Buyer of Mineral Royalties - Leasing Mineral Rights Royalties VS Mineral Rights: http://www.apsense.com/article/gazpromsbunkering-business-in-constanta-plus-50-the-company-gave-up-the-big-fourauditors.html Just as most people think, the oil and gas royalties are not that complex. They are actually quite simple and later in this article, it will be clear exactly what they are and in which ways do they generate cash. If you are the owner of a farm, then you are the owner of that land also which is illustrated in the surface rights. If you own the mineral rights, it means that you have a right to sell, extract, and explore any mineral like helium, uranium, coal, gas or oil. However, there are some landowners who have absolutely no idea of potential minerals that may exist under their land. Either they do not have the geological knowledge or they did not acquire any training regarding this. Actually, some of the landowners completely forget they own the mineral rights to their land. Furthermore, an average landowner does not necessarily have the budget of multi million dollars to explore and search valuable hydrocarbons.
However, energy companies have the funding and the necessary knowledge to explore oil and gas. As soon as they find out the likely presence of hydrocarbons under a land, they can negotiate with the landowners to lease the mineral rights for search and exploration. The lease permits the energy companies to explore and produce & sell if the petroleum is found in economic quantities and an interested buyer of mineral royalties exists.
The Bonus and the Royalty: For leasing his right for minerals, two forms of compensations are received by the mineral owner. The first one is called a bonus payment, a signing bonus which is paid on per acre basis and the amount is typically $200-50 per acre. At the time of the lease signing, the bonus is paid once, which may be the only time it will be paid. The second one is the royalty, the percent of money generated from his property by the oil and gas. The amount calculated is traditionally 12.5%, but recently it is around 18-25%. The percentage can vary upon the negotiation of the mineral owner and the cost of the extraction of oil and gas. If, in a case, the oil company fails to find oil or gas or not in the economic quantities, then the lease expires and the only bonus was earned by the owner. The mineral rights are reverted back to the mineral owner, afterwards. If the wells produce and the hydrocarbons are found, then the royalties are activated. In case the well produces 100 barrels per day and if the oil price $80 per barrel in that month, then the total amount becomes $8000 per day. The buyer of mineral royalties if agreed to 15% royalty, will get $1200 per day. The mineral owner earns $36000 per month which makes this oil business a luxury business.
Royalties Dwindle Over Time: The royalties which are paid to the mineral owner often last for decades. The money with time, however, drops considerably because of the depletion of the wells. An average well lasts for
almost thirty five years. Somehow, the royalty dies and the mineral rights owned, get leased again in the future.
Finding Mineral Rights to Buy is Hard: Due to the reliable and trustworthy cash flow stream, a good investment can be made in oil and gas royalties. However, finding people who own mineral rights is the toughest part. Blackbeard Data Services currently own all the available royal owners data and all the owners are situated in Kansas and Texas. Blackbeard Data is a data warehousing company which maintains the world’s largest database of oil and gas royalty, mineral right owners, working interest and overriding royalties. The database contains over four million records at this time. The company sells the data to a buyer of mineral royalties looking to buy oil and gas royalties as well as to the institutional investment firms. http://issuu.com/uniroyalties/docs/negotiating_oil_and_gas