Shut-in royalty

What is Shut-in royalty?

Shut-in royalty meaning A royalty paid by a lessee as compensation for a lessor’s loss of income because the lessee has deferred production from a property that is known to be capable of producing minerals. Shut in may be caused by a lack of a ready market, by a lack of transportation facilities, or by other reasons. A shut-in royalty may or may not be recoverable out of future production.

 

reference: Glossary – U.S. Energy Information Administration (EIA)

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