Royalty Management Issues

Are landowners selling their Oil and Gas Mineral Rights or Royalties?

Every day more and more landowners are opting to sell all or part of their oil & gas mineral rights. Every mineral and royalty owner has a different reason to consider when selling all or a portion of their interests. Unfortunately the Oil & Gas industry is risky. Sometimes companies pull out of neighborhoods where rigs had been planned, leaving those leases behind in the process and leaving landholders unsure when, if ever, they will see a well on their property that might bring a steady stream of royalty checks with it.  Always seek out a reputable company before deciding to sell. Here are just a few reasons you need to consider, if you are thinking about it…

Issues in managing your Oil and Gas Royalties

Future Uncertainties: Royalties are depleting natural resources and not appreciating financial assets. The production from Oil and Gas reservoirs does not last forever. It is also facing increased competition from Alternative Energy sources such as; ethanol, solar, bio-fuels, etc. Also, there is increased political pressure to increase the amount of taxes owed on oil and gas income, windfall profit taxes and proposed carbon taxes.

 

Paperwork Nightmares: The sale of royalties will eliminate the necessary maintenance of files and property tax records. In addition, it will simplify your federal income tax return. Paying taxes on royalty income is a necessary evil year after year after year. Depositing the revenue, accounting for it, and paying taxes on the royalty income are all part of the deal. At times there comes a point when the hassle factor simply outweighs the benefit of owning the oil or gas royalty.

 

Split Interests: As minerals and royalties are inherited from older generations they become increasingly divided. This brings less monetary benefit to the generation receiving the smaller interest and also increases the time and money required to
administer the smaller portion of interest.

 

Debt Repayment: Selling mineral rights and royalties can provide a quick and hassle free way to pay off debt. Whether it be high interest credit card debt, mortgages, or bank loans. Selling mineral rights and royalties can provide you with a lump sum payment to use to pay down or pay off burdening debt.

 

Money for immediate needs: Instead of counting on a small monthly royalty, selling your mineral rights can provide you with an upfront large cash payment to use to address immediate needs. Whether it is work needed on your vehicle or your home, school costs and other necessities for your children, selling mineral rights and royalties can help you achieve these money goals now.