MINERAL RIGHTS Frequently Asked Questions

Simply put, more control over your assets. Rather than waiting for small monthly royalty checks that can fluctuate and decline, with a large, lump sum payment, you can use your payment for an immediate need or to reinvest. While Derby is not a tax advisor and doesn't provide tax advice or guidance, there may also be tax advantages. A monthly check is subject to federal income tax, but with lump-sum payment, you may be able to take advantage of capital gains tax rates. In addition, your paperwork and records, as well as estate planning, could be greatly simplified. 

We know there are a lot of companies out there. But at Derby, we do things a little differently. Our local experts are part of your community and will work with you to get you the best deal—in person whenever possible. We have geologists and engineers on staff who take a deep dive into the actual property itself so that you have a solid understanding of what your interest is worth. With strong financial backing, we can help you close and get your funds quickly. We’re proud of the reputation we’ve built and committed to the service that will help us keep it for years to come. 

It varies case by case. Our engineers will look at the operator and the property and verify the royalty on your lease to assure that we get you the best offer.

With monthly royalties, you’re subject to federal income tax. By selling, you’re eliminating that long-term tax burden. In addition, you can take advantage of long-term capital gains tax rates depending on how long you’ve had your mineral interests and when you decide to sell.

Your royalty amount is based on two variables: the market price for oil and gas, and production from wells on your property. As you’re probably aware from the news, the price for oil and gas fluctuates wildly, and your check will reflect any increases or decreases. From a production standpoint, your royalty is based on the amount of oil and gas that is produced. In any reservoir, there is a finite amount of oil and gas that can be produced, so over time, wells will begin to produce less and less. In addition, any mechanical or operational problems with the production equipment could also affect the amount of oil and gas produced, so that will affect your check, too.

While natural gas and oil prices have been volatile recently, oil and gas prices are hard to predict and can change rapidly, like the stock market. Experts commonly make opposing predictions, so it’s very difficult to forecast.

As an individual, your revenues are dependent on production and drilling results in a small area, so if production declines or oil and gas market prices fall, your income can dip drastically. As a diversified company, we invest over larger areas and geographies, so while we do assume risk, we have the volume and scale to manage and reduce it. We invest over the long term and buy enough mineral interests to diversify our risks so that we can manage if one of our interest’s value declines. 

Derby will purchase both under the right circumstances. 

We can buy all or part of your interest. We’ll meet with you in person to discuss your options and find the best financial solution for you. 

We have geologists and engineers on staff who take a deep dive into the actual property so that you have a solid understanding of what your interest is worth. After our comprehensive evaluation of the well, we’ll also look at the current price of oil and natural gas in the U.S. and abroad, oil and gas futures, global usage patterns, and projections for future demands. We use all this information to develop the most competitive offer. 

Yes, you can. Our offer does not oblige you to sell your interest. However, oil and gas prices could decline, and we can’t guarantee you’ll receive the same offer or that we’ll still be purchasing in your area. 

We’re well-funded, so we can close and get your check to you quickly. When possible, we’ll bring your payment to you personally. 

When you sell your royalties, you won’t receive monthly checks anymore, but you will have a larger, one-time payment. If this seems like too big a decision right now, or you’re just not sure, you can always sell a portion of your mineral interest. This will help reduce your financial risk and provide you a lump-sum payment, but you’ll still have monthly royalty checks and be aligned with Derby in future income generation.