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INTRODUCTION TO ROYALTY & MINERAL OWNERSHIP
Oil and gas royalties offer a different way to explore portfolio diversification, passive-income potential, and long-term asset ownership.
This complimentary guide explains the fundamentals in straightforward language, helping you make a more informed decision before evaluating a royalty or mineral opportunity.
Free educational guide. No purchase required. We respect your privacy.
Inside the guide, you’ll learn:
- The differences between mineral, royalty, and overriding royalty interests
- How royalty payments are calculated and distributed
- How producing and non-producing assets differ
- Why property location, operator activity, and diversification matter
- How deeded mineral interests qualify for most IRC-1031 exchange strategies
- Important factors to consider before evaluating an opportunity
Why Investors Look at Oil & Gas Royalties
For over a hundred years, individuals and institutions have used oil and gas royalties to diversify beyond stocks, bonds, and traditional retirement accounts. Royalties have long been called a “mailbox investment.” Owners receive a share of a well’s production revenue for as long as the property produces, without paying for drilling, operations, or ongoing expenses. Those costs and risks are carried by the operating companies, not the royalty owner.
Ownership is conveyed by deed, so mineral and royalty interests are considered real property. That opens the door to benefits familiar from traditional real estate, including hard asset ownership, potential monthly cash flow, and eligibility as like-kind replacement property in a 1031 exchange.
Selling Real Estate? Royalties May Fit Your 1031 Exchange
As deeded real property, oil and gas mineral and royalty interests are considered like-kind replacement property for a 1031 exchange. Investors selling commercial real estate have the option of placing all or part of the proceeds into oil and gas minerals while deferring capital gains taxes. The guide walks through five key things to know before executing an exchange.
Get the free guide above to read the full breakdown.
This guide is provided for educational purposes only and is not an offer to sell or a solicitation to purchase an investment. Investing involves risk, and income, appreciation, and returns are not guaranteed. Breakthrough Investment Group does not provide legal or tax advice. Consult qualified legal, tax, and financial professionals regarding your circumstances.
