Selling Gas and Oil Royalties - Frequently Asked Questions

 

How Much will I be offered for My Interest?
What’s the difference between Mineral Interests (MI), Royalty Interests (RI), Overriding Royalty Interests (ORRI), and Working Interest (WI)?
How Long is the entire Process to Sell My Oil & Gas Mineral or Royalty Interest(s)?
Am I Obligated to Sell My Interest if I Receive an Offer?
Why Do My Checks Vary Every Month?
Why Don't I Receive Royalty Checks Anymore?

 

How Much will I be offered for My Interest?
Offers vary on the Following Evaluations determined by our Petroleum Engineer:

Production History - (Decline Curves and Water Rates) of the Field and/or Leases

Operators Reputation - Some are just better than others

Reservoir Formation - Some Reservoirs have longer production histories than others

Commodity Price Risk – Gas and oil pricing futures, political change, OPEC, weather, etc.

Future Production and Development

Interest Type - Royalty, Overriding Royalty, Mineral Rights/Interest, Non-Participating Royalty Interest, or Working Interest.

Historical Cash Flows and Averages for: 12 months, 6 months, and 3 months.

Tax Rates - Tax Rates for Purchase and Severance may be too high, low, or non-existent pending your state of where the interest is located, which affects property value and offer rate.

Our offers typically range 25 - 70 months (pending certain parameters). The information above allows us to calculate current reserves with a prediction of future reserves and cash flows. Our objective is to offer you fair market value while addressing risks and uncertainties that may be involved in future interests and commodities prices.

What’s the difference between Mineral Interests (MI), Royalty Interests (RI), Overriding Royalty Interests (ORRI), and Working Interest (WI)?

MI RI ORRI WI
Generates Revenue from Well Production Y Y Y Y
Owns the Underground Minerals Y Y N N
Ownership Continues after Production Stops Y Y N N
Collects Upfront Bonus Payments Y N N N
Has Rights to Executive Leases Y N N N
Pays to Operate or Drill the Well N N N Y
Participates in the Lease Operating Expenses N N N Y
Has Significant Tax Advantages N N N Y

 

(NPRI) Non-Participating Royalty Interests - Are Interest similar to ORRI's but typically not bound to a well or lease, they are typically bound to Minerals or Mineral Rights assigned by a land/mineral right owner conveying either a permanent royalty or temporary royalty off his or hers mineral rights and lands, typically NPRI do not have executive rights to bonuses but the NPRI owner is carried and bound by such leases that are executed by the true Mineral Rights Owner.

How Long is the entire Process to Sell My Oil & Gas Mineral or Royalty Interest(s)?

It typically takes several days to several weeks pending the information currently available and presented by the Seller. Some Royalty Companies string Sellers out for periods of 30-60+ Days; however we offer solutions that meet our timelines and work and fit within the guidelines and timelines of the seller.

Am I Obligated to Sell My Interest if I Receive an Offer?

Absolutely Not, All offers presented by are "Non Obligation" Offers to Owners for their Oil & Gas Interest(s). Additionally, receiving an offer does not obligate you to sell either.

Why Do My Checks Vary Every Month?

Because of variations of oil & gas production compounded with market averages, majority of oil & gas royalties are determined off the monthly commodity averages. Most operators are 60-90 days back meaning your current months check is typically for production two months back (gas) or one month back (oil), however some oil & gas companies operate 90 days back but is always based on production and commodity pricing. Additionally, productions do vary and change because of the declines in oil & gas wells. There is only so much gas that can be recovered from reserves on a monthly basis and over the lifetime of the well.

Why Don't I Receive Royalty Checks Anymore?

1. A different company is responsible for paying you royalties and may be currently setting up your owner accounts.

2. The amounts you receive may not have accrued the minimal amount set forth by the Royalty Payor, for example Companies like Devon Energy Production Company, LP and Chesapeake Exploration, LP require that you must first have a minimum accrued amount of at least $100.00USD to receive a royalty check.

3. Your interest may be in suspense for legal reasons because you have not filed all appropriate paperwork with the Oil & Gas Company who is to pay you royalties, address change request, estate changes, or litigation.

4. The wells and/or field may not be producing gas or oil, please call the number on the last check stub you recieved. If you can't locate that number please feel free to contact us for further assistance and help.

 

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