A Guide to Selling Oil & Gas Royalties in 2021

A Guide to Selling Oil & Gas Royalties in 2021

In 2019 and 2020, many mineral and royalty owners across the US were not interested in selling their minerals. What we are now seeing in 2021 is an increased desire to sell oil & gas royalties. What is causing this? It is probably a combination of depressed oil and gas prices over the past two years, financial stress due to the pandemic, and now $70 oil. We will define mineral and royalty interests below, but for the purposes of this guide, we are going to focus on the sale of your monthly royalty payments.

What is a Mineral Interest?

Mineral ownership constitutes the right to explore for and produce oil and gas. The mineral owner has the right to:

  • Enter onto the property to explore
  • Authorize another to enter onto the property to explore (by granting an Oil & Gas Lease),
  • Receive the benefits (from granting a lease), such as bonus consideration and royalty.

What is a Royalty Interest?

When a mineral owner grants an oil and gas lease to a driller, the exclusive right to drill and develop is transferred to the driller. In exchange for granting the lease, the driller agrees to pay the mineral owner an oil and gas mineral royalty. The royalty is a percentage of the proceeds from the sale of oil and gas produced, which is paid monthly to the mineral owner.

Why Would You Want to Sell Your Oil and Gas Royalties?

Common reasons why our clients decided to sell their royalty interests:

  • Unexpected medical expenses
  • College expenses – their income decreased during the pandemic,
  • They are elderly and want a big cash payment now instead of a monthly royalty check,
  • They saw the price of oil drop to below zero last year and now want to sell at $70/bbl.

Royalty owners like getting that royalty check in the mail every month. But many royalty owners would like to know how much cash someone would pay them today for all of their future royalty payments. Most oil and gas royalty owners do not realize there is a market to sell oil and gas royalties until they receive an unsolicited offer in the mail from a company or individual interested in buying oil royalties. What you probably do not realize is that there are thousands of individuals and companies trying to buy producing royalty interests.

Unfortunately, oil and gas royalty buyers prefer to make offers to un-informed royalty owners. Some royalty owners might have noticed that their royalty checks are steadily decreasing, which is not good news when royalty owners rely on that check every month. So, when someone offers to pay you 24 times (2 yrs) your last check, you might be tempted to take it. But what you don’t know is that the operator may be getting ready to drill more wells and your royalty check is going to start increasing every month. Royalty buyers are NOT going to inform you of future drilling. LandGate, however, knows exactly what is happening now and, in the future, and will get you more cash if you list your oil and gas royalties for sale.

Why is LandGate the Leading Resource for Selling Oil and Gas Royalties?

  • We are Best in Class in running SEC guideline royalty valuations
  • We will include un-drilled (future) wells in your valuation to maximize your sales price
  • We provide free well and production data for royalty owners to understand our valuations
  • Will prepare your personal LandGate Data Room for royalty buyers to review before offering
  • Will market your royalty interest for sale to thousands of buyers each month
  • Will guide you through the process of accepting an offer, closing, and getting paid when you sell oil and gas royalties

What is a LandGate Valuation?

A LandGate valuation report is a forward-looking financial review of projected oil and gas reserves and the value those reserves can generate. Most companies claiming to get you the highest offer do not know the true value. Some companies will take the average of the last six months of your royalty checks, multiply that number by 36 (3 years), then shop your oil and gas royalty interest at that price. Hold it! Was that the average of royalty checks when oil was selling at $45/bbl? And how about the wells they have drilled but not yet completed on your minerals? And how about the wells that have been permitted, but not yet drilled on your minerals?

LandGate provides an expert valuation from a team of geologists and reservoir engineers at no cost when you list with us. If you want to maximize the value of your royalty interest to put the most cash in your pocket, you need LandGate to manage and market your royalty interest for sale.

Free Well and Production Data

LandGate makes well and production data available for free. We will show you how we locate your property on LandGate.com and show you the drilling and production activity. We will also show you how to locate this detailed data and information. This well and production data will also be a part of your Personal LandGate Data Room on LandGate.com where buyers will understand why the asking price for your oil and gas royalty interest is as high as it is.

Your Oil and Gas Royalties for Sale – Why LandGate Will Get You More Money

LandGate has successfully assisted hundreds of royalty owners in closing at a price averaging 4 times their original offer. LandGate’s appraisal expertise, global-reach website, and large network of oil and gas royalty buyers are key components for creating competition and getting better deals.

LandGate will post your listing and personal LandGate Data Room on LandGate.com to expose it to as many potential buyers as possible. Marketing your royalty interest online with LandGate equals more money and better deals. LandGate will not sit back and wait for offers. LandGate takes an aggressive approach to email targeted marketing. LandGate.com is the ideal marketplace to list your oil and gas royalty interests. Contact us or find your parcel on our map to get started.

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