“Do more with your exchange than just avoid the taxes. Benefit your portfolio by increasing its level of diversification and take advantage of the domestic oil & gas shale boom by owning the minerals.”
“Do more with your exchange than just avoid the taxes. Benefit your portfolio by increasing its level of diversification and take advantage of the domestic oil & gas shale boom by owning the minerals.”
Our simple process starts with a conversation. By learning about the objectives of your 1031 exchange, we can better determine if energy royalties would be a good solution as part of your replacement strategy. As it is a new asset class to most, we pride ourselves in educating our clients on royalties and where they may fit within an exchange. We talk through the history of royalties dating back over 150 years and how others have utilized them within their portfolio to help increase annual cash flow and maximize diversification.
Our land team works with each client to build a royalty portfolio from the available properties in our inventory. Depending on the size of the exchange, we work to diversify each client both operationally and geographically. Our average royalty portfolio will have interest in over 100 producing oil and gas wells in multiple states under several different operators. We use the legal descriptions for these properties along with a detailed well list to create the 1031 identification language that is submitted to your qualified intermediary.
Because there are no banks involved in our debt-free exchanges, our clients are able to ID and close on their properties in a streamline manner. Clients enter into a short and simple Purchase Sale Agreement that outlines the terms of the transaction along with a full description of the properties being acquired. We work directly with your exchange accommodator to prepare the Settlement Statement and facilitate the wiring of funds to close on that part of your exchange.
Peregrine handles all of the heavy lifting to transition your property on a title and revenue basis. We first file all of the mineral deeds in the county courthouses where the wells are located. We then work with each operator to transition the revenue direct to our clients. The full process normally takes around 90 days, after which, you will receive 12 checks (or direct deposits) each year along with a 1099 from each operator each January.
