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Friday, May 25, 2007 11:09:35 AM
"As I said, the total WI = NRI."
That's not correct.
See what you posted...""NRI.........
A share of production after all burdens, such as royalty and overriding royalty, have been deducted from the working interest. It is the percentage of production that each party actually receives."
Granted the bills are paid out of WI and NRI but WI and NRI are not the same.
Simple illustration.
You have an old 1/8 lease. You have no partners so your WI is 100% and your NRI is 87.5%.
You have a sublease in which others have retained ORRI. The total RI burdens are 30%. You have no partners so your WI is 100% but your NRI is 65%.
This illustrates why it is so critical to have a workable NRI.
You can have 100% WI all day long but if your NRI is too low you're absolutely screwed. WI is NOT equal to NRI.
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