Working Interest
The operating interest in a lease that pays its share of drilling and operating costs in exchange for production revenue after royalties.
A working interest is the operating side of an oil and gas lease. The working interest owner pays its proportionate share of the cost to drill, complete, and operate the well. In return it receives the production revenue that remains after royalties and other burdens are paid out.
This is the opposite of a royalty interest, which is cost-free. Working interest carries the risk — dry holes, cost overruns, and plugging liability all fall here. Operators and non-operating partners hold working interest; most mineral buyers do not, because the cost exposure changes the risk profile entirely.
The distinction between cost-bearing and cost-free interests is fundamental to valuing any deal. Review the basics in our mineral rights overview.