Deciding to sell minerals and royalty is a personal decision and each individual’s situation is different. Here are a few reasons you may want to consider a partial sale of your mineral or royalty interest.
Guaranteed Cash – Life is full of unexpected and sometimes expensive events. Whatever your circumstances, we offer you an opportunity to profit from your mineral interest today and not wait months or many cases, years for drilling to occur.
Delays in Development – As a mineral owner you are not in control of the timing of the development of your mineral interest. The simple truth is that a typical oil and gas lease gives exploration companies 3, 5 or in some cases, 10 years in which to begin drilling. This means your mineral interest may not be scheduled for drilling for many years. Farms and ranches located away from existing pipelines may be drilled last. For this reason, a mineral owner may prefer to capitalize on a portion of their minerals and royalty today, rather than waiting years for development to take place.
Marginal or Non-Economic Wells – Unfortunately, there is no “sure thing” in the oil and gas business. Even when wells are generally productive in an area, there can be considerable variation between them – uneconomic wells can occur right beside economic ones. And some wells, (“dry holes”) may not even produce at all. This means, even if your land is drilled, your royalties could prove of little value. By selling a portion of your minerals now, you hedge against the real possibility of an uneconomic well being drilled on your property and assure yourself of a payday.
Partnering Together – Flatiron Energy works hard to learn an owner’s current situation and is able to assist in an introduction to a well qualified financial advisor or 10-31 “like kind exchange” tax specialist. Our goal is to create “win-win” scenarios and help mineral owners achieve financial security.
Favorable Tax Savings – If you recently signed an oil and gas lease on your mineral interest, this may have resulted in a hefty tax bill because lease bonus payments are treated as ordinary income. However, a sale of your minerals and royalty may qualify for long-term capital gain tax. If you have owned your land or minerals for more than one year, the payment you receive for selling your minerals may only be subject to a federal tax rate of only 15%. (We encourage mineral owners to speak a certified public accountant for tax advice.)
Capitalizing on the “Boom” Today – Oil and Gas trends and “plays” come and go. What is hot today may be old news in 6 months. Many ‘shale plays” across the country have already began to lose steam and drilling has slowed significantly or come to a halt due to falling commodity prices. By capitalizing on your asset today, you can hedge against any uncertainty that the future holds.
Other Personal Reasons – Whatever your situation, remember that we will treat you with respect and confidentiality.
Additionally, the proceeds from the sale can be used in a “10-31 like kind exchange” and taxes can be deferred completely.
If you need more reasons on why to sell mineral rights, please contact Flatiron Energy Partners today!