Oil and Gas Royalties FAQ: |
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Mineral and royalty interests are similar
in that both involve ownership of minerals under the ground
and they receive a portion of the income from the production
of oil and gas. They differ in that the owner of a mineral
interest also has the right to execute leases and collect
bonus payments. Both mineral and royalty owners receive
income once the well is producing, but only the mineral
owner receives the up-front bonus payment.
Like mineral and royalty owners, the owner of overriding
royalty interests receives a portion of the income from the
production of oil and gas. The main difference is that the
owner of an overriding royalty does not own the minerals
under the ground, only proceeds from the production of
minerals. Once the lease has expired and production has
ceased, the overriding royalty interest expires. Conversely,
the owners of minerals and royalties maintain their
ownership after production ceases.
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