Does that mean that an investors working interest is always more than his net revenue interest?
Answer In order to determine your Net Revenue Interest, all lease burdens must be subtracted from your Working Interest. Lease burdens are any lease royalties or overriding royalty interests which burden your portion of the Working Interest. As an example, you may have assigned a 3% ORRI to a geologist, if so, your WI would be reduced by this ORRI, but another WI partner would not necessarily be affected by your assignment of the ORRI – it just depends on how the Joint Operating Agreement (JOA) is set up. Your Net Decimal Interest is not reduced by ‘taxes’; taxes are an expense item that is “paid”, just like the “lease operating expenses”. An Investor’s Working Interest should always be greater than his Net Revenue Interest. If you have a 20% Net Revenue Interset and someone wants to purchase a 5% WI, you need to deduct the 5% WI from your WI amount, not your Net Revenue Interest. Then, his 5% WI will also be reduced by any lease royalties or ORRI’s which also burden your WI. I hope th
