Mineral extraction usually occurs at some time in the future as equipment and employees are often scheduled years in advance. If you do not start mining or drilling operations before the expiration of a lease, then all rights to the property and the minerals reverts back to the owner.Oil and gas have the ability to cross property boundaries underground. Some states require drilling companies to specify how oil and gas royalties will be shared among adjacent property owners., There is usually no guarantee that gas or oil will be present, so it would be to your advantage to pay a smaller amount for a lease rather than purchasing outright that will cost more. A lease gives you the right to test the property for minerals., Speculators buy the property with the goal to sell the mineral rights to another company who will do the actual production. It is an opportunity to acquire valuable property from individual owners and sell those properties to mining companies for a higher price than what you paid., In an option transaction a property owner is offered a small amount of money today for the option of buying the property at a certain price before a specified date in the future. You would then quickly try to find someone who will pay an even higher price, purchase the property from the owner, and then sell the buyer your mineral rights. If you fail to pay the specified price by the expiration date of the option, the property owner keeps the option payment., Companies such as Patriot Royalties do all the purchasing of mineral rights and the mining. Investors receive monthly income, and you don’t pay taxes on 15% of the production from a well.


Like other assets, oil and gas royalties can be bought, sold or transferred. The royalty income lasts for as long as the well produces, which may be several decades.
 Most mining and drilling activity is regulated by state law. These laws may restrict extraction or require additional expenses, so make sure you are familiar with all regulations relating to extracting the minerals. Also, consider that laws may change or new laws and regulations may be passed which impact your ability to extract minerals.


Note that if you are merely receiving royalties and are not the majority owner of the mineral rights, you have no say in the production schedule. If the majority owner decides prices are too low, they may cease production at any time, which will stop the flow of royalties.
Determine the advantages of buying vs. leasing mineral rights.
Lease rather than purchase gas and oil rights.
Purchase the mineral rights as a speculator.
Purchase mineral rights as an option.
Invest in oil and gas royalties.
Familiarize yourself with local and state laws.
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