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Engineered
verified reserves
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Royalty interest in wells with long
life is crucial to getting a long-term investment. To increase the
likelihood for long-term production on a well, it is best to have
wells that are engineered by professionals who can verify at least
25 years of reserves. It is a very simple concept - the longer the
reserve life, the longer the investment will pay out.
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Hundreds or
thousands of currently producing wells
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Single well investments in Energy
Royalties for a 1031 Exchange is always an option (see: Direct or
LLC Royalty investment). But why put all your eggs in one basket
when you can exchange into investments with multiple wells. Like a
REIT investment, investing into multiple wells makes a lot of sense.
It brings investors more diversity, less risk than a single asset,
and less reliance on one asset for revenue.
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Underdeveloped
mineral acreage
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When investing in Royalties you are
essentially investing in a depleting asset; wells which will
eventually go dry even if it's not for several decades. The best way
to offset the decline in specific assets is to combine the
investment in producing wells with the acquisition of the Mineral
Interests in and around the producing wells.
Remember, as an owner of the Mineral Interests, you will never have
to incur the expense or liability of drilling but will enjoy the
Royalty revenue when new energy sources are found.
Owning Energy Royalties with further development of the acreage
gives the owners growth potential.
With both Mineral Interest and producing wells you have an
investment that will likely extend much farter into the future and
should offset any steep declines in production of a particular well.
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Geographical
diversity
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This concept makes sense whether it is
real estate or producing energy assets. The more diverse your Royalty
investments are geographically the less chance you will have for
interrupted production due to hurricanes, tornadoes, or anything
else that would disrupt a well. It just makes sense that diversity
in this way leads to lower risk.
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