What is the difference in Working Interest and Ne

What is the difference in Working Interest and Net Revenue Interest?

Working Interest is the percentage interest identified as the interest purchased in the well and is the percentage share of the monthly operational expenses that the investor will pay.

Net Revenue Interest is the investor's percentage share of the monthly income realized from the sale of the well's produced oil and gas.

As noted, the Net Revenue Interest (NRI) is a lesser number as compared to the Working Interest (WI). This reduction is due to the "mineral owner royalty" burden on the well. When land is leased for drilling, the mineral owner is paid a cash consideration and provided a free interest ("royalty interest") in all wells drilled on the leased acreage. It is a negotiable interest, but usually ranges on the order of 20% to 25%. This royalty interest is free and clear of all monthly operational expenses. Therefore, on a lease where the mineral owner gets a carried 25% royalty interest, the lease Working Interest would be 100%, with a Net Revenue Interest of 75% (100% - 25%). This means that the Working Interest owner pays 100% of all monthly operational expenses, but receives 75% of the monthly income, with the remaining 25% of the income going to the mineral owner.