7 Easy Steps to make it Simple for the Gas Royalty Buyer

Gas Royalty Buyer

Over the years many oil and gas companies have developed widespread royalty interests (along with their leasehold positions). These interests are then usually converted to cash to support their search and production efforts. If you look through the eyes of an investor, you will see these royalty interests as liable streams of revenue. However, most sellers find it difficult to make proper transactions with the gas royalty buyer, thus making it tough for the royalty gas buyer to make a decision.

We can give you a step-by-step help on how to approach the gas royalty buyer with an attractive royalty package:

1. Show the Buyer what you own: every purchaser wants to get a deep introduction on their purchase, so tell them everything in detail. Make a spread sheet adding all the details there. For example: buyers might be keen to know about the wells in which you own a royalty interest, to solve this problem, simply add a row In the spreadsheet for each well you are selling. Don’t forget to add a little legal description, the name of the well and mention your stake ownership in the well.

2. Make it Clear to yourself and then explain the Buyer: the most important question for the gas royalty buyer is whether you are selling only the revenue interest generated on each well or are you selling your interest in the original leases? So, you need to be clear to yourself about what you are selling and then approach the potential buyer openly. Otherwise, they can back out and waste your time.

3. The Gas Royalty Buyers Should Know the Value of your Royalties:show themsix months of production checks. This will act as a proof that yes! You are being paid on the royalties being offered. However, keep it clear as it is not the same as getting a third party evaluation of the worth of the future productions.

4. Price your Royalties to Move: the market will tell the worth of your royalties, but you should know that they should be priced at around the perceived value of 60 months of production. Obviously this amount can increase or decrease depending on so many external factors. If the gas royalty buyer is keen for a long term flow of cash, then he may obtain ROI from the income growing over time that surpasses the purchase price.

5. Keep your Purchase and Sale Agreement Ready Before you Offer Royalties for Sale: doing this will minimize the chances of finishing being delayed; i.e.: if the buyer plans to start changing boilerplate language in a contract for sale that still have to be drafted. So, to avoid this keep your PSA ready before you plan to start offering your properties for sale.

6. Prove that you ownit:you should prove that you own it with title documentation. It is crucial that you allow the gas royalty buyers to review all the documents before proceeding.

7. Be Ready to Convey: once the deal has completed and the ownership changed, the first thing you need to do is to notify all gas operators (who are making the payments) about the change of ownership. Royalty divestiture is a complex process and requires unnecessary time for the exploration and the production.
This happens because seller is not clear about the process and goes through many small things that are not the company’s main business focus and are a complete wastage of time.
But, by keeping these 7 steps in mind, you can make things simple for the gas royalty buyer and the royalty divestiture process can go much smoothly and easily.
 Watch our YouTube Video of Selling Oil And Gas Royalties:- https://youtu.be/gDDuTtwk_3s