Tercero Minerals is a long term mineral buyer. We focus on producing oil and gas interests in the form of Royalty Interest, Overriding Interest and Working Interest. Evaluations are typically based on cash flow and the multiple we pay depends on the properties location and potential.
A royalty interest in the oil and gas industry refers to ownership of a portion of the resource or revenue that is produced. A company or person that owns a royalty interest does not bear any of the costs of the operations needed to produce the resource, yet the person or company still owns a portion of resource or revenue produced.
Overriding Royalty Interest
An overriding royalty interest is the right to receive revenue from the production of oil and gas from a well. The overriding royalty is carved out of the lessee’s (operator’s) working interest and entitles its owner to a fraction of production. It is limited in duration to the terms of an existing lease, but is not subject to any of the expenses of development, operation or maintenance.
Working interests are an investment in oil and gas drilling operations in which the investor is directly liable for a portion of the ongoing costs associated with exploration, drilling and production. In a similar fashion, working interest owners also fully participate in the profits of any successful wells.