What do we do at Royalty Clearinghouse? Why do we buy mineral interests? How do we make money? We want to be open and honest with you about our company, so we are continuing our Frequently Asked Questions blog posts series.
WHAT IS AN OIL AND GAS ACQUISITIONS COMPANY?
Royalty Clearinghouse acquires oil and gas leases, mineral rights, and royalties. We purchase minerals and royalties from people who own an interest in a well or lease. This means we look at the interest amount, the amount of revenue each month, and what the market is doing at the time. Based on that information we make an offer to our client on what we think the interest is worth.
WHY DOES ROYALTY CLEARINGHOUSE BUY MINERAL RIGHTS AND ROYALTY INTERESTS?
In our last post we explained what royalties are: the funds paid to a landowner from the production of minerals (i.e. oil and gas) extracted from beneath the surface. Royalty Clearinghouse purchases those royalties from the interest owners and sends them a lump sum. However, the royalties are usually just a small percentage of the overall income from the production of a well, sometimes resulting in just a few dollars a month. So, you may be wondering why we even bother purchasing your interests.
We take a portfolio approach to investing, meaning that we spread our risk across many oil and gas investments. Basically, we buy oil and gas interests and hold on to them. Because we own a significant number of interests, we can effectively reduce our overall risk compared to an individual mineral owner who owns less than 1%.
Do you have other questions for us? Just let us know, we would love to hear from you!