Is it common for an oil companies to mortgage their producing mineral acres? Specifically I am talking about county records that I noticed in 3-18-13 in Blaine County.
Sure. Minerals in Oklahoma are classified as real property.
Thanks Todd, I’m hoping the company is not in trouble. Derby is a great company for royalty owners.
Most companies have loans or lines of credit which are guaranteed by their working interests in wells and leases. These loans fund operations, acquisitions, costs of new leases, etc., particularly when cash drops or there is an opportunity. The company may draw down off a line of credit on a temporary basis as needed. It is not a sign of weakness unless a company maxes out its credit and has continuing negative cash flow.
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