Advance Royalty Payment (ARP) and Volumetric Production Payment (VPP)
These products give a royalty owner (ARP) or a working interest owner (VPP) a payment upfront for a specific amount of production that will be produced in the future. These products have been designed for those who need a large amount of capital in the short term while continuing to retain their asset in the long term. This only other current option for this product is a sale of the asset, which destroys all the long-term value of a producing asset. These products also remove the risk, for a customer, of the price of their future oil and gas production falling, since they are paid upfront. These products can continually be renewed at the conclusion of each transaction, giving customers a great option for more clarity and security on the income of their oil and gas assets.
Gross Royalty Price Hedge
This product allows for a customer to lock in the gross price that they will receive on a royalty check each month. ARC will pay the difference to the customer between the gross price that is realized on their royalty check and the agreed-upon price. This product is ideal for customers who do not want to have uncertainty in the price of their future production and are afraid that prices may fall.
This product locks in a minimum price for a customer on their future production. Generally, it is combined with an ARP and allows for production, for assets that will start producing soon, to receive at least a minimum amount of value. This allows for a customer to guarantee themselves a minimally acceptable rate of return while allowing for upside potential in the case that future prices increase.
These products are very similar to what the large producers have access to and allow for them to have financial certainty. ARC has developed these products to give royalty owners and oil and gas investors the same financial tools. If you have producing oil and gas assets, you should not have to “hope for the best;” rather you should have protection for when commodity prices fall. In addition, if you have producing assets, you should be able to leverage those assets, like any other asset, without having to sell your ownership.
Get in touch with Advance Royalty Company to maximize your mineral rights ownership.