The Boom In Natural Gas Royalties

by | Oct 1, 2015 | Business

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With the increase in the viability of natural gas production in the United States, particularly in the various shale booms from Pennsylvania through to Texas, more and more people are enjoying the benefits of natural gas royalties.

Depending on the number of acres you have in the total drilling unit, as well as the production on the property, these natural gas royalties can be thousands to tens of thousands of dollars a month, literally turning farmers and property owners into very rich people within a few months of production.

For many families, the natural gas royalties have created a completely different way of life. Debts are paid, college accounts fully funded, mortgages are zero and investment in new equipment, additional land or even in retirement funds is also now a reality without taking on more debt.

The Prevalence

While it is true that shale has really boosted natural gas royalties in the respective areas, there are some 12 million individuals in the United States that receive some type of royalty payment from natural resources, including oil and gas. This is according to the National Association of Royalty Owners, a group that advocates for and supports those receiving royalties.

While natural gas royalties can be very high in the shale boom areas, in many locations the royalties are not that great, but they can be high enough to boost an individual or family tax rate into a much higher bracket.

Surprised People

For many Americans with ancestors who bought property in the shale areas, there may be a pleasant surprise in store. In some cases the mineral rights for properties were not conveyed to new owners, but were retained by the original owners. Over time and with the death of the original owner, these mineral rights have just sat in limbo, but with the natural gas companies wanting to have the mineral rights, descendants may find they have a nice additional monthly income.

The natural gas companies have to pay natural gas royalties to the heirs of the last people listed on the mineral rights. With large families with multiple heirs, this can result in a lot of division of that royalty, but you may be able to turn those small monthly royalty checks into a nice lump sum payment.

By choosing to sell your rights, instead of collecting natural gas royalties, the gas companies provide a one-time payment which is not taxed at the same rate as the royalty checks. This can be a great way to pay off debt, help to buy a home or to do with as you please, all thanks to a forward-thinking ancestor.

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