What Are The Advantages of Owning Mineral Rights?

If you’ve investigated options for owning alternative assets, you might have heard that directly owning mineral rights can offer a number of advantages for qualified individuals. This royalty-generating asset class offers exceptional benefits in comparison to other traditional asset classes, such as stock market returns or real estate. Here are just a few of the key benefits of mineral rights ownership:

Monthly Income
One of the main advantages of owning mineral rights is income through monthly royalty payments. Mineral rights entitle the owner to receive a share of the profits from the extraction and sale of minerals from a particular property or area. As a mineral owner, you are paid first before anyone else in the oil and gas payment deck. These royalties are distributed in the form of monthly checks, a great source of steady, ongoing income for the owner that is not burdened with the need for active management or participation in the mining or drilling process. A combination of lack of overhead exposure, zero liability, and regular cash payments makes mineral rights a highly desirable asset.

Inflation Hedge
The value of minerals, such as oil and natural gas, tends to increase over time due to a myriad of factors including supply, inflation, and increasing demand. This can result in a corresponding increase in the income generated by mineral rights and mineral royalties. These factors can make assets connected to the larger energy sector a great choice for those seeking to protect their wealth from inflation. 

Diversification
Seasoned individuals know the value of not placing all their eggs (or all their nest egg) in one basket. Choosing to acquire mineral rights and mineral royalties can help provide diversification through access to a sector that may be uncorrelated with traditional financial markets. This can reduce overall risk level, as the performance of one asset class may not necessarily affect the performance of another.

Long-Term Value
Many mineral rights and royalty agreements have a long lifespan lasting for decades. At Eckard Enterprises, our team searches for only the best of the best tier 1 and tier 2 minerals for those individuals who qualify and are interested in direct ownership. When these individuals directly own these royalty producing assets, they own those minerals outright and can pass those rights down to the next generation. This arrangement can make minerals attractive for those looking to generate consistent, long-term income for decades to come.

Multiple Wells, Booked Reserves, and Potential For Appreciation
Advances in modern drilling technology have significantly lowered risks, allowing mineral owners to reap the benefits from scaled and optimized drilling operations. These operations account for increased activation of wells in areas of production as well as the increased ability to harvest minerals from multiple geological reservoirs. Such reservoirs are often stacked on top of one another, and mineral leases may contain access to multiple or all reservoirs in the mineral boundary. The value of mineral rights, their royalties, and other booked reserves can also
increase if the demand for the minerals in question increases or if the cost of extracting the minerals decreases as improvements in technology make drilling and explorations of minerals more cost effective over time.

For example, if the price of oil increases significantly, the income generated by mineral rights or royalties for an oil field may also increase. Similarly, if new technology is developed that makes it easier and cheaper to extract minerals from a particular area, the value of the mineral rights or royalties for that area may also increase.

Always Seek Expert Advice
It's important to note that acquiring mineral rights does carry its share of risks. As with any opportunity, it's important to carefully consider the potential risks and rewards before making a decision. It may also be helpful to seek the advice of a financial professional before deciding to acquire mineral rights or mineral royalties.

Experts in mineral rights are experts for a reason. They have the expertise to seek out minerals in strategic locations, make sure you’re classifying your mineral rights per the law, and evaluate market trends in the energy space. Eckard Enterprises is here to help you understand mineral rights thoroughly. We work with qualified individuals on a daily basis to ensure they are receiving the maximum benefits from their oil and gas minerals. We have almost four decades of experience in the oil and gas space, and are passionate about educating and helping our clients and potential clients on an asset class that we believe is one of the most secure and long-term available today.

If you want to learn more, contact us today to speak to one of our experienced account managers.