Our acquisition representatives are standing by now to begin our assessment of your royalty holdings. Once we hear from you, our goal is to extend you an offer within 24 hours. If you accept our offer, we will complete our pre-closing due diligence and issue payment right away. Depending on your situation and your royalty holdings, we can expedite this process for payment within a matter of a few days or even a few hours. If time is of the essence, please be sure to notify your acquisition representative upfront so that we may expedite your transaction accordingly.
We perform an in depth assessment of each royalty interest in order to extend the most generous offer possible. This assessment involves reviewing the production history of each well and forecasting future production using petroleum engineering best practices. We combine these forecasted production volumes with aggressive market expectations for future oil and gas prices in projecting royalty payments over the remaining productive life for each well. The end result of this process is a professionally-engineered, fair-market valuation that in most cases would cost the individual royalty owner thousands of dollars to have done by a third-party engineering firm.
Yes. Oil and gas reserves are finite, and every oil and gas well is destined to be plugged and abandoned. So, although royalty income can increase in the short term due to rises in oil and gas prices or production enhancement projects, you can be certain that your royalty checks will decline over the long run and will one day stop coming.
Royalties are worth more to our investors than they are to most individuals and institutions. This is because our investors are able to significantly reduce the uncertainty of royalty income.
They do this in two ways. First, they do not have all their eggs in one basket. That is to say, they own interests in thousands of wells. So, the risk that one well will unexpectedly go down is offset by the thousands of other wells they own. Second, our investors have the capability to hedge oil and gas prices. In effect, they lock in today’s oil and gas prices by assuring that the shortfalls in royalty income that would result from falling oil and gas prices would be made up in gains on their futures contract investments. You may have heard of Southwest Airlines’ use of this same financial tool to protect itself from increases in jet fuel prices.
The bottom line—our investors are able to limit the risks of holding minerals and royalties in ways that most of us can’t. Lower risk means higher value…and a higher lump-sum payout to you.