Renting Property Provides Lots Of Benefits

Renting Property Provides Lots Of Benefits

by

Jane Cooper

It is common practice for gas companies to rent oil-rich property. These companies assess a standard rate for leasing the land, but they also incur something that is known as a gas royalty. Because it\’s based solely upon the volume of oil the company is producing from the land, this income is different from the lease price. The name \”royalties\” stems from the fact that the landowner gets a percentage of the oil, but doesn\’t have to pay for operating expenses or drilling. A base income for the landowner is guaranteed due to the leasing fee; however a larger amount of money, or royalties, could be earned based on the income the company gets from the land. Per the terms of the lease agreement, the owner must leave the land to the company and collect their checks. Why would leasing land to a gas company be a selection a landowner would make? Listed below are a few reasons.

It could be more advantageous for the owner to rent the land and get paid while not having to do any additional work for it; of course this will depend on what the land had formerly been used for. If there are any concerns over how the land will be treated, it is useful to know that the lease agreement will state the terms of how the land should be kept. It will also include how it will be left upon completion of the allotted time of the agreement. The Environmental Protection Agency also monitors drilling companies very closely for potential spills or other things that could impact the environment.

What if you\’re tied up in the legalities of your contractual agreement, but want more immediate funds? One possible option is to sell your gas royalties. People choose to sell their royalties for numerous reasons. One possibility is that the royalties are part of a trust or inheritance and the liquid assets are needed by the trustees. Another conceivable reason for beneficiaries to sell would be if there\’s a big enough number of them so that it wouldn t be worth divvying up the royalty payment among everyone. Others could simply want to streamline their portfolio to make handling their funds more manageable.

If selling your royalties interests you, here\’s the common procedure: initially, a petroleum engineer will be hired to perform a valuation on your oil royalties to decide the proper price for the sale. An evaluation of the history of production is included in this valuation. They will also review historical cash flows and calculate production decline rates. All of these statistics are used to estimate future production from the well and determine the remaining gas and oil reserves to predict future profits. Giving you a fair sale price while making sure you understand any future risks is the end goal for any company purchasing the royalties.

Gas royalties are very common in the drilling world. The leasing fee helps to ensure that the owner will have earnings for the property; the royalty is a bonus dependent on production. Steady income with no work involved and the ability to sell royalties if the owner is in need of funds are two of the benefits to the owner leasing his land. It\’s almost foolish not to lease your land given how easy the process by which royalties are sold has become.

An acquisition company can certainly make the entire process of

selling gas royalties

extremely quick and painless. For more details on

Legacy Royalties

are attainable at the company\’s web page, http://legacyroyalties.com/.

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