FREQUENTLY ASKED QUESTIONS
Why should I sell my minerals and/or royalties?
Diversification- Mineral rights and royalties have real value. But like any investment, diversification is important. Given the inherent risks in the oil and gas business–such as commodity price risk, government regulation, and environmental and mechanical issues that can affect production–it is even more important to make sure your interests are diversified. To mitigate our risk, we own interests in numerous wells in multiple states. Many of our clients aren’t diversified, and sell to us to make sure all their eggs aren't in one basket.
Depleting Asset- Oil & gas wells are depleting assets. If you are reliant on royalty income, or it is the primary asset in your portfolio, you will have no means of replacing the declining income or hedging your commodity price risk from such an asset. Many of our clients recognize the risk in owning depleting assets and sell to us in order to invest in other assets, such as real estate, which don’t have the same risk profile.
Estate Planning- Many people find that it is easier to sell mineral rights rather than bequest them. This is because of the time and expense required to probate them upon death. Moreover, distributing your minerals to numerous heirs dilutes their long-term value. If you are Trustee of an Estate, it is much easier to distribute cash than dividing up property. To make the process even easier, we will prepare the deeds to save you even more time and money.
What are the potential tax benefits of selling?
Royalties paid to well owners are taxed in various ways, including a Federal Income Tax of up to 39.6% and state and local taxes. Our clients often choose to receive a large lump sum payment up front instead of paying these taxes over the lifetime of ownership.
The Gusher Royalty team can also help clients save on taxes by facilitating a 1031 exchange of their oil and gas assets into other assets, including vacation homes, real estate investment, etc… If you would like more information on how 1031 exchanges work, or how they might be beneficial to your situation, we are happy to discuss.
What is the timeline for receiving payment?
Our closing process typically takes 30-45 days depending on how complex the title is on your property(ies). In most cases, we are able to close sooner, but we typically ask for 30-45 days to ensure enough time to run the title and solve any issues that may arise.
How do I find out what my minerals and royalties are worth?
We are happy to run an in-depth model to determine what your mineral and royalties are currently worth, and we will share that model with you with no obligation to sell! Give us a call or shoot us an email today to get started!