Oil & Gas Leasing – Be Sure You Do These Things!
November 16, 2017
If you own oil and gas royalties, you may want to earn some extra income by selling your interests. Parties who are looking at oil and gas royalties for sale may have even asked if this is something you want to do. There are many times you can greatly benefit by selling your royalties; however, you must go about it the right way.
So before selling your oil and gas royalties, make sure you do the important things below to ensure you get the best deal possible.
Identify All Parties Involved in the Sale
When you plan the sale of any oil and gas royalties, it is essential to identify the parties interested in buying them. Get all important contact information as well as the name of the specific person to deal with. It may be an individual buyer, a representative of an energy company, a leasing agent, or a middleman like a landman.
Each of these parties is looking for something different when considering oil and gas royalties for sale, which can affect the way the sale is carried out and the price you receive. Leasing agents negotiate the best deals for their customers, while middlemen usually buy with the intent to sell at a higher price. Individual buyers and energy companies may deal with you directly to work out a favorable deal.
Research Other Wells In Your Area
Before you commit to selling your oil and gas royalties, take some time to research other wells that are producing in your area to obtain important information. Determine the types of wells that have been drilled, the companies who have drilled them, and how they were drilled. Look up how much oil these current wells are producing and any new drilling permits that have been issued in the area.
Collect Important Paperwork In Advance
Gathering the paperwork necessary to sell your oil and gas royalties can be time-consuming. Prepare ahead of time by gathering deeds, wills, and any other documentation that identifies your ownership of mineral and surface estates since proof of your ability to sell your oil and gas royalties will be required.
Make sure to gather documentation on previous leases, easements, mineral or royalty conveyances, and other related information. You will be better able to strike a deal if you have all of this prepared and there is no question about ownership.
Require Separate Leases for Separate Tracts
If you own multiple tracts of land, demand a separate lease for each portion if you plan to sell oil and gas royalties, even when dealing with the same buyer. This removes any potential concerns that could arise if there are any questions as to whether a tract is still being held by the royalties buyer. A separate lease ensures that each contiguous land tract is held according to its own contract.
Set Up Business Entities In Advance
Once you come to an agreement with a buyer and sign an oil and gas lease, the buyer will begin to issue bonus payments to the party identified on the lease. If the income you receive is substantial enough, you may be interested in setting up a business to favorably handle this income. If you plan on transferring mineral ownership to a business, be sure you do so before the lease is signed.
The sale of oil and gas royalties can be lucrative as long as it is handled the right way. If you would like to sell oil and gas royalties, be sure to do your research and footwork ahead of time before trying to make any type of deal. Doing so will ensure a smooth transaction with your buyer when you offer your oil and gas royalties for sale!
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