Tips to Follow When Selling Oil and Gas Royalties

by | Nov 5, 2015 | Business

If an individual has oil and gas under their land, they might consider selling those rights for a royalty. There are millions of people all over the country selling oil and gas royalties and more starting each and every day. The way the process works is the property owner will look for companies that can safely extract the gas and oil from the ground without posing an environmental risk. These companies will take and sell the oil and gas for a profit, which they will then give a portion to the property owner as their royalty. What the property owner needs to do is find the firm that is going to give them the best possible royalty while still following the rules by working safely.

Selecting the Right Oil and Gas Company

Start by writing down the names of all the organizations that are providing oil and gas royalties. Now that the individual knows the names of these companies, they will need to start screening each one carefully to try to identify the one with the best value proposition. What some organizations do is, pitch a very high royalty, but then inside the fine print, they hit the landowner with fees so they essentially get what the other companies are offering. The only way to know whether the company pitching the royalty agreement is viable is to look at their reputation as a whole. If the firm has not taken care of a landowner, there should be feedback about it on the Internet. When the property owner has confirmed the company selling oil and gas royalties has a decent reputation the next step before making a decision to engage their services is to look at their overall financial health.

Establishing the Financial Health of an Oil and Gas Company

The reason the property owner has to check this is to make sure the company exploiting the oil and gas can sustain the daily operations and make timely royalty payments. To do this the property owner could ask to review the financial documents of the company or simply check their credit rating. Only when the property owner has completed these steps can they finally move forward and engage the services of the firm knowing they are going to get the best possible royalty for their oil and gas resources.

Property owners who follow all of these suggestions should be able to get a very substantial return on their natural resources they just need to do their research.

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