This is a question that often faces owners of mineral rights, royalties, working interests and overriding royalty interests. Whether you have owned mineral rights, royalties, working interests and overriding interests for many years or you just inherited them, you need to understand the pros and cons of owning oil and gas interests if you are considering selling your minerals or royalty.
If you receive monthly payments in the form of royalty checks, then you may want to consider these two important questions before while deciding whether or not you should sell your royalties or minerals:
As a royalty owner, you should consider the benefits of selling your royalty interest in exchange for a large lump-some cash payment.
The people we have helped have been do get the money from their royalty up-front rather than drawn out over several years of smaller monthly payments. You could put that cash to use:
INVEST YOUR MONEY
BUY A NEW CAR
PAY OFF AN OLD CREDIT CARD
MAKE A DOWNPAYMENT ON A NEW HOUSE
PAY AN OUTSTANDING MEDICAL BILL
OR JUST TAKE A GOOD LONG VACATION!
You can use the money for whatever you need it for. The real benefit of selling royalties and mineral rights is that you can take away the uncertainty and collect future cash flows right now! Use the cash when YOU need it!
There are some important risks to understand when you own or inherit royalties or minerals. Think about these facts:
OIL AND GASS WELLS PRODUCE LESS AND LESS UNTIL THEY EVENTUALLY RUN DRY
AS THE OIL AND GAS IS DEPLETED, YOUR ROYALTY CHECKS GET SMALLER EVERY MONTH UNTIL THEY REACH $0
THE VALUE OF YOUR ROYALTY IS BASED ON THE OIL AND GAS THAT IS LEFT, SO THE LONGER YOU WAIT TO SELL, THE LOWER YOUR VALUE GOES
THE PRICE OF OIL IS VERY HIGH RIGHT NOW, IF OIL CRASHES BACK TO $40 PER BARREL, YOUR CHECKS WILL GET CUT TOO!
IF A WELL GETS SHUT IN, YOUR CHECKS WILL GO TO $0
These are just a few of the risks, but many of the dangers are area specific. If you don’t want to gamble with the value of your royalties, then you should think about selling them now to get the most money for your mineral interests!