Things to know before making an
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oil and gas investment
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What are royalty interests? In the industry of oil and gas, royalty refers to a portion of the revenue produced from the oil or gas resource. A company or a person who owns the royalty does not bears the cost of the operation needed to produce the resource; even then that person is the owner of the portion of the revenue generated. People make oil and gas royalty investments because the profit earned is of great value that is almost 12-25 %. Why would anyone want to sell oil royalty? Typically, people sell oil royalties for a number of reasons. Inheritance is the most common among them. Heirs of the royalties are unable to manage the royalties or they are too small to share among the heirs. Some people sell oil royalties because they need money immediately or they want to simplify their investment. Although oil and gas investment is a profitable business, it can turn out to be a nuisance if not managed properly.
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If I ask to receive an offer to sell my oil royalty, will I be obliged to sell? No, you can ask for an offer without being obliged to sell it for the same offer. You are not obliged to sell oil royalty until you sign an agreement. If you are planning to make oil and gas investment, you should weigh the pros and cons before signing the actual lease agreement. How do I determine the value of my oil and gas royalties? You can get your assets evaluated by a petroleum engineer for a fair price. The evaluation will include analyzing historical production data, calculating production decline rates etc. the information obtained from the evaluation will be used to predict the future performance and calculate remaining oil and gas reserves.
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Am I going to receive the same amount of money each month? The price of oil and gas will vary each month, resulting in variations in prices paid and volumes produced. This will cause fluctuations in your monthly checks. Another reason for the fluctuations you might experience maybe because of the technical problem on the field. In addition to this, over time most wells experience a reductions in the amount of oil and gas produced which may cause fluctuations in the money received each month. What could be the reason why royalty check would cease? There can be following reasons: a) The company which is responsible to pay you have changed and a new company is processing your payment b) The amount due on the company is less than the minimum disbursement amount c) Your account is placed under legal suspense because of a change in address, change in ownership of royalty or the responsible company is unable to disburse revenue to you d) The well has ceased to produce oil. Visit www.uniroyalties.com
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