Midland, Texas
Liquidate An Estate
When a royalty owner dies, the heirs often don't want the responsibility of managing royalty assets. Instead, they would rather receive cash for their interests allowing them a broader range of investment opportunities.
Often a royalty interest is divided among several heirs, which can cause it to have little financial value to each individual. Therefore the heirs may choose to receive cash, and once again avoid the time and paperwork required to manage a royalty asset.
Convert Future Cash Flow to Present Value
If your royalty interests don't amount to a significant portion of your monthly income, then you may want to consider selling your interests. Or if you are in need of immediate cash.
Oil and gas wells are a depleting asset because as time passes, the production from a well will normally decrease resulting in a lower monthly check. Therefore, many royalty owners choose to sell their minerals and take the cash today, since a dollar today is worth more than a dollar in the future. People can then take this cash and apply it towards a needed purchase or other investments that are more familiar to them.
Eliminate Daily Paperwork & Bookkeeping
Owning royalties can be burdensome due to the multiple tasks that go along with the interest such as keeping track of monthly royalty checks and well production, reviewing division orders and lease agreements, tracking ad valorem tax payments, and reporting income tax. These often become more trouble than they are worth, and it may be more cost effective to receive cash for the interest, eliminating such detailed bookkeeping.