Net Profits Interest
Definition
The percentage of net profit paid by a company to an investor based on the percentage share of the investor in that company. Net profit interest is a common type of interest in oil and gas companies, where the oil field is leased out to producers. A lease contract is then made, which will state the exact percentage of net profit (after all expenses is deducted) to be paid to the oil field owners or investors. Net profit interest should not be confused with royalty interest, which involves the payment of investor from the gross revenue rather than the net profit.
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