Learn why there are great opportunities to include oil, gas, and mineral rights in a 1031 exchange and how those investments can be a powerful part of a diversified portfolio.
Energize Your 1031 Exchange with Oil and Gas Royalties
Chris Faulker, CEO of Breitling Royalties, says many people don’t realize that oil, gas, and mineral rights qualify as real property and can be included in a 1031 exchange.
"“…I can diversify a 1031 exchange into…oil and gas assets with a great degree of certainty… [because] I own a very popular commodity and am essentially partnering with the biggest oil and gas producers in the world."
Mineral Rights | Basic Information About Mineral, Surface, Oil and Gas Rights
Now that you know it qualifies as a 1031 exchange; learn more about the ins and outs of oil, gas, and mineral rights. You’ll still want professional advice though.
"In addition to financial matters, a lease or sales contract can do more than simply specify the amounts paid to the owner. It can also contain language that protects the owner's property and way of life while exploration, mining, drilling and production take place."
Oil & Gas Investing – A Quick Guide to Different Oil & Gas Mineral & Royalty Interests
Acquiring interest in oil and gas investments through a 1031 exchange can help diversify your portfolio, but it’s still treated much like any other asset by the IRS.
"“…the rights and ownership of those interests may be held in perpetuity and therefore are considered ‘real assets’ as far as the IRS is concerned."
Mineral Rights Holders: The New Breed of High-Net-Worth Investors
Investment advisors say those with strong cash positions are looking hard at oil, gas, and mineral rights. Mike Sonnier, a Houston private client adviser for private bank U.S. Trust, who works with mineral rights owners notes:
"...as you might imagine, mineral owners on oil lands are seeing a spike in interest from drillers as oil prices remain high..."
Questions Answered on Oil and Gas Leases
Oil, gas, and mineral rights can be complicated. You want to be sure your investment is protected and that you are receiving your share of the income.
"There is no such thing as a standard mineral lease, nor is there any lease that cannot be negotiated and refined."
Oil and gas rights can be a powerful part of a good investment portfolio and they qualify as part of a 1031 exchange like any other real property. Trust the investment professionals at Kernors LLC. We’ve been protecting and growing our clients’ wealth for nearly 90 years. Call us today at 503.670.9433 to get started.