Definition of Over Ridding Royalty Interest

Over Ridding Royalty Interest is a type of sharing arrangement that offers an individual with no risk a portion of the revenue in exchange for something of value such as the right to drill on their land.

Applying "Over Ridding Royalty Interest" to Securities Exams:

Partnerships that have been organized to explore for oil, gas or precious metals may offer the owner of the land where the partnership would like to explore an over ridding royalty interest in exchange for the right to drill or mine on their land. The partnership will absorb all of the costs and take all of the risk. If the well or mine produces results the land owner will be paid the over ridding interest.

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