Money now is worth more than money in the future.
Learn about what sets Red Stone apart.
Frequently Asked Questions
Different Land Rights
What are Mineral Rights?
Mineral rights are the legal rights that a person has, to exploit, mine, or produce any materials underneath the surface of the earth. These materials may be ores of metal, coal, oil, natural gas, gemstones, stone, salt, or any other substance other than sand, gravel, or water. The owner of the mineral rights can sell, lease, gift, or bequeath these minerals to any individual or entity they choose.
What are Surface Rights?
Surface rights differ from mineral rights. The term refers to any organic or inorganic substance that lies on top of the surface. If an owner wants to keep possession of the surface area, these are known as surface rights, and these are different from mineral rights which lie beneath the surface. For example, a person can choose to sell the mineral rights to any organic/inorganic substance beneath his property but keep the surface rights which would allow him/her to keep control of things on “top” of the ground.
What are Executive Rights?
Executive rights owners have the right to negotiate and execute oil & gas leases. In addition to executive rights, the other rights associated with mineral ownership are (1) the right to receive lease bonus payments, (2) the right to receive delay rentals, if provided for in the oil & gas lease, and (3) the right to receive payment of royalty.
Royalties vs Payments
What are Oil and Gas Royalties?
Oil and gas royalties refer to the amount of money paid to the person who owns the mineral rights after the substances (gas, oil, stone, etc.) are sold by an oil and gas operating company. The amount of these payments may fluctuate per month due to the amount of substances that are extracted and sold, and due to the changing rate of oil and gas prices.
What are Bonus Payments?
A bonus payment is a one-time payment made to the mineral owner at the time the oil and gas lease is signed. It is calculated on a per net mineral acre basis.
Kinds of Ownership Interest
What is a Non-Participating Royalty Interest (NPRI)?
NPRIs are created when a mineral owner conveys all or part of the royalty interest under a given tract but does not convey any right to execute oil & gas leases. NPRI owners are entitled to their proportionate share of oil & gas revenue from the tract without having to share in the operational costs of the well(s).
What is a Working Interest (WI)?
Working interest refers to an individual’s or entity’s ownership percentage in the oil & gas operations within a well, regulatory lease or contract area. Working interest owners must account for the costs associated with the leasing, drilling, completing, and production resulting from oil & gas operations.
What is an Overriding Royalty Interest (ORRI)?
An overriding royalty interest is a cost-free royalty interest retained by a lessee when an oil & gas lease is assigned to a third-party. Such an interest expires once the underlying oil & gas lease from which it is derived expires.
Differences between Interests: MI (Mineral Interests) vs RI (Royalty Interests) vs ORRI vs WI
|Generates Revenue from Well Production||Yes||Yes||Yes||Yes|
|Owns Underground Minerals||Yes||Yes||No||No|
|Ownership continues after production stops||Yes||Yes||No||No|
|Rights to Executive Leases||Yes||Yes||No||No|
|Pay to Operate the Well||No||No||No||Yes|
About Your Check
What do the decimals on my check indicate?
This is your proportionate net share of production revenues stated as a decimal, which considers both your fractional mineral/royalty interest in the tract, as well as the lease royalty rate negotiated in the governing oil & gas lease.
Why do my checks vary every month?
How do I calculate my Royalty Interest?
About Leasing & Selling
What is a regulatory lease?
A regulatory lease is simply the acreage designated by an operator for oil & gas operations that has at least one undivided owner of the underlying mineral estate.
What is the difference between leasing and selling of mineral rights?
What entails in leasing my mineral rights?
Are there any tax consequences that I need to be aware of with regards to mineral/royalty interest divestment
When you sell oil and gas assets that you’ve owned for more than a year, the long-term capital gain proceeds you receive are taxed.
Divestment of a mineral/royalty interest results in a single tax event. Receipt of monthly oil & gas royalty revenue or bonus payments are taxed at regular tax rates on a continuing, annual basis. It is imperative to consult with your tax professional to accurately determine an individual’s tax burdens/consequences.
How do I receive an offer?
It’s very simple! Fill out the form below.
What if I have additional questions?
Please contact us and we will get back to you.
- Oklahoma City: (405) 441–4004
- Louisiana: (318) 963-1044
- Texas: (469) 325-6981
- Pennsylvania: (412) 561-1001
- Fax: 405-562-1208