If you have Oil and Gas Royalties in West Virginia, you may be considering selling or may just want to know more about them. Below we will help you better understand your Oil and gas royalties in West Virginia and what you need to know.
About Selling Oil and Gas Royalties
Oil and Gas royalties are monthly income received when a well produces oil and/or gas in excess of the amount it costs to operate the well. A royalty owner is entitled to receive proceeds from the well based on their royalty interest. Let’s look at a simple example where the owner has a 20% royalty interest:
- Well produces $10,000 worth of Oil in a month
- Well has $2,000 in monthly expenses
- This leaves $8,000 in income to distribute to the owners in the well
As a royalty owner, you would receive 20% of the $8,000 or $1,600
The amount you will receive on a monthly basis depends primarily on three things:
1. How much Oil or Gas the well produced
2. The sales price of Oil & Gas
3. The monthly expenses
Any of these factors can have a large amount on the amount received by the royalty interest owner each month. As royalty owner, it’s important to look at your statements each month and look for an unusual drop in monthly income. If the amount produced stayed the same, and Oil & Gas prices also stayed the same, expenses have likely increased and it’s important to know why. If it’s a simple month decline there is probably nothing out of the ordinary but if the declines are occurring month after month with no change in production or prices you should contact to operator to determine why your royalty checks have decreased.
Selling Oil and Gas Royalties in West Virginia
One of the most common questions we receive from Royalty owners is how much their royalties are worth. The value of royalties in West Virginia is much easier to calculate than a lease bonus amount or the price per acre you should sell. This is because your property is already producing so the risk involved with drilling has already passed and the future value of your royalties can be reasonably estimated. All royalties buyers value royalties differently based on their perceived risk, but they primarily focus on the following things:
- Oil vs gas mix (IE are you producing all oil, all gas, or some combination)-Current Oil & Gas Prices
- Decline Curve (All wells have a natural decline which is typically steepest in the first 5 years)
- Their risk tolerance
There are other factors that affect what a buyer is willing to pay, but the above factors are most common and taken into account by all buyers. What’s important to know as a royalty owner is the following:
1. What your average monthly revenue has been for the past 6 months
2. How long the well has been producing (we can help with this)
3. Whether the well is producing oil or gas and how much of each (we can help with this)
The best way to sell your oil and gas royalties is to list them online with a company who can put your property in front of a number of buyers. We recommend US Mineral Exchange due to the fact they don’t buy royalties and work with thousands of buyers from all over the country.
How much are Oil and gas royalties in West Virginia Worth
Another common question we receive from royalty owners in West Virginia is how much their royalties are worth. The amount that each buyer will pay varies based on the factors we listed above, but we have found the most common range is from 2 years to 6 years. Let’s look at a simple example of selling oil and gas royalties in West Virginia:
Average monthly check for the last 6 months: $500
Amount an investor would be willing to pay: $12,000 to $36,000 (12 months x $500 = $6,000 year $6,000 x 2 to 6 years)
As a royalty owner, you want to get the highest price you can for your royalties and make sure you aren’t leaving money on the table. We speak with royalty owners every day who want to make an informed decision and help them through the process. Enter you information below to get in touch with us:
Free Consultation
If you own mineral rights and have questions, fill out the free consultation form below. We can help you with the following questions:
- Mineral Rights Value
- Evaluate whether you have a fair offer to sell mineral rights
- Answer questions about selling mineral rights
- Understanding Market Value of Mineral Rights
- + Any other questions related to mineral rights!
No matter what question you have regarding your mineral rights, we can help! We usually respond to your inquiry within 1 to 2 hours!
Whether you want to sell mineral rights, determine mineral rights value, or simply have some basic questions regarding your mineral rights ownership, fill out the form and we will quickly be in touch.
