Frequently Asked Questions

What is the difference between minerals and royalties?

Mineral owners generally have executive rights and can execute oil and gas leases, collect the first year payment and any delay rentals and shut-in rentals. Royalty owners share in what is produced and saved from an oil or gas well, do not execute oil and gas leases nor collect the first year or any rental payments.

How do I know if I even own my mineral rights/royalties?

You need to have your “Mineral Title” examined by an attorney to be absolutely sure. However, that can be very expensive. If you have leased your land for oil and gas exploration, then you probably own at least an interest in the Minerals. In Louisiana the quick answer is that if you bought your land and no minerals were reserved, you probably own the Minerals. In Louisiana, if the Minerals under your land were reserved or sold more than ten years ago and your land is not producing oil and gas (it is also considered producing if it is included in a producing unit, either voluntary or compulsory), after the ten years have passed from the date of the sale or reservation, your Minerals have “reverted” to you as the surface owner. Most other states do not have this reversion principle. In these states once Minerals are severed from the land they do not return unless they are repurchased by the surface owner.

How are mineral rights or royalties evaluated to establish a value?

It depends on the property. With many properties there are three basic property scenarios with very different valuation processes.

Producing Property: If your property is producing, and you are receiving royalty checks from an operator, then it can be simple to value your mineral rights. In most of these cases, research is done to figure out what stage of production your property is in. Depending on your property location, there is a standard decline rate which all wells experience. Decline rate means that your second check will be less than your first and your third will be less than your second. Many wells experience a rapid decline rate within the first year. After the first year, the decline rate usually slowly levels off. Decline rates are unique to different formations or plays (like the Haynesville Shale or Eagle Ford Shale), but are similar within each play, which means that your decline rate is going to be similar to your neighbor’s. Once it is determined where your property is on the decline curve, an offer will usually be based on a multiple of your monthly royalty check. This multiple can be anywhere between 20 and 75 times your current month’s royalty check.

Leased but NOT Producing: If your mineral rights are leased but not currently producing, it is more difficult to value but still fairly straightforward. In this case, an oil and gas company has leased the rights to drill for and produce your mineral rights, but has not yet begun drilling and/or producing. There are a variety of factual situations that can be applicable, but the bottom line is that the property has some unknown factors. At this stage the known factors are evaluated, these include the company leasing your minerals, neighboring production and others. A value is usually based on the risk as to if, when and how much the property will ultimately produce.

NOT Leased – If your mineral rights are not leased, the valuation is nearly always very uncertain and risky. This situation is too risky for Louisiana Royalties, but there are companies that may be interested. Any valuation arrived at would be specific to that property and company.

Why should I sell to Louisiana Royalties?

You should sell to Louisiana Royalties firstly because in our areas of focus we can generally provide the highest cash value to the seller. Additionally, the transaction will be handled quickly and in a professional manner with no sales pressure.

How to calculate royalty interest?

Generally your property is in a unit. To calculate your royalty interest in a unit, divide the number of (net) mineral acres you own within the unit by the total acres within the unit, and finally multiply this by your royalty interest listed in your oil & gas lease.

Follow this example below:
Net mineral acres: 11 Acres
Unit size: 640 acres
Royalty in lease: 20% or 1/5th
Royalty interest: 11 acres/640acres x .20 royalty = 0.0034375 royalty interest

Why does my check vary from month to month?

There are many reasons that your royalties check may vary from month to month, including: changes in the price of oil and gas; changes in the amount of production from the well or wells; changes in the number or months of production included in your check; weather or road conditions affecting production or sales of production; required work on the well, wells, pipeline or field facilities may have caused the production to cease for all or a portion of the month; adjustments to your royalty payments due to prior payments being incorrectly made; change in operator of the well, wells or field which may delay your royalty check.

If I decide to sell, how long does the process take?

Once you decide to sell the entire process can take as little as two (2) business days to complete. Larger properties will take longer, generally one month to complete the process. Every effort is made to close your sale in a thoroughly professional manner, as quickly, efficiently and easily as possible for you.

Am I obligated to accept an offer made by Louisiana Royalties?

There is never any obligation at any time for you to accept any offer from Louisiana Royalties. Our offers are made without cost or obligation. Also be assured that any offer to you will be handled professionally, discretely and with absolutely no high pressure sales calls or other similar practices sometimes employed by others looking to purchase your royalties or minerals.

How do I obtain an offer?

Simply email our Team Leader or fill out our Request An Offer Form