Initial Energy Services, LLC

The power of knowledge 

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When it comes to selling oil and gas mineral rights we handle the process with the same transparency and attention to detail as selling any other real estate. Mineral right owners tend to receive numerous offers via mail from companies looking to purchase their rights at the lowest possible price. 

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Selling all or a part of your oil, gas and mineral rights is a viable option if you would like to reinvest money in more stable investments, You can streamline your estate planning or simply diversify your investments. 

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Cash works

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Cash is a sure thing, and by selling, you receive funds and the risk of ownership is transferred to the buyer. Energy prices are volatile and unpredictable, and many people who own mineral rights would rather not deal with the risks associated with ownership. Selling will allow you to shed the risk of ownership and use the money to pay off mortgages, high-interest debts, medical bills, or simply invest the money in less risky assets.

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Depleting assets ​

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​Mineral right ownership can be more profitable over the long run than selling, assuming everything goes well.  No matter how good a producing well is, it will eventually stop producing. Once production stops the mineral right is virtually worthless. This is why mineral rights are classified as “depleting assets.” Due to the nature of the asset, many oil and gas mineral owners people decide at some point to convert some or all of their mineral properties into other assets that are more predictable. 

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Value

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The actual value depends on the specific property. At Initial Energy Services we utilize three different valuation processes:

 

1. Producing Interests – If the interest is producing, and the potential seller receives royalty checks from an operator, the valuation process is simple. In this case, we will research the stage of production of the interest and the location of the interest. We will make an offer based on a multiple of the current cash flow.

 

2. Leased But Non-Producing Interests – If the interests are leased, but not currently producing, they are a bit more difficult to value, but the process is still fairly straightforward. There are a variety of factors to consider in this situation, including whether a rig is on location, or if drilling has begun. However, because there is no current production, several unknown factors remain that affect the value of the interest. We will look at the known factors to arrive at a value based on the interest’s future production probability.

 

3. Un-Leased – Purchasing an interest that is not leased can be a risky endeavor. Therefore, the valuation is completely interesting specific. The sale of un-leased interests can yield a nice return considering the risky opportunity costs. Initial Energy Services is a well-diversified investor, which allows us to take some risks on un-leased interests.

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We look forward to hearing from you. 

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