Explanation of oil and gas working interest Most of the people do not know about the working interest. They think it is a complicated subject beyond understanding. Actually, it is as complicated as perceived. The simplest way to explain working interest of oil and gas is that in every business there are expenses and an income. The working interest is the ownership of the expenses of the business. It is abbreviated as WI sometimes. Hence, if you possess a fifty percent of the working interest, you are obliged to pay the fifty percent of the total bill that are due for that lease.
The most obvious question asked by the beginners is that why would someone want to have a share in expenses? To answer that, let us consider a normal oil and gas royalty lease. That there is one owner and there is one oil company. The owner of the land owns the mineral rights and signs a lease that gives him a twenty percent royalty. The oil company explores then extracts and produces oil. The landowner owns the twenty percent of the net revenue interest, so he is going to receive 20 percent of the revenues. The oil company owns the hundred percent of the Working interest, thus pays for the 100 percent of all the expenses. However, the company has only 80 percent of the net revenue interest. If the company decides to sell their fifty percent of working interest, they are still going to have 50% of their WI and 40% net revenue interest. The point that needs to be kept in mind is that the royalty owner’s net revenue interest will never change because of something that the working interest owner does. A warehousing firm sells mineral rights ownership data to individual investors searching for an investment in oil and gas royalties and to institutional investments firms. Contact uniroyalties.com for more information on buying and selling oil and gas royalties.