I own mineral rights in ND and would like to try and figure out what the value is if we were to sell them? Anyone know how to value or recommend someone?
Has anyone ever taken a credit loan against your Mineral Rights value or royalties?
Hi Jake G, I am also interested in selling a portion of my mineral rights in Weld County Colorado. I have had several inquiries and am just now starting to respond to them. I don’t know where to find the “going” price. Is there a site that I can go to and see whats been sold and the price? Or can you help me figure at what I really have. Thanks, Kathy
Scott brings up a very important point. Does anyone loan money with Mineral Rights or royalties as colateral? They used to. This was called a Production Payment, where someone would advance money in exchange for a royalty or overriding royalty interest until a specified amount of royalties were paid to the party advancing the money. I still receive money that was derived from a 1949 production payment. My predecessor paid the party $275,000 in 1949 (which was a lot of money back then), and the interest that was conveyed to my predecessor is valid until $7,000,000 have been paid. Not there yet, so for more than sixty years, this interest has continued to pay my predecessor and now me.
That's the essence of the production payment, and they used to be fairly common. Recently I was in need of some emergency cash, and could not find any bank (not even in Texas) that would loan me money using my royalties as colateral. So as a result, I'm in the process of forming a company that will do just that. It provides royalty owners an alternative to selling their royalties. In my case, we will make short-term loans (up to 12 months), with the royalty owner making interest only payments. From my own personal history, I think there is definitely a need for this. Just did a web search, and there are a whole flock of Craigslist ads for royalty loans.
Do you know where to get a loan against mineral rights or royalties ? In Ohio Utica and Marcellus
Donald Skotty said:
Scott brings up a very important point. Does anyone loan money with Mineral Rights or royalties as colateral? They used to. This was called a Production Payment, where someone would advance money in exchange for a royalty or overriding royalty interest until a specified amount of royalties were paid to the party advancing the money. I still receive money that was derived from a 1949 production payment. My predecessor paid the party $275,000 in 1949 (which was a lot of money back then), and the interest that was conveyed to my predecessor is valid until $7,000,000 have been paid. Not there yet, so for more than sixty years, this interest has continued to pay my predecessor and now me.
That's the essence of the production payment, and they used to be fairly common. Recently I was in need of some emergency cash, and could not find any bank (not even in Texas) that would loan me money using my royalties as colateral. So as a result, I'm in the process of forming a company that will do just that. It provides royalty owners an alternative to selling their royalties. In my case, we will make short-term loans (up to 12 months), with the royalty owner making interest only payments. From my own personal history, I think there is definitely a need for this. Just did a web search, and there are a whole flock of Craigslist ads for royalty loans.
henry mcgraw said:
Do you know where to get a loan against mineral rights or royalties ? In Ohio Utica and Marcellus
I would certainly consider a loan as long as you have producing royalties.
They are not producing yet.....my lease ends 4-12-2015 I should get a large bonus payment then.
Donald Skotty said:
henry mcgraw said:Do you know where to get a loan against mineral rights or royalties ? In Ohio Utica and Marcellus
I would certainly consider a loan as long as you have producing royalties.
Mr. McGraw, I would suggest that you would be better off selling your royalty stream for a period of time so that no matter what the minerals would return to you after a period of time. If you took a loan out against them and could not make the payment you would lose the minerals forever. It should be as easy either way, the number of years vs how much money you wanted would have to be negotiated. I hope this helps. I saw that interest only loans may be available, but I think the interest would be high enough that in a year you would have paid back as much as you received or more and still owe all of the principle and next months payment to boot.
Mr. McGraw, it's hard to quantify non-producing minerals. I myself have had a dud well drilled on my minerals in a great area. I think it likely that anyone loaning you money against your non-producing minerals would want really high interest rates to offset the risk. Even if you have an extention option in your lease, that would be no guarantee that the lessee would pick it up.
r.w. kennedy is correct about the interest rate being high (14-18%) on this type of loan (particularly if the colateral is non-producing minerals). He is also right about if you fail to repay the loan you lose your colateral (like all other secured obligations). What is nice about this type of loan is there are no credit checks, no tax returns and those who make these loans, understand the value of royalties and minerals (unlike a bank, which generally will not make such a loan). It is ideal if you only have a short-term need for cash.
I meant no disrespect, of course the interest would have to be high with such variable collateral. If the interest weren't high I would think that one of us was missing a crucial part of the equation. In anything to do with oil I have never met anyone not doing their best to make money, as it should be.
Donald Skotty said:
r.w. kennedy is correct about the interest rate being high (14-18%) on this type of loan (particularly if the colateral is non-producing minerals). He is also right about if you fail to repay the loan you lose your colateral (like all other secured obligations). What is nice about this type of loan is there are no credit checks, no tax returns and those who make these loans, understand the value of royalties and minerals (unlike a bank, which generally will not make such a loan). It is ideal if you only have a short-term need for cash.