If you sell your minerals and you have an active lease, who gets the royalties when it starts production within the timeframe of the lease?
The buyer usually owns royalties from the time the deal is closed. One reason to be very careful about selling. If you have pending wells that are about to come onto production, then if you sell, you will not get the royalties after the closing date of the sale unless you make provisions to keep them which would be quite rare (and would lower the purchase price). You will also not get any future royalties attached to the lease. (That is why they want to buy them)
Thanks. That makes perfect sense.
That’s interesting and may explain why an offer we recently received on some minerals in Haskell County included ‘back-dating’ the mineral deed to Oct of last year…which I thought odd. When I questioned the gentleman on that provision he said it was typical language and allows for them to capture production. As it turns out Trinity drilled and completed 3 wells in that section last year and there is indeed ‘production’ to capture. And if typical results project out on these wells into the future this offer would have yielded a 50% ROI. Another good reason ‘not to sell’…and stay informed.
Exactly my point! They want to capture as much production royalties as they can. Given the delay between first sales and Division orders and first checks, that sort of dating is good to question since you will lose on those royalties and any future ones.