Have questions about selling your minerals or royalties?
If you are a landowner with oil and gas mineral interest, understanding how selling your mineral or royalty interest works can be confusing. Here are answers to some frequently asked questions you may have.
In a nutshell, royalties are payments made based on income received over a specific period of time.
If you are a landowner who leases the mineral rights to your property, the company that leases your minerals will typically agree to pay you a percentage of the profits they make from selling the oil and gas collected from the development of your mineral interest. What that percentage ultimately is will vary depending on the company you’re working with and the region you’re in, but the industry standard is between 15-20%.
Assuming you have an active oil and gas lease, you’ll receive royalties as long as the well is producing.
If your well stops producing or the company decides to stop production on your land for any reason (market prices, oversupply, financial troubles, etc.), you will stop receiving royalties. Once the lease has expired on your mineral rights and you’re no longer under contract, you will stop receiving royalties.
However, if you sell your royalties, you might qualify for long-term capital gains tax treatment.
If you’ve owned your oil and gas minerals for more than one year, the payment you receive for selling your royalties may be subject to the lower capital gains tax rate.
We encourage our landowners to talk to a certified public accountant for tax advice. If you’d like to learn more about selling your royalty, call Gateway Royalty at 330-627-4200.
So, you have a mortgage on your property, but you want to sell a portion of your royalty? Easy. At Gateway Royalty, we’ll work with your bank to find a solution that benefits everyone.
In most situations, we’ll use one of these three options:
One: We’ll pay off the mortgage in full, as long as our purchase price for the royalties is greater than mortgage on your property.
Two: We’ll subordinate the mortgage with your bank: this means getting written consent from your bank agreeing to the terms of your deal with Gateway.
Three: If the first two options don’t work, Gateway will work with you to refinance your loan with a different lender.
To discuss your specific situation, and to learn more about Gateway Royalty, call us at 330-627-4200.
If you receive an oil and gas royalty, you might end up with lower SSI or SSDI monthly benefits. If your royalty income surpasses a certain threshold, your SSDI monthly benfits will be reduced.
As of October 2011, earnings that surpass $1,000 a month are considered substantial.
The SSA disregards the first $65 to $85 that you earn, before reducing your monthly benefit by $1 for every $2 you earn from oil and natural gas royalties.
In Eastern Ohio, oil and gas production is broken down into three distinct regions where different resources are extracted. In the energy industry, these regions are called windows.
- Dry Gas Window
- Wet Gas Window
- Oil Window
Different resources (or commodities) are extracted in each of these windows, and these commodities all have prices that rise and fall independently.
Oil and gas companies move their rigs based on commodity prices, and where they think the best production will take place.
Since royalty payments are tied to commodity prices and production, geography is one of the biggest factors that affect your royalty.
Gateway Royalty buys royalties throughout all three windows. To learn more about Gateway, call us at 330-627-4200.
Selling your royalty is merely selling the stream of royalties you might receive if your land were put into a producing drilling unit. The oil and gas royalty buyer cannot execute leases on your property.
A royalty buyer like Gateway Royalty is a silent partner in the background and receives money only in the event that your oil and gas minerals are drilled or pooled with a producing well.
We are primarily interested in the Ohio counties of Carroll, Jefferson, Harrison, Belmont, Guernsey, Noble, and Monroe, all located within the Utica Shale.
However, if your land is not in these counties, we may still consider it for purchase. Talk to us!
Gateway Royalty is committed to doing business the right way. We are building a business based on honesty, fairness and respect. In buying a balanced portfolio of Utica Shale royalties across a broad region, we do hope to benefit if successful wells are drilled. At the same time, however, the result of our investment will allow landowners to reduce some of their holdings to cash, spreading the risk of being that unlucky landowner sitting on bad geology. And by only buying a portion of a landowner’s oil and gas royalties, we allow a landowner to “keep some skin in the game.”
We intend to be a part of your community for a long time. If you want to learn about the oil and gas business in the Utica Shale, come and see us! That’s what neighbors are for.
We are located off the Square in Downtown Carrollton at 111 2nd St. SW (the old Huntington Bank branch) and in St. Clairsville, just across the street from the courthouse at 116 E Main St. We look forward to getting to know you. Feel free to give us a call or just stop by.
There’s no obligation. When you give us a call, we’ll help you explore your options with your oil and gas royalty.
You’re under no obligation to sell, and all conversations are kept confidential.
But we always hold onto and keep track of landowner information. That way whenever development picks up in your area or we get a better understanding of development, we can revisit it at a future date.
This is why it is good to sell your mineral or royalty interests. You’ll have money available to invest or use as you see fit, without waiting on production.
Still looking for answers?
Our experienced staff is here to help. We’ve got years of experience working with landowners in Eastern Ohio. Give us a call at 330-627-4200 and we’ll get your questions answered.