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What are the Benefits of Owning Mineral Rights?
Owning mineral rights means having ownership of subsurface resources in a specific area, which can be separate from ownership of surface land. These natural resources may be oil, natural gas, coal, metals, gemstones, or even sand. The extraction and sale of these resources can be tremendously beneficial to the mineral rights owner.
REAL PROPERTY
Having mineral rights is ownership of real property, like real estate, and they are owned in perpetuity.
NO DRILLING COST
Mineral rights owners pay ZERO expenses and take ZERO drilling liability in regard to drilling operations.
PAID FIRST
Mineral rights owners are royalty owners and are paid first, before anyone else in the oil & gas chain of payment.
MONTHLY CHECKS
Royalties from the sale of oil and gas are distributed monthly to mineral rights owners. Twelve checks a year and a 1099.
BOOKED RESERVES
Mineral rights owners are paid for every zone or reservoir that exists within their defined mineral boundary.
MULTIPLE WELLS
Modern technology has lowered drilling risk and increased production.
How Does Revenue From Mineral Rights Work?
Financials of Mineral Rights:
How Do You Get Paid?
First, let’s start with owning oil and gas mineral rights enables mineral rights owners to receive royalties. Mineral rights owners earn these royalties from what’s produced and sold from their mineral rights property. Now, maybe mineral rights owners don’t have all the tools and resources to shovel their way 10,000 feet below surface. So, they make a deal (lease agreement) with an oil and gas company that does have the tools and resources to get the oil and gas. There is a lot to consider to ensure picking the right oil and gas company for that job. Let’s skip that for now and focus on the money.
One-Time Payments:
Leasing Your Mineral Rights
Mineral rights owners don’t have time to waste waiting on the oil company to extract their ‘black gold’. Therefore, they set in the agreement a time frame to do so – usually 3 years. But mineral rights owners don’t have the oil company lock up exclusive rights to their minerals for 3 years without something in return. Mineral rights owners have the oil company pay them a ‘lease bonus’ to hold exclusivity to their mineral rights for that time. To be more specific, mineral rights owners agree to a price per mineral acre they own. Mineral rights owners may even give the oil company an option to extend this agreement for another 2 years. Of course, for another lease bonus per mineral acre.
Receiving Royalties:
Monthly Payments
Next, should all go well (no pun intended), mineral rights owners want to keep a piece of all future oil and gas produced. That’s part of the lease negotiations and usually falls between 12.5% and 25% of revenue from the minerals produced. It’s great to receive a one-time payment for leasing minerals to an oil and gas company. Nevertheless, it is a one-time payment. Mineral rights owners can receive continuous monthly royalty payments from the sale of oil and gas produced on the mineral rights that they own. The oil and gas company drilling and producing the oil and gas pays these royalties for every oil and gas molecule they extract and sell on the market.
Direct Ownership:
Underground Real Estate
Much like traditional real estate holdings, mineral rights owners own an asset in perpetuity. These assets are titled and deeded, and we provide these documents in your account on the Eckard Insight app to be referenced easily. Unlike a mineral fund, when one owns mineral rights directly they hold legal title to specific mineral rights that are tied to a particular piece of land. Mineral rights have the significant benefit of being representative of physical resources that are tied to real property, with value that is retained and can potentially grow with time as global demand for energy resources increases.
Consulting the Experts:
Eckard Enterprises
We do the hard work of selecting mineral rights of interest, purchasing them, clearing title, and gathering them strategically in specially formulated mineral packages. We then allow qualified, accredited individuals to acquire ownership at the level they wish to participate. Revenue is distributed to owners every month on a percentage basis as oil & gas is produced on the mineral rights. The performance of owned assets are tracked on our proprietary app, Eckard Insight, in detail down to each well in the package. Reach out to our team to learn more about how mineral rights ownership works and whether it’s right for you!
How Does Revenue From Mineral Ownership Work?
Financials of Mineral Rights: How it Works
First, let’s start with owning oil and gas mineral rights enables mineral rights owners to receive royalties. Mineral rights owners earn these royalties from what’s produced and sold from their mineral rights property. Now, maybe mineral rights owners don’t have all the tools and resources to shovel their way 10,000 feet below surface. So, they make a deal (lease agreement) with an oil and gas company that does have the tools and resources to get the oil and gas. There is a lot to consider to ensure picking the right oil and gas company for that job. Let’s skip that for now and focus on the money.
Getting a One-Time Payment for Leasing Your Mineral Rights
Mineral rights owners don’t have time to waste waiting on the oil company to extract their ‘black gold’. Therefore, they set in the agreement a time frame to do so – usually 3 years. But mineral rights owners don’t have the oil company lock up exclusive rights to their minerals for 3 years without something in return. Mineral rights owners have the oil company pay them a ‘lease bonus’ to hold exclusivity to their mineral rights for that time. To be more specific, mineral rights owners agree to a price per mineral acre they own. Mineral rights owners may even give the oil company an option to extend this agreement for another 2 years. Of course, for another lease bonus per mineral acre.
Receiving Royalties: Monthly Payments
Next, should all go well (no pun intended), mineral rights owners want to keep a piece of all future oil and gas produced. That’s part of the lease negotiations and usually falls between 12.5% and 25% of revenue from the minerals produced. It’s great to receive a one-time payment for leasing minerals to an oil and gas company. Nevertheless, it is a one-time payment. Mineral rights owners can receive continuous monthly royalty payments from the sale of oil and gas produced on the mineral rights that they own. The oil and gas company drilling and producing the oil and gas pays these royalties for every oil and gas molecule they extract and sell on the market.
Direct Ownership: Underground Real Estate
Much like traditional real estate holdings, mineral rights owners own an asset in perpetuity. These assets are titled and deeded, and we provide these documents in your account on the Eckard Insight app to be referenced easily. Unlike a mineral fund, when one owns mineral rights directly they hold legal title to specific mineral rights that are tied to a particular piece of land. Mineral rights have the significant benefit of being representative of physical resources that are tied to real property, with value that is retained and can potentially grow with time as global demand for energy resources increases.
Consulting the Experts: Eckard Enterprises
We do the hard work of selecting mineral rights of interest, purchasing them, clearing title, and gathering them strategically in specially formulated mineral packages. We then allow qualified, accredited individuals to acquire ownership at the level they wish to participate. Revenue is distributed to owners every month on a percentage basis as oil & gas is produced on the mineral rights. The performance of owned assets are tracked on our proprietary app, Eckard Insight, in detail down to each well in the package. Reach out to our team to learn more about how mineral rights ownership works and whether it’s right for you!
Speak to an Expert
Eckard has spent the past five years helping accredited investors own mineral rights in areas where we see the greatest potential upsides. With 40 years of oil and gas experience, Eckard has the intellectual resources and the expertise to pick the right assets. Speak to an expert today to learn more about what mineral rights have to offer.
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