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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You should try to make sure that you are making the most out of your net profits interest and reinvesting it wisely.

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The net profits interest were well received by the investors who believed in the company and had been investing for years.

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After all the expenses had been deducted, the investor was not happy with his share of the net profits interest, he felt the expenses by the company where to robust and he should have received more of the initial net profit.

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