There are as many reasons to sell your Oil and Gas Assets, whether they are minerals, royalties, overrides, and non-operated working interests, as there are to keep them.
There are many old sayings about real estate that can be applied to minerals and royalties – such as, “they aren’t making any more of it”. That may be true, but every owner’s situation is unique and everyone has different needs, risk tolerances, and desires.
If you are considering selling your oil and gas asset, let’s take a look at the fundamentals underlying your asset and help you make an informed decision. We can help walk you through the sometimes confusing world of oil and gas. Whether it’s lease clauses, understanding that monthly check statement, what upside potential exists, or something else, there are no questions too simple or too complicated to ask. It’s an important decision, and you can never have too much information. Please feel free to contact us, and we can give you objective assistance from experienced professionals.
Some may want to sell their oil and gas assets to reap the upfront cash payment instead of collecting an uncertain future stream of checks, others may want to sell down a portion to reduce the risk of having a large portion of their net worth tied to a single asset in a single location with a single partner (operator).
There are many old sayings about real estate that can be applied to minerals and royalties – such as, “they aren’t making any more of it”.
Below is a small list of potential advantages to consider when deciding whether or not to sell your oil and gas asset. At Front Range, we understand that every situation is unique, and we are willing to work with you to review the options. Selling may not be right for everyone, but if it is, let’s take a look at the fundamentals underlying your asset and make an informed decision.
You eliminate uncertainty about the value of your oil and gas assets.
Prices are volatile, and as we have seen over the last 10 years, the good times can be great but the low point of the cycles can be scary. When the price of oil drops, so does your check. Oil and gas drillers are also affected by shifting commodity prices, as they are forced to drill fewer wells when the price falls, and if prices stay too low, existing wells may no longer be profitable to operate.
You receive a lump sum payout, rather than monthly, quarterly or yearly checks.
There is a saying, “A dollar today is worth more than a dollar tomorrow” – instead of putting off that project or struggling to make ends meet, take charge of your finances and make them work for you. By taking an upfront payment on all or a portion of your oil and gas assets, you can diversify your investments, reallocate the capital into a safer asset class, reduce debt, pay for college, acquire that dream house or address some other pressing need.
Selling can help to simplify your estate.
When someone leaves behind an oil and gas asset in their estate, it may become a burden for the person who receives it. Whether it’s the unfamiliar paperwork or the burden of keeping track of what’s going on with the asset, heirs of mineral estates can call Front Range for help and assistance. We will gladly help evaluate your mineral interest, provide suggestions on what alternatives are available, and if you would like, we can make an offer to acquire all or part of the asset.
Eliminate accounting and administrative hassles.
You no longer have to keep up with tax regulations and bookkeeping expenses. The oil and gas business is rapidly changing, operators, come and go, rules are changing at an ever increasing pace, and common contract terms are continually modified making it difficult to understand what can be done to maximize the value of your asset or whether you are receiving what you had bargained for in your contracts. It’s not uncommon to have difficulties dealing with oil and gas operators, they potentially have hundreds and thousands of mineral owners and working interest partners they have to keep track of and deal with, sometimes they get it wrong. Front Range has decades of experience working through these issues and let us make your hassle our job.
Oil and Gas assets decline over time as the reserves deplete – Selling your asset for cash now eliminates the risk of your monthly check declines over time.
Oil and gas wells are depleting assets. As a mineral owner, this means that the majority of the royalty payout you receive will come early in the life of the well and payout will diminish over time.
Although not an exhaustive list of items to consider when making the decision to whether to sell all, part, or none of your oil and gas asset, we at Front Range are happy to discuss your concerns, goals, and needs.