Has anyone ever heard of getting a loan based on anticipated royalties, when there isn't even any drilling going on yet?
NO; it is hard enough getting ANY kind of loan!!
I agree with Dctex. It's hard for you to get a loan. The oil company that leases you probably will get a loan against the acres they lease from you which they could lose if they don't drill. The bank will loan THEM money with no drilling in sight. I have seen a pattern of late, especially in the Bakken, where the acres are leased and I think the loan the oil company takes out pays for the leasing. They can borrow against your acres when you can't.
yah there might be some shister out there to try to slam a lien on your interests, then try to lease it with a lien on it... not such a good idea, more likely some middle man wanting to make a fast buck buy purchasing them outright and reselling them tho... you might try that if you want to get jacked that way instead. i disagree with r w kennedy...a reputable producer operator has investors lined up to commit to the lease production when the lease is signed, they do not go to a bank for a loan to proceed.
Thanks,
I just wanted to know if it was possible to get a loan by promising payment from possible future royalties. It's something someone in my family, who isn't too rational, said they would do if they could find someone to give them a loan. It caused me some anxiety.
Mr. Glub, My information on operators mortgaging leased acres comes from searching the North Dakota Recorders Information Network. On the NDRIN you can see mortgage after mortgage by oil companies of leased acreage, and they are not just the little oil companies.
Zeb Glub said:
yah there might be some shister out there to try to slam a lien on your interests, then try to lease it with a lien on it... not such a good idea, more likely some middle man wanting to make a fast buck buy purchasing them outright and reselling them tho... you might try that if you want to get jacked that way instead. i disagree with r w kennedy...a reputable producer operator has investors lined up to commit to the lease production when the lease is signed, they do not go to a bank for a loan to proceed.
The only loan would be a loan shark and they would wind up with your interest whatever it may be. I don't know how you could set a value for something like royalties. Your best way to go is determine who is interested in your mineral ownership and see if someone will take you out of your ownership. I can't imagine how you would come out of this whole. You would probably realize 10% of actual value--- maybe. Do you have other parties involved that may want to cash you out.
GET A LAWYER to be sure you are protected someway otherwise you may never even see any money. This kind of transaction makes slot and dice in Vegas look like a good deal.
The others that have responded are right. This is on the road to financial suicide. Do not get involved. If some member in your mineral interest is talking about this, be sure you have a good lawyer that understands your exposure or you may loose all since a reputable oil company will run away before getting involved.
If this a family matter where someone is acting irresponsibly, Try to get them to agree to set up a mineral trust with a responsible Trustee, to protect everyone including the party that would consider doing this.
I believe that the question was taking a loan with the mineral interests as collateral for the loan, anyone can surely sell or mortgage the land itself the top rights, including large and small oil companies. A mortgage on the land vs a mortgage on the mineral interests are two entirely different things.
r w kennedy said:
Mr. Glub, My information on operators mortgaging leased acres comes from searching the North Dakota Recorders Information Network. On the NDRIN you can see mortgage after mortgage by oil companies of leased acreage, and they are not just the little oil companies.
Zeb Glub said:yah there might be some shister out there to try to slam a lien on your interests, then try to lease it with a lien on it... not such a good idea, more likely some middle man wanting to make a fast buck buy purchasing them outright and reselling them tho... you might try that if you want to get jacked that way instead. i disagree with r w kennedy...a reputable producer operator has investors lined up to commit to the lease production when the lease is signed, they do not go to a bank for a loan to proceed.
Thanks for the insight. I thought the only option for this type of loan would be a loan shark, but wanted to find out if anyone has found opportunities through reputable loan companies before I condemned the delusional idea first.
Larry Johnson said:
The only loan would be a loan shark and they would wind up with your interest whatever it may be. I don't know how you could set a value for something like royalties. Your best way to go is determine who is interested in your mineral ownership and see if someone will take you out of your ownership. I can't imagine how you would come out of this whole. You would probably realize 10% of actual value--- maybe. Do you have other parties involved that may want to cash you out.
GET A LAWYER to be sure you are protected someway otherwise you may never even see any money. This kind of transaction makes slot and dice in Vegas look like a good deal.
The others that have responded are right. This is on the road to financial suicide. Do not get involved. If some member in your mineral interest is talking about this, be sure you have a good lawyer that understands your exposure or you may loose all since a reputable oil company will run away before getting involved.
If this a family matter where someone is acting irresponsibly, Try to get them to agree to set up a mineral trust with a responsible Trustee, to protect everyone including the party that would consider doing this.
I was talking a motgage on leased minerals only, by oil companies. Not surface, or top rights ,as you call them.
Zeb Glub said:
I believe that the question was taking a loan with the mineral interests as collateral for the loan, anyone can surely sell or mortgage the land itself the top rights, including large and small oil companies. A mortgage on the land vs a mortgage on the mineral interests are two entirely different things.
r w kennedy said:Mr. Glub, My information on operators mortgaging leased acres comes from searching the North Dakota Recorders Information Network. On the NDRIN you can see mortgage after mortgage by oil companies of leased acreage, and they are not just the little oil companies.
Zeb Glub said:yah there might be some shister out there to try to slam a lien on your interests, then try to lease it with a lien on it... not such a good idea, more likely some middle man wanting to make a fast buck buy purchasing them outright and reselling them tho... you might try that if you want to get jacked that way instead. i disagree with r w kennedy...a reputable producer operator has investors lined up to commit to the lease production when the lease is signed, they do not go to a bank for a loan to proceed.
heard of it and it is highly not recommended.
I am not planning on doing it, I was just concerned that my dad might think it's a good idea. He's 78 and would attempt to gain some profit if possible. It's not important anymore as his health issues will prevent him from persuing anything anyway.