Understanding Royalties: Sell Oil and Gas Royalty Interests for Cash

"How do I know how much my royalties are worth?"

Click here to learn more about how to value your royalty.

Or give us a call and we can help estimate the value for you FOR FREE.



What are Oil and Gas Royalties?

A royalty is a right to a payment for the use of an asset by another party. For oil and gas, royalties are rights to a portion of the sales of oil or natural gas from a property. The total royalty interest on a property is typically defined in the leases signed by you and the operator who drilled and/or maintains the wells on the property. This is often a small interest, usually less than 20%, of the total revenue interest tied to the minerals. An individual royalty will be a portion of this total royalty interest.

What are the benefits of owning royalties?

Royalty interests have the benefit of receiving a portion of the total revenue from the sale of oil and gas but without being responsible for paying expenses. Working interest owners are responsible for the operating expenses tied to the well. If you own a royalty interest in a producing unit or lease, you should be receiving regular payments from the operator for your portion of the revenue brought in by oil and gas sales.

What are the risks of owning royalties?

Most royalty owners do not realize that the production from their property will continue to decline every year, though their check will fluctuate mainly based on oil and gas prices. Eventually, the well will deplete and the royalty checks will decline to $0. Furthermore, if the well that pays the royalty gets damaged and is shut in for repairs, or if the well simply becomes uneconomical to operate, the royalty payments will stop. Because of this risk, many royalty owners choose to sell oil royalty or gas royalty, trading their declining monthly cash flows into a lump-sum pool of cash they can convert to a non-depleting asset.

Should I sell gas royalty or oil royalty?

In general, royalty ownership in an oil and gas field should be looked at individually and decisions should be made on a case-by-case basis. This is why it is important for owners to understand how royalties and other oil and gas interests work. Before they sell oil royalty or sell gas royalty, many owners consider the amount of recent royalty payments, how old the lease on the property is, how reliable the operator is and how long the royalty payments might last. Another thing to consider is the current prices of oil and gas that may be affecting the size of the recent royalty checks.


Receive a Free Quote

For a risk-free quote, with no cost and no obligation, please fill out the following short form.


Energies Monitor

Latest News

  • Gas Prices Are About to Hit a Key Symbolic Mark
    Energy Information Administration (EIA) says the average national gas price could fall below $3 a gallon in the coming weeks, a symbolic level that could help boost consumer sentiment and spending ahead of the holiday season. The AAA survey shows the average at $3.01, down from $3.04 at the start of the week. Gas prices typically drop at this time of year, according to AAA, but they’ve fallen more dramatically than usual because of tumbling crude oil prices as a result of increased supplies and a weaker outlook for global demand, as growth in China and elsewhere slows. “The cost of crude oil accounts for approximately two-thirds of the price consumers pay for gasoline, which means, barring any other factors, gas prices continue to fall as long as crude oil prices decline,” AAA said this week.
  • Conoco sees third-quarter profit rise, 2015 capex seen lower

    ConocoPhillips Chairman and CEO Lance rings the closing bell at the New York Stock ExchangeBy Anna Driver (Reuters) - ConocoPhillips , the largest U.S. independent oil and gas company, on Thursday reported higher third-quarter profit after the sale of its Nigerian unit and said overall spending would decline next year, partly in response to falling crude oil prices. Crude oil prices have tumbled more than 20 percent in recent weeks as global demand slows and supplies rise. Crude traded in New York fell to a more than two-year low on Monday at $79.44 a barrel but recovered a bit to above $81 on Thursday. Conoco expects to spend less than $16 billion next year, down from the $16. ...

  • Conoco to spend less in 2015, below $16 billion
    HOUSTON (Reuters) - ConocoPhillips plans a capital budget below $16 billion next year and will defer spending on some of its less-developed areas, including the Permian Basin and Western Canada, if crude oil prices continue to slide, the company said on Thursday. "Beginning in 2015 capital in our major projects begins to taper off," Ryan Lance, Conoco's chief executive officer told investors on a conference call. "We have significantly more flexibility of ramp up or down our capital as circumstances dictate. ...