There are many reasons royalty and mineral owners are motivated to sell their interests.
Here are a few reasons why.
Estate Settlement – Often times it is easier for an individual to sell his or her oil & gas interest rather than divide it among heirs. Cash can be easily divided, but the task of dividing an oil & gas interest among heirs can often be difficult and expensive, while at the same time a lengthy process involving large amounts of paperwork. Also, many heirs often choose to sell an oil & gas interest out of an estate rather than performing the lengthy process of dividing the interest.
Cash Flow Needs – As is common in life; individuals have different needs at different stages of their lives. Whether the need is for debt elimination, education expenses, high interest credit card bills, or medical expenses, sometimes a large cash payout is needed at a particular point in life.
Paperwork Elimination – Owning an interest in an oil & gas property involves large amounts of paperwork and accounting diligence. Signing division orders, tracking royalty payments, and paying property and federal income taxes, it can all become very time-consuming and overwhelming to manage.
Investment Reclassification – Many royalty owners are eager to exchange their interest in a depleting natural resource asset into another type of investment that will appreciate, and not depreciate, over time. Many royalty owners find other investments more stable and more comforting. Typically, production from an oil or gas well decreases as the well ages, resulting in diminishing royalty income to the royalty owner.
Current Tax Advantages – Capital Gains Taxes are at historically low levels. Now is a good time to sell to avoid paying large amounts of taxes that historically have been in place and will be again in the future.