Hi, How would I go about getting a loan on my future payments on the oil, gas and mineral rights?
You can try a bank that is working in the oil and gas business. There are several groups out there outside of banks that will make loans. Proceed cautiously.
I think I’ve seen an ad on this site somewhere related to this.
Ms Barnes is correct, read carefully any and all paperwork you are presented. Be sure you’re not burdening your minerals with any undue clauses in contracts. A quality and trusted atty in your court is always a good bet.
If I were you I would run an analysis on future cash flow from production utilizing a decline curve. Then, by adding a discount factor, you can figure out roughly how many months of production you need to cover the necessary loan amount plus interest (which is essentially captured by the discount factor in the DCF analysis). If you don’t know how to do this, maybe someone here will help for free. If not, find a competent landman who can run the analysis (they cost about $40-60/hr depending on experience and the complexity of the task).
The terms I’ve seen used in a “Mineral Loan” deal contain a terrible (for the mineral owner) clause.
The clause I am referring to is one that provides a Right of First Refusal (ROFR) to the Lender stating that the mineral interest from that point on is encumbered with the obligation to let the Lender have the “Right of First Refusal” to purchase the minerals. This notice will be filed into the public record, thus observable by everyone from now on. In short, your minerals are now far less desirable by the open market because would be buyers know that their chance at a successful deal are quite slim.
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