Oil and gas minerals, royalties and overriding royalties are similar in that they all receive revenues from the production of oil and gas from a well, and they do not pay for the drilling or monthly operating expenses of the well. Often you will see the term “royalties” used interchangeably to mean either mineral interests, royalty interests or overriding royalty interests. However, there is a slight difference between minerals and royalties, and there is an even greater difference between overriding royalties and both minerals and royalties. Mineral interests and royalty interests are similar in that both involve ownership of minerals under the ground. They both receive a portion of the income from the production of oil and gas. The main difference is that the owner of a mineral interest also has the right to execute leases and collect bonus payments, and the owner of royalty interests does not execute leases or collect bonus payments. Both mineral and royalty owners receive income once the well is producing, but only the mineral owner receives the up-front bonus payment.

Unlike mineral and royalty interests, overriding royalty interests do not constitute an ownership of minerals under the ground. Instead, overriding royalties constitute ownership of a portion of the revenues generated from oil and gas production, and the ownership expires when the lease has been abandoned. Overriding royalties are created from the working interest. The main difference is that the owner of an overriding royalty does not own the minerals under the ground, only proceeds from the production of minerals. Once the lease has expired and production has ceased, the overriding royalty interest expires. Conversely, the owners of minerals and royalties maintain their ownership after production ceases.

A working interest is usually the lease owner who is responsible for all cost associated with drilling for, and producing oil and gas.

Many times you will see the word "royalties" used interchangeably when referring to oil and gas mineral interests, royalty interest, and overriding royalties. They are indeed similar, but there are some important differences to note as well. All of the above-mentioned interests receive revenues derived from the production of oil and gas from a well. Likewise, neither oil and gas minerals, royalties, or overriding royalties have to pay for the drilling or monthly operating expenses of the well. Specifically, mineral interests and royalty interests involve ownership of minerals located under the ground. As a result of that ownership, they both receive a portion of the income earned from the production of oil and gas. As the land owner, the holder of the mineral interest has the right to execute leases (and collect up-front bonus payments). The owner of a royalty interest can do neither of these. Both of these options-- mineral and royalty owners-- receive income once the well is producing. They also both continue to maintain ownership of the land and remaining minerals after production ceases on site.

Overriding royalty interests consist of ownership of a portion of the revenues generated by oil and gas production. They do not involve actual ownership of the land or minerals under ground on which the well may be working or producing. So, ownership of royalty interest expires when the lease expires or has been abandoned.

Working interest is the owner of the oil and gas lease and pays all costs associated with drilling and producing oil and natural gas.

Many times oil royalties are tied to an estate, and the heirs would prefer cash instead. Or, a family may have an immediate need for cash for some other purpose. Those not familiar with managing oil royalties or seeking to simplify their investment portfolio often sell their oil and gas royalties for cash instead.

Founded in 2004, Parous Energy buys, throughout the United States, both producing and non-producing mineral, royalty overriding royalty and non-operated working interests. From single well interests or multiple well interests, we purchase varying amounts, depending on the land and minerals available in a particular region or county. Our oil and gas properties are located in different counties and diversified across multiple states throughout the country.

We must determine the current value of your oil royalties, in order to receive an offer from Parous Energy. We will need to get some information from you. You can either call us at (601) 856-7613 or you can submit the information online. If viable, once we receive the needed information, we will promptly issue you an offer. We are known throughout the industry for our competitive prices and our quick cash sales. There is no cost to you the seller, as we negotiate the selling of your oil royalties. Once you have decided to sell, we take responsibility to finish our due diligence and properly prepare the mineral deeds. As a bonus, once you decide to sell, there is actually very little required of you to complete the transaction. When buying oil royalties, we assume all the costs associated with completing the sale, including mineral deed preparation and filing fees.

You are under no obligation to sell your oil royalty: either to us or anyone. Also, it should be clearly understood, that even if you receive an offer, you are under no obligation to sell your oil royalty. Only until you sign the acceptance of a written offer are you under any obligation.

A professional evaluation on your oil royalties is performed by a petroleum engineer to determine a fair price. During this process, we analyze historical cash flows, production date, and decline rates. These are all used as part of the assessment to forecast future performance and calculate remaining oil and gas reserves. As always, our goal is to offer you a fair sales price, while understanding future risks and uncertainties and foreseeing future revenues.

Contact us at Parous Energy by simply emailing us at info@parousenergy.com, or calling (601) 856-7613 for a complimentary consultation.

Yes, there is a simple math formula for calculating your oil royalty interest. You take the number of mineral acres you own within a well’s producing unit, divide it by the total acres within the well’s unit, and multiply this by your royalty interest as listed in your oil and gas lease. (acres you own/total acres) x (your royalty) = your interest.

Multiple factors play into the reasons why oil and gas royalty checks vary from month to month. Top factors include: oil and gas production and oil and gas prices. These variations in productions and pricing lead to fluctuations, nearly monthly. Occasionally, a well may need mechanical issues resolved and require all production to cease for a period of time. Another ongoing factor is the nature of wells to slowly decline in production as time goes by.

Generally, the loss of an oil and gas royalty check is the result of four things:
- new company disbursing revenues and new payment system not full set up
- amount due you is not enough to generate a check being cut. It will come when it reaches the minumum payment marker. This is also known as "Petty Suspense."
- Changes in ownership, address, or another reason why the company can not locate you, can cause your oil and gas royalty check to be placed in "Legal Suspense." Please verify that your information is kept up-to-date at all times.
- The well may not be producing, either to maintenance, or lack of minerals.

The best way to determine the status of your account is to call the phone number listed on the last check you received. If you cannot find a phone number, then e-mail or call us and we can supply you with contact information.

We'd love to hear from you and answer your additional questions! Contact us at Parous Energy by simply emailing us at info@parousenergy.com or calling (601) 856-7613.