free of drilling and operating costs. It is created out of the leasehold, not out of the minerals, which is the whole point and the whole risk. Landmen and geologists commonly take one as compensation for assembling a prospect. Companies retain one when they [farm out](https://www.berlinroyalties.com/farmout-agreements/) acreage. It is the standard currency for someone who contributed knowledge or acreage but does not want to pay for wells. ## How is an ORRI different from a mineral royalty? This is the difference that decides value. | | Mineral royalty | Overriding royalty (ORRI) | | Carved out of | The minerals themselves | The lease (the working interest) || Bears well costs | No | No || Survives lease termination | **Yes.** The minerals are still yours and can be re-leased | **No.** When the lease dies, the override dies with it || Perpetual | Usually | Only as long as that lease lives || Typical value | Higher, per dollar of current income | Lower, discounted for lease risk | A mineral owner whose lease expires still owns the dirt and can lease again next year at today's rates. An override owner whose lease expires owns nothing at all. That asymmetry is why a buyer will pay less for an ORRI producing the same monthly check as a mineral royalty. Not because it is worth less today, but because its future is contingent on somebody else's lease staying alive. ## How is an ORRI calculated? An override is expressed as a fraction or percentage of 8/8, gross production. If you hold a 2% ORRI in a well and the well produces $100,000 of oil in a month, the override is $2,000 before taxes and any deductions your instrument allows. Where it gets confusing is when an override is defined **proportionately reduced** to the leasehold, meaning your 2% applies only to the working interest actually covered. If the assignment covered a 50% working interest, your effective share is 1%. Read the assignment carefully; the phrase "proportionately reduced" cuts many overrides in half and owners routinely miss it. If you know the working interest and the net revenue interests involved, our [ORRI calculator](https://www.berlinroyalties.com/tools/) works out the retained override and what it earns at a given well cost multiple. ## Do overrides bear post-production costs? It depends entirely on the instrument that created yours. Some override assignments say the interest is free of all costs including post-production. Many say nothing, in which case state law and the underlying lease language decide, and gathering, compression, and processing deductions may be charged against you. Our [statement decoder](https://www.berlinroyalties.com/royalty-statement-decoder/) explains those line items and [royalty payment laws by state](https://www.berlinroyalties.com/royalty-payment-laws/) covers your right to demand an itemized accounting. ## What is an ORRI worth? Less than an equivalent mineral royalty, and the gap widens as the lease gets older and the wells get closer to the end of their lives. Buyers, including us, discount an override for: - **Lease termination risk.** When production stops and the lease terminates, your interest is gone permanently. There is no reversion. - **No re-lease upside.** If the operator drops the lease and someone else takes a new one at a better royalty, you do not participate. The mineral owner does. - **Depth and formation limits.** Many overrides cover only the formations named in the assignment or only a single wellbore. - **Documentation risk.** Overrides are often assigned informally, decades ago, with sloppy legals. Title work is genuinely harder. None of that makes an ORRI a bad asset. A 3% override on a good Anadarko Basin well is a fine thing to own. It simply means the multiple applied to it should be lower than the multiple applied to minerals, and any buyer who quotes you an identical multiple for both either does not understand what you have or is hoping you do not. ## Can I sell an overriding royalty interest? Yes, and it is a market we participate in directly. Berlin buys overriding royalty interests of any size, including small ones, including old landman overrides nobody has looked at in thirty years, and including whole portfolios accumulated across a career. Overrides are also one of the more common things people inherit without understanding. If a parent or grandparent worked as a landman, geologist, or independent, there is a reasonable chance of overrides in the estate that never made it onto anyone's list of assets. Our [inherited minerals guide](https://www.berlinroyalties.com/transfer-inherited-minerals/) covers getting them into your name, and [unclaimed royalties](https://www.berlinroyalties.com/unclaimed-royalties/) covers money already sitting in suspense. What we need to make an offer is modest: a recent check stub or two, the assignment if you have it, and the well or county. If you have nothing but a name and a hunch, we will look it up. ### Have an override and want to know what it's worth? Send a check stub or the assignment. We will value it with the reasoning shown, including how we discounted for lease risk, and tell you honestly if holding it beats selling it. Free, no obligation. [Get a Free Valuation](https://www.berlinroyalties.com/free-valuation/) [Ask a Landman](https://www.berlinroyalties.com/ask-a-landman/) ## Related reading - [Unusual royalty interests](https://www.berlinroyalties.com/unusual-royalty-interests/): NPRIs, net profits interests, term royalties, production payments - [Farmout agreements](https://www.berlinroyalties.com/farmout-agreements/), where most retained overrides come from - [Selling a non-operated working interest](https://www.berlinroyalties.com/non-operated-working-interest/) - [How mineral and royalty interests are valued](https://www.berlinroyalties.com/mineral-rights-value/) - [Mineral owner's glossary](https://www.berlinroyalties.com/glossary/) Berlin Royalties is a mineral buyer and a landman shop in Tulsa, not a law firm or a financial advisor. This is general information about a common interest type. Your assignment and the underlying lease control what you actually own. Last reviewed August 2026.