my question is whats the difference between selling mineral interests and selling oil and gas royalties.
Lisa, selling your mineral interests is selling the minerals themselves (going by how you phrased the question). Selling oil and gas royalties or royalty stream, you could sell the royalties for all producing wells that you have AT THE MOMENT of time of sale and still keep the royalty from any and all wells drilled in the future plus have rights to the wellbores of the existing wells if they should be abandoned but reopened at a future date.
You could sell your royalty interest in an entire lease, including new wells for a defined term or forever or for a defined term and the purchaser could throw in the words or for as long as oil or gas is produced which would be nearly the same as forever because companies do not release leases anymore if they think they can squeeze a little more profit from them. You could get your royalty stream back but it would be likely be worthless for a very long time because all of the easy to get (economic) minerals would be gone. That does not mean that there are no valuable minerals down there anymore. There are probably ten times as much mineral wealth down there as was produced, it's just that nobody knows how to get the remainder out in an economically feasable fashion. It might be a great prize again in 100 years after abandonement.
MY PROBLEM IS THAT AT THE MOMENT I HAVE FAMILY HARDSHIPS AND BECAUSE BANKS DONT LOAN USING ROYALTIES AS COLLATERALS THAT IM AWARE OF. WHAT DO YOU RECOMEND AS A COURSE OF ACTION IF YOU WERE IN A DIRE STUATION IN NEED OF AROUND 5-7K. MY PRODUCING WELLS BRINGS ME IN CLOSE TO ABOUT 850.00 A MONTH. YOU MENTIONED I COULD SELL MY ROYALTIES FOR A SET TIME. COULD THAT BE A POSSIBILITY TO SELL MY ROYALTIES FOR PRODUCING WELLS FOR LETS SAY A YEAR. IS THAT POSSIBLE ? WHATS THE BESY COARSE THAT I CAN TAKE.
Lisa, there was someone someone who said he was starting a company to make loans against royalties. Donald Skotty, search for him on this site. It's been 1.5 years since he said it so he may be up and running.
I would rather sell my royalty stream for a couple of years term. If you did that make certain that you use a lawyer or other trusted advisor because the buyer may try to include, "or as long as oil and gas is produced" which would mean until your minerals were sucked dry and you only intend to sell your stream for 2-3 years. I'm sorry I can't direct you to where you could sell your royalty stream. I know it can be done but I have never had to do it and God willing, I never will. I hope things get better for you soon.
Apparently, you could look on Craigs List for a loan. Be careful!
Donald Skotty said;
Scott brings up a very important point. Does anyone loan money with Mineral Rights or royalties as colateral? They used to. This was called a Production Payment, where someone would advance money in exchange for a royalty or overriding royalty interest until a specified amount of royalties were paid to the party advancing the money. I still receive money that was derived from a 1949 production payment. My predecessor paid the party $275,000 in 1949 (which was a lot of money back then), and the interest that was conveyed to my predecessor is valid until $7,000,000 have been paid. Not there yet, so for more than sixty years, this interest has continued to pay my predecessor and now me.
That's the essence of the production payment, and they used to be fairly common. Recently I was in need of some emergency cash, and could not find any bank (not even in Texas) that would loan me money using my royalties as colateral. So as a result, I'm in the process of forming a company that will do just that. It provides royalty owners an alternative to selling their royalties. In my case, we will make short-term loans (up to 12 months), with the royalty owner making interest only payments. From my own personal history, I think there is definitely a need for this. Just did a web search, and there are a whole flock of Craigslist ads for royalty loans.
My name is Cutter Brewer I am a Landman and I would be glad to discuss your options. My company specializes in the type of loan your looking for. Please contact me at 4097826846 or visit our website at WWW.cdroyalty.com
Minerals rights carry with them the right to negotiate and sign a lease, be paid a signing bonus, and be paid annual delay rentals (either up front when the lease is signed, or periodically throughout the primary term of the lease), plus be paid royalties when the minerals begin to produce. A royalty right carries only the right to receive a royalty on whatever is produced and sold from the land--no right to negotiate & sign a lease, receive any bonus payment, or any rental payments. That's the difference in a nutshell.
As a mineral rights owner, you can sell part of your royalty right and keep all of the right to negotiate & sign a lease, receive bonus, and receive annual delay rentals, plus whatever portion of the royalty right you didn't sell.
Also, based on $850/month income for your mineral rights, they are worth (general rule of thumb, not a hard & fast appraisal) $850 x 36 months = $30,600. So if you need to raise $5-$7K, you should consider assigning only 1/4th to 1/6th of your lease royalty, describing the current lease fully in the assignment (lessor & lessee names, date, recording information) for a purchase price of $5,000 to $7,000. That way, when the lease expires, so does the assignment of the 1/4th to 1/6th share of its lease royalty and you still own everything again for the next lease. And you will still be getting income each month from the current well(s) after the assignment. Just some additional information for you to consider.