Oil and Gas Royalties

Frequently Asked Questions

Oil and gas royalties can be a somewhat confusion subject, and we are here to answer your questions.  We have gathered a list of commonly asked questions on the topic, including information on the investment, interests, tax advantages, and more.  Read below and get all your questions answered…and contact us if you have any others.

Frequently Asked Oil and Gas Royalties Questions

How does the investment in oil and gas royalties work?

Unlike traditional fixed-income investments, oil and gas royalties let the investor know exactly where their returns will be coming from. Oil and gas royalty owners do not have any of the accompanying costs usually involved with the drilling and maintenance of the oil and gas wells. But they do own a percentage of the underground minerals. Royal Mesa Minerals offers investors the opportunity to take advantage of tax laws, making the investments perfect for retirement accounts and providing a perfect hedge against inflation. Investments aren’t generally in just one well, our acquisitions typically comprise hundreds of producing properties, which diversify and minimize risk by reducing the impact of well depletion.

Can I will or transfer my interest?

Oil and gas royalties, much like any other investment, can be included in an investor’s will, and upon the death of the investor, and any required probate, will be inherited by the heirs to the estate. Any transfers of royalties will require the investor to notify Royal Mesa Minerals so we can have the assignments switched over to the transferee.

What are my tax advantages?

If your investment in royalties are part of an IRA, the royalty checks you receive can be a source of cash for investing in other assets, all tax-deferred under your retirement plan. In addition, the IRS’s 1031 Real Estate Exchange rule allows an investor to make money from a real estate transaction and not have to immediately pay capital gains taxes on their profits. A 1031 exchange, sometimes referred to as a like-kind exchange, is the trade of one investment asset for another. Generally, most switches of assets are subject to either sales or capital gains taxes upon completion of the transaction. But if you fall with the guidelines of the 1031, you will have no tax due at the time of the exchange.

What is the minimum investment?

The minimum investment may vary, depending on your situation, but as a guideline, we require that you have either individual income of over $200,000 in each of the past two years, or a joint income (with spouse) of over $300,000, with the expectation of similar incomes in the current year, or that your individual net worth be over one million dollars.

How often is revenue distributed and how are we paid?

Once you invest in oil and gas royalties, you will receive a monthly check from us for as long as you remain an investor.

What are my liabilities?

Royalty interest holders do not pay anything for the development of the field. All of those expenses are paid for by the developers (oil producers and drillers). The same is true for maintenance of the field. The fields we offer royalty investment in have been carefully chosen to have proven reserves with a longer-than-normal life span.

Are there any cash calls?

No, there are no cash calls on your original investments in royalties. However, you may choose to invest more money in additional royalty properties at any time, subject to their availability.

Is it possible to liquidate my position down the road?

Much like an investment in real estate, oil and gas royalties are liquid within a reasonable time frame. After a three year period, you have quite a bit of flexibility with the investment. You may sell it to whomever you wish.

What happens if there is maintenance required to increase recovery rates on existing wells or when new wells get drilled?

All development, maintenance, drilling, and equipment costs are paid for by the developer of the particular field, and are not, and will never be, the responsibility of the royalty investor.

How long do these wells last?

Thanks to improvements in tried-and-true technologies, such as fracking and horizontal drilling, the productive life span of a well is much longer now than in previous times, in many cases it’s now well over 50 years. Because Royal Mesa Minerals does its homework before entering into any particular play, our track record of successful, long-lived wells speaks for itself.

How do I get started with an investment?

Contact us by calling (214) 706-9034 or fill out our contact form here.

Educate yourself on royalty investing…

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Are royalties a good fit for your portfolio?

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View Royal Mesa Mineral's Reg D filings with the U.S. Securities and Exchange Commission. There are significant risks associated with investing in oil and gas ventures. The information contain throughout this website is for general purposes only and is not a solicitation to buy or an offer to sell any securities. General information on this site is not intended to be used as individual investment or tax advice. Consult your personal tax advisor concerning the current tax laws and their applicability and effect on your personal tax situation.