FAQ — Frequently Asked Questions | Shale Mineral Group, Inc.

Question 1

What types of interests do we purchase?

Accepted Answer

Shale Mineral Group buys producing and non-producing, will purchase all or part of an interest, will purchase both single and multiple well interests, and offers finance and trade (1031) options throughout the United States with special focus in Texas. Cash payments can be received within as little as 2 days.

Question 2

Is there a cost to request an evaluation offer?

Accepted Answer

No. There is no fee associated with performing a royalty interest evaluation. And there is no obligation to sell. We provide a fair market value offer price which is the total amount that would be sent to you with no hidden fees, charges or commissions.

Question 3

How is the value of a royalty interest determined?

Accepted Answer

Shale Mineral Group will analyze the production data, calculate the production decline rate, and review the cash flow history of the well. Using this information and other factors, we will forecast future performance, calculate the remaining reserves, and predict future revenues. A fair price offer is determined using this method and factors including: Production History, Operator Reputation, Reservoir/Well Formations, Interest Type, Tax Rates, Historical Cash Flows and Monthly Averages, Future Production and Development, and Commodity Price Risk.

Question 4

How does an owner calculate royalty interest?

Accepted Answer

Divide the number of (net) mineral acres you own within the unit by the total acres within the unit, then multiply that number by your royalty interest listed in your oil and gas lease. Example: 12 net acres ÷ 510 acres unit size × 20% (.20) = .0047058 royalty interest.

Question 5

What are some reasons for selling royalties?

Accepted Answer

There are various reasons an entity or individual would want to sell all or part of their interest, but the most common factors include: quick cash for a lump sum pay-out, getting out of debt, addressing estate settlement issues and inheritances, breaking away from a depleting asset, and elimination of on-going asset management.

Question 6

What is required for selling royalty and mineral interests?

Accepted Answer

It is an easy process. Submit your information on the Request An Offer form (or contact one of our acquisition managers over the phone). Shale Mineral Group will evaluate your asset and make you an offer. Once the offer is accepted we take care of preparing all the required documentation and assume all costs associated with the completion of the sale. A date will be scheduled for closing — with your acknowledgement, you will not need to be present at closing.

Question 7

Why do checks vary?

Accepted Answer

Check amounts vary month-to-month because the production of a well can greatly vary. Variations in volume of oil and gas production along with changes in oil and gas prices create fluctuations in payment checks. Factors that can contribute include operational difficulties with producing equipment, mechanical efficiencies, and natural production decline.

Question 8

What would cause royalty checks to stop or be suspended?

Accepted Answer

There are four typical reasons for oil and gas royalty payments to stop or be suspended: (1) The monthly payment amount is less than the company's minimum disbursement amount. (2) The account has been suspended due to legal reasons such as estate change, litigation, address change, or missing paperwork. (3) The well has stopped producing. (4) Environmental and/or pollution concerns.

Question 9

What is a Royalty Interest?

Accepted Answer

In the oil and gas industry, royalty interest refers to an ownership portion of a resource or revenue that is produced which does not bear any costs of the operations required to produce that resource.

Question 10

What is a Working Interest?

Accepted Answer

A working interest is an investment in an oil and gas operation where the investor bears some of the initial costs associated with the exploration, drilling and production of that resource.

Question 11

What is a Mineral Interest?

Accepted Answer

Mineral interest is commonly referred to as mineral rights. This is the right to use, extract, or collect royalties on the use or extraction of minerals present within a property.