Royalty income from an oil and gas lease will be paid so long as a product is produced from the lease. Royalties are a proportionate part of the revenue received from the sale of oil, gas or other materials from a well or lease and paid to the royalty owners based on a lease agreement or other contract. As oil or gas is extracted from the ground, the supply is drained and eventually depleted. Prolific fields such as those found in the Permian Basin have produced for years and have the potential to produce for many more years. In contrast, the newer shale plays often have a higher rate of depletion, producing more in one or two years than they will for the remaining life of the well.
Where your royalty stems from is important to know. Royalties derived from mineral rights ownership are different than an overriding royalty or revenue from a working interest. Overrides, working interests, production payments and other types of royalties tied to a leasehold generally expire once production ceases. Although royalties will no longer be paid to the mineral rights owners if a well is no longer producing, they still continue to own the underlying minerals that could potentially be leased again with new development.
For questions concerning your oil and gas royalties, give us a call at 800-950-6954 and/or for more information, visit our website at www.LegacyRoyalties.com. Legacy Royalties is not your typical mineral rights buyer. We spend a significant amount of time answering questions and educating mineral and royalty owners even if the goal of the caller is not a sale of their oil and gas interests. You can also speak with an engineer about an appraisal and find out what your royalties or mineral rights are worth and we also provide free royalty appraisals for Medicaid and social services applicants.