Question on Selling Royalties vs. Selling Mineral Rights

Let's say I have a property and it is producing gas, and I have a lease with the operator.   Now I sell the royalties.  Fast forward to the future, and let's say the well has dried up.  It is plugged and abandoned, and the lease ends.

 

Is my agreement with the royalty purchased over with at the time the lease ends?  Does that royalty purchaser have any claim to any future royalties that might result from a future lease?

 

I think the answer is no, but someone tried to tell me that the royalty purchaser has a 10-year period, after the lease ends, where he still has rights to future royalties.  I think this person is confusing the purchase of mineral rights with the purchase of royalties.  But I thought I'd ask here, just to see if anyone has any thoughts.

 

Thanks in advance.

Tags: mineral, prescription, rights, royalties

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Permalink Reply by Henry on December 10, 2012 at 0:36

Andrew,

This was sooo useful.  Thank you very much.  Every now and then, someone posts a great explanation of something on GHS.com.  This goes into my save file, along with KB's treatise on UMO's and The Baron's tutorial.  Thanks.

Permalink Reply by Andrew on December 10, 2012 at 2:54

Henry,

I'm glad this helped. I will make this a blog post so others don't have to go digging through the site for it.

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