On the Cusp: Making the Decision to Sell Your Oil and Gas Royalties

by | Nov 10, 2014 | Business

If you are having difficulty managing your oil or gas royalty holdings, it may be time to sell. The decision to relinquish your resources is not easy but has many benefits. Here are several aspects to consider if you feel ready to sell your oil and gas royalties:

No More Managing Estates

Have you received an influx of oil and gas royalties due to an inheritance or liquidation? Do you feel equipped to manage the estate? Instead of researching, negotiating, and attempting to manage these royalties on your own, consider selling them. This financial boost will come in the form of quick cash flow, enabling you to use the estate’s assets in any way you choose.

Property Evaluation and Buyer Negotiation

If you are prepared to sell your oil and gas royalties, the next step is to have your property evaluated. This will enable both you to set exact terms for the sale, including the estate’s market worth and the estimated amount of minerals or resources on your property. The process of evaluating and preparing your royalties for sale is extremely important, as it can help you avoid contractual or legal disputes in the future. Aside from selling, you could choose to lease your mineral rights for a specified amount of time. In doing so, you will relinquish control of the resources but may still be eligible for a portion of the royalties.

If you decide to sell your royalties, you will most likely be able to choose from a variety of offers thanks to an ever-present amount of interested buyers, This may vary depending on your estate’s location and the amount of resources or wells you own. In general, you should never accept your first offer, but rather wait for others to come in. At this point, you will negotiate with a corporation or their broker to establish the terms of the agreement. This step requires extensive research and knowledge as well as diligence and negotiation skills, diligence. Ultimately, you want to strike a deal that will benefit both buyer and seller.

Cash in Hand

Once the deal goes through, you will no longer be responsible for the upkeep of your oil and gas royalties, such as state regulations, accounting issues, and hefty income tax payments. Selling your oil or gas royalties will result in a bulk sum of money, keeping you from having to rely on variable royalty amounts each month. If you decide to sell out, consider investing some of the resulting money elsewhere. This is predominantly useful if you would like to maintain some small, monthly income.

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