Minerals and Royalties – How to Make a Business Out of Knowing Where to Buy – Mailbox Money – NMA, NRA, ORRIs, Even NOWIs. A Moneymaker Forum talk given by Joe Dumesnil, Overland Oil & Gas in Oklahoma City, Oklahoma on 4 April, 2019.
There are nuances to transacting in minerals and royalties and in many ways the business in these non-cost bearing asset classes is still very much a regional business, even opportunistically “grey” relative to other asset classes like equities and real estate. Mineral and royalties can serve as a physical hedge to reduce risk or compliment other business models, like working interests or positions in paper commodities. They can also serve as standalone business venture in a full or part time capacity. The deal size spans a large spectrum from hundreds to millions of dollars. The uncertainty of value spans an equally large spectrum from proverbial “goat pasture” to proven, producing and actively being drilled acreage. Once under ownership they do not incur any of the costs associated with drilling or completing a well(s), they only bear a proportionate tax and midstream deduction from revenue. There are skills sets beyond the geosciences that benefit a play in minerals and royalties making for a new skill to challenge oneself with or an opportunity for collaboration with other disciplines. Given a geoscientist’s skew to understanding regional and sub-regional nuance to mother nature there is natural fit for them to seek to understand this financial aspect at the surface of their below ground expertise. This talk will delve into these and more aspects of the mineral and royalties sector and the associated business models that can work in the space.