Mineral Rights vs. Royalty Interests vs. Working Interests: What's the Difference?

When mineral owners receive an offer letter or talk to a buyer, they often encounter terminology they have never seen before. What is a non-participating royalty interest? Is an ORRI the same as a royalty? Does ARB buy working interests? This guide breaks down the most common types of oil and gas interests in plain English.

Mineral Rights (Fee Minerals)

Mineral rights — sometimes called fee minerals or mineral fee ownership — represent the actual ownership of the minerals in place beneath a tract of land. If you own mineral rights, you own the oil, natural gas, coal, and other extractable resources beneath the surface. You have the right (called the executive right) to lease those minerals to an operator, and you receive a royalty interest in any lease you grant.

Mineral rights can be severed from surface rights — meaning the person who owns the land on the surface may have no ownership of the minerals beneath it, and vice versa. This is common throughout Texas, New Mexico, and most western states. When you own fee minerals, you own something that is perpetual and self-renewing — your mineral ownership does not expire unless you sell it or give it away.

Royalty Interests (Landowner Royalty)

When a mineral rights owner leases their minerals to an operator, they typically retain a royalty interest — typically 20–25% of gross production revenue, though it varies by lease. This is called the landowner royalty or lessor royalty. It is a cost-free interest: the royalty owner receives their share of production without bearing any of the drilling, completion, or operating costs.

If you own mineral rights and they are currently leased, you are receiving a royalty. If the lease expires or is released, your mineral rights revert to their unleased state and you have the right to re-lease (or sell) them.

Non-Participating Royalty Interest (NPRI)

A non-participating royalty interest (NPRI) is a royalty interest that was carved out of the mineral estate and conveyed separately. The holder of an NPRI receives a royalty from production — just like a mineral owner who leased their minerals — but has no executive rights. The NPRI owner cannot negotiate or enter leases, cannot receive lease bonuses, and cannot participate in development decisions.

NPRIs are common in Texas because of how mineral estates have been subdivided over generations. They can be fixed-fraction (e.g., always 1/16 of gross production) or floating (calculated as a fraction of the royalty actually received by the mineral owner). ARB buys non-participating royalty interests.

Overriding Royalty Interest (ORRI)

An overriding royalty interest (ORRI) is similar to a landowner royalty, but it is carved out of the working interest (the lessee's interest) rather than the mineral estate. ORRIs are most commonly created by landmen, geologists, or brokers who receive an ORRI as compensation for assembling or facilitating a lease. Like landowner royalties, ORRIs are cost-free and receive a percentage of gross production.

One important difference: an ORRI is tied to the specific lease from which it was created. When that lease expires, the ORRI expires with it. In contrast, a mineral interest or NPRI is perpetual.

Non-Operated Working Interest (NOWI)

A working interest is the cost-bearing ownership stake in a well. Unlike royalty interests, working interest owners pay their proportionate share of drilling, completion, and operating costs — and they receive the corresponding share of revenues after those costs. The operator (the company in charge of drilling and production) is called the operated working interest. Parties who own a working interest but are not responsible for day-to-day operations are called non-operated working interest owners (NOWI).

Non-operated working interests can be lucrative in a high-production environment, but they also carry real downside risk: if production falls or costs rise, NOWI owners bear their share. Many non-operators choose to sell their working interests to simplify their finances and avoid ongoing cost obligations. ARB purchases non-operated working interests in qualifying situations.

Which Interests Does ARB Buy?

• Mineral rights (fee minerals) — producing and non-producing
• Non-participating royalty interests (NPRI)
• Overriding royalty interests (ORRI)
• Non-operated working interests (NOWI) in qualifying situations

If you are unsure what type of interest you own, ARB can help you identify it as part of the free valuation process. Share the property description or county where your interest is located — such as Midland County or Howard County — and our team will research the chain of title and confirm exactly what you own before making an offer.