Overriding Royalty Interest Defined

An overriding royalty is a benefit an assignor receives when he or she assigns a leasehold interest. It is an interest which is carved out of, and constitutes part of, the working interest created by an oil and gas lease. Gruss v. Cummins, 329 S.W.2d 496, 501(Tex.Civ.App.-El Paso 1959, writ ref’d n.r.e.). Specifically, it is the share of the oil or gas produced reserved in assignment, part assignment, or sublease of an oil and gas lease payable to the assignor by the assignee over and above the royalty reserved in the lease payable to the lessor. See 3 W.L. SUMMERS, THE LAW OF OIL & GAS § 554 (2nd ed.1958). An overriding royalty is an interest in real property regarded as a covenant running with the land between the assignor and the assignee, and is enforceable by the assignor against the assignee. Phillips Petroleum Co. v. Taylor, 116 F.2d 994, 995 (5th Cir.1941).