Mineral Rights Investing: 7 Proven Frameworks Elite Fund Managers Use to Generate Passive Oil and Gas Income
Mineral rights investing may be the most overlooked passive income strategy in the alternative asset universe — and institutional capital is flooding in before retail investors even know it exists.
Key Takeaways
- Mineral rights investing allows fund managers to generate royalty income from producing oil and gas wells without taking on operational risk, dry hole risk, or capital expenditure obligations.
- Understand the three-tier valuation framework — PV10 for producing wells, PV15-PV20 for permitted wells, and PV30-PV40 for upside locations — used by professional mineral rights investing teams to structure offers.
- Learn how to bypass public auctions and acquire mineral rights directly from landowners through a systematic cold outreach, data sourcing, and petroleum engineering underwriting process.
- Discover why family offices, private equity firms, and institutional capital groups including Blackstone and Natural Gas Partners are increasingly allocating capital to mineral rights investing as a distinct alternative asset class.
- Explore how natural gas demand from AI data centers and LNG export infrastructure is creating new tailwinds for mineral rights investing in major U.S. shale basins.
What Mineral Rights Investing Actually Means for Fund Managers
Drills and operates wells. Full capital exposure, operational risk, and dry hole risk. Highest complexity and liability.
Shares drilling costs with operator. No operational control but carries proportional capex and dry hole exposure.
Receives royalty income from existing producing wells. Zero capex, zero opex, zero dry hole risk. Monthly royalty checks from operators.
Framework: Jace Grant, Rising Phoenix Resources
Mineral rights investing is a distinct upstream oil and gas strategy that most fund managers have never seriously evaluated, yet it sits at the intersection of real estate, commodities, and passive income in a way that few alternative asset classes can match. In this episode of Making Billions Podcast, host Ryan Miller sits down with Jace Grant, CEO and founder of Rising Phoenix Resources, a company managing approximately $60 million AUM that specializes entirely in mineral rights investing. Grant breaks down the mechanics, the market dynamics, and the direct acquisition process in more detail than has been publicly explained before.
According to Grant, mineral rights investing should be understood as a real estate transaction at its core. When land is originally conveyed, the minerals beneath the surface are part of the bundle of rights that accompany the property, and those mineral rights can be separated from the surface estate and sold independently. This separation is what creates the mineral rights investing opportunity, one where a buyer acquires the right to receive royalty payments from operating companies without ever touching a drill bit or funding a rig crew.
Grant identifies three primary ways to invest upstream in oil and gas: as an operator, as a non-operating working interest participant, or as a mineral rights owner. Mineral rights investing is the third path, and in Grant’s view, it is the most passive, the most durable, and the least operationally intensive of the three. There is no capital expenditure, no operating expenditure, and no dry hole risk, just monthly royalty income from producing wells already in the ground.
Mineral Rights Investing Versus Working Interest: Understanding the Risk Difference
Mineral rights investing differs fundamentally from working interest participation, and Grant uses the episode to draw a clear line between the two approaches for fund managers evaluating the energy sector. Working interest participation means sharing in the drilling costs with an operator, which introduces dry hole risk, the possibility that a well produces nothing after significant capital has been deployed. According to Grant, his own father, an independent operator, used to say that if you drill four wells, one will be a dry hole, two will be marginal, and one will be great.
Mineral rights investing eliminates that uncertainty by focusing exclusively on producing assets with documented royalty streams. Instead of funding the development of a well and waiting for results, mineral rights investing means acquiring the royalty income that is already flowing from wells that operators have already drilled, completed, and put into production. The production history is known, the operator is already paying royalties, and the underwriting process becomes a matter of analyzing that existing cash flow rather than forecasting speculative outcomes.
This risk profile distinction is significant for fund managers evaluating energy allocations, according to Grant. The SEC has long cautioned investors about the speculative nature of upstream oil and gas drilling programs, and mineral rights investing sidesteps the most volatile component of that risk spectrum by acquiring rights to existing production rather than participating in exploration. That structural difference is what makes mineral rights investing attractive to the family offices and private equity groups now entering this asset class.
The Direct Acquisition Process in Mineral Rights Investing: A Step-by-Step Framework
Screen Texas Railroad Commission and state databases for active rigs, filed permits, and operators developing new wells.
Pull tax assessor data to identify mineral owners receiving royalties. Append phone numbers and scrub for TCPA compliance.
Deploy cold calling and physical direct mail using NEPQ methodology to identify motivated sellers.
Request royalty check stubs from seller. Load well data, decimal interests, and deductions into PhD Win software for engineering review.
Issue tiered PV-based offer. Chain title to original land patent, cure gaps, execute mineral deed, record at courthouse, and initiate pay status with operator.
Framework: Jace Grant, Rising Phoenix Resources
Mineral rights investing through direct acquisition, bypassing public auctions entirely, is the core operational framework Grant describes in detail during this episode. The process begins with identifying areas of active drilling activity, which Grant describes as a fundamental first filter. Using publicly available tools like the Texas Railroad Commission website, his team identifies basins and counties where rigs are currently operating, permits are being filed, and operators are actively developing new wells.
Once a target area is identified, the mineral rights investing team pulls tax assessor data to generate a list of mineral owners in that area. In Texas, mineral owners pay what is called ad valorem tax on royalty income they receive from operators, and that tax record links back to identifiable owners. Grant’s team appends phone numbers to that list, scrubs it against the Do Not Call registry and litigator lists for TCPA compliance, and then deploys a dual-channel outreach strategy combining direct cold calling and physical direct mail to reach motivated mineral sellers.
The sales methodology Grant’s team uses in mineral rights investing is built around what he describes as the Jeremy Miner NEPQ framework, neuro emotional persuasion questioning, which focuses on understanding the seller’s underlying motivation rather than pushing a transaction. Once a mineral owner expresses interest, the team requests check stubs from the operating companies currently paying them royalties. Those check stubs, which contain data on individual wells, decimal interests, marketing deductions, and transportation costs, are then loaded into a spreadsheet format and handed off to Grant’s in-house petroleum engineer for formal underwriting using PhD Win software.
The Valuation Framework That Drives Mineral Rights Investing Offers
Mineral rights investing requires a disciplined valuation framework because there is no equivalent of a cap rate or a Zillow estimate for subsurface royalty assets. Grant explains that his team segments mineral assets into three categories when building offers, each with a corresponding present value discount rate. Producing wells with active cash flow are valued at PV10 to PV12, meaning the purchase price is set such that if the asset simply cash flows out at current production rates, the buyer earns a 10 to 12 percent return on their investment.
Permitted wells, those that are not yet producing but have active drilling permits indicating near-term development, are valued at PV15 to PV20 in Grant’s mineral rights investing framework. Upside locations, defined as acreage that has not yet been permitted but is surrounded by active development suggesting future drilling, are valued at PV30 to PV40. This tiered approach to mineral rights investing valuation reflects the time value of money and the increasing uncertainty associated with each category of reserve.
According to Grant, many mineral owners focus exclusively on their current royalty checks and have limited awareness of the longer-term upside embedded in their acreage. This dynamic is central to the mineral rights investing acquisition model, as sellers often accept lump-sum offers because they prefer immediate liquidity over the prospect of future royalty streams that may take years to materialize. Grant describes his team’s role as demystifying that process for sellers while simultaneously conducting rigorous engineering-grade underwriting on the buyer side. The royalty income structure is well-documented in financial literature, but the specific mechanics of mineral rights investing underwriting require petroleum engineering expertise that most generalist investors do not possess.
Title, Closing, and Pay Status in Mineral Rights Investing Transactions
Mineral rights investing transactions involve a title chain review process that has no parallel in conventional real estate investing, and Grant spends significant time in this episode explaining why title is one of the most critical risk management steps in any mineral rights investing deal. Because mineral rights can be severed from surface rights at any point in the chain of ownership going back to the original land patent, a buyer must trace the ownership of those mineral rights all the way back to the original presidential land grant to confirm that the seller actually owns what they are selling.
In active basins like the Permian Basin in West Texas, mineral rights have been changing hands since the 1930s and 1940s, which means a typical mineral rights investing title review may span nearly a century of courthouse records. Grant describes pulling grantor-grantee indexes from county courthouses that predate the typewriter, with conveyance deeds written in ink that reflect the earliest recorded land transactions in those regions. His team uses specialized land professionals to chain that title, and then a title attorney reviews the assembled record and identifies any gaps, discrepancies, or required curative documents such as affidavits of heirship.
Once title is confirmed and a closing occurs, the mineral rights investing transaction is recorded at the county courthouse using a mineral and royalty deed, the direct analog to a general warranty deed in a surface real estate transaction. The buyer then notifies the operating company, which issues a division order and eventually places the new mineral owner into pay status. Grant notes that pay status timelines vary significantly by operator, ranging from 60 days to more than 180 days, but the royalty payments ultimately begin flowing to the new mineral rights investing buyer once that process is complete. The alternative asset category to which mineral rights investing belongs has grown substantially as institutional investors seek yield outside traditional equity and fixed income markets.
Basin Selection Strategy for Mineral Rights Investing: Where the Smart Money Is Looking
| Basin | Primary Commodity | Key Demand Driver |
|---|---|---|
| Permian Basin (West TX) | Oil | Global crude demand; institutional PE focus |
| Haynesville (TX-LA border) | Natural Gas | Gulf Coast LNG export terminals |
| Marcellus / Utica (NE / OH) | Natural Gas | Domestic utility and AI data center power |
| Bakken (North Dakota) | Oil | Midcontinent crude production |
| Eagle Ford (South Texas) | Oil & Gas | Multi-zone liquids-rich development |
Framework: Jace Grant, Rising Phoenix Resources
Mineral rights investing returns are heavily influenced by basin selection, and Grant offers a frank assessment of the major U.S. shale plays and their relative attractiveness for buyers entering this market today. The Permian Basin in West Texas is, in Grant’s words, the 900-pound gorilla, a multi-zone reservoir that generates more oil than Saudi Arabia and represents the dominant focus of institutional mineral rights investing capital in the United States. The challenge, according to Grant, is that private equity competition in the Permian is intense, with large shops deploying $200 million to $1 billion in capital focused exclusively on that basin.
Beyond the Permian, Grant identifies the Bakken Shale in North Dakota, the Marcellus Shale in the Northeast, the Utica Shale in Ohio, the Eagle Ford Shale in Texas, and the Haynesville Shale on the Texas-Louisiana border as meaningful mineral rights investing opportunities. The Haynesville is particularly relevant in the current environment because of its proximity to new LNG export terminals being built along the Gulf Coast, which create sustained demand for the natural gas production underlying Haynesville mineral rights investing positions. Grant’s team buys across all major basins in the lower 48 states, though West Texas remains their primary operating area.
The horizontal drilling and hydraulic fracturing revolution that began in the Barnett Shale near Fort Worth, Texas in the early 2000s fundamentally changed the economics of mineral rights investing by turning previously uneconomic shale formations into prolific producing zones. Grant explains that a vertical well stimulated in place affects only the immediate rock surrounding the wellbore, while a horizontal well drilled two miles through a reservoir and then stimulated fractures an enormous volume of rock and allows oil and natural gas to flow freely to the surface. Energy market analysts at Bloomberg have tracked the shale revolution’s impact on U.S. production extensively, and that production base is what underpins the royalty streams that mineral rights investing buyers acquire.
Institutional Capital Flows Into Mineral Rights Investing: What Family Offices and PE Are Doing
Mineral rights investing has transitioned from a niche strategy known primarily to industry insiders into a recognized alternative asset class attracting institutional capital raising from family offices and major private equity firms. According to Grant, family offices are increasingly allocating to mineral rights investing because of the asset class’s combination of monthly cash flow, real property backing, and commodity price optionality. He describes working with a multi-generational family office out of New Mexico that has deep roots in the oil and gas business and views mineral rights investing as a core portfolio holding.
On the private equity side, Grant identifies firms including Blackstone, Natural Gas Partners, Arch, and F Street as active participants in mineral rights investing, deploying $200 million to $1 billion in capital through dedicated teams focused on aggregating royalty and mineral assets. Grant notes that these large institutional players are not equipped to execute the ground-level acquisition work that direct mineral rights investing requires, the cold calling, the direct mail, the courthouse title runs, and instead pay premiums to aggregators like Rising Phoenix Resources who can deliver assembled portfolios ready for institutional deployment.
For fund managers looking to raise capital around a mineral rights investing strategy, Grant’s experience suggests that high net worth accredited investors under Regulation D 506 offerings represent the most accessible starting point, with family office and institutional capital as a natural progression as track record develops. The SEC’s Regulation D exemption framework is the established pathway for private fund managers raising capital for mineral rights investing vehicles, and Grant’s team has structured multiple fund offerings under that framework to aggregate investor capital for deployment into royalty acquisitions.
Natural Gas Demand, AI Data Centers, and the Mineral Rights Investing Outlook
Mineral rights investing in natural gas assets has taken on new strategic relevance in recent years due to two converging demand drivers that were not visible to analysts just five years ago. Grant identifies AI data center electricity consumption as a major new source of natural gas demand, noting that electricity is primarily generated from natural gas and that the scale of power required to operate modern AI infrastructure is creating sustained demand growth that is not yet fully reflected in commodity prices. This emerging demand tailwind adds a forward-looking dimension to mineral rights investing in natural gas-weighted basins that goes beyond historical production analysis.
The LNG export buildout represents the second major demand driver Grant highlights in the context of mineral rights investing. Massive liquefaction facilities being constructed along the Gulf Coast, including one recently completed Louisiana project that occupied a full square mile and temporarily housed more construction cranes than any other development site in the world, are designed to export U.S. natural gas to international buyers. As more countries build import infrastructure to receive LNG from the United States, the demand base supporting natural gas prices and the royalty income flowing through mineral rights investing positions continues to expand.
Grant’s current market view, offered as his personal perspective and not as investment advice, is that natural gas presents more price upside potential than crude oil at current levels. Oil has been trading around $70 per barrel, which Grant describes as a stable and functional price for domestic operators, while natural gas has moved from approximately $2 per MCF to approximately $4 per MCF after reaching $8 in 2022. The commodity price sensitivity embedded in mineral rights investing means that royalty income expands proportionally with price increases, creating a natural inflation hedge characteristic that institutional allocators find attractive. Commodity market data published by the Wall Street Journal tracks these price movements in real time and provides context for the valuation environment in which mineral rights investing transactions are priced.
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About the Guest
Jace Grant is the CEO and founder of Rising Phoenix Resources, a group of companies with approximately $60 million in assets under management that specializes in oil, gas, and mineral rights investing across major U.S. basins. A fourth-generation participant in the oil and gas industry, Grant grew up alongside his father, an independent operator, and transitioned from working interest participation into the passive mineral rights investing space after identifying the royalty acquisition model as a more durable and less operationally intensive approach to energy asset ownership. Grant’s team executes the full mineral rights investing cycle from direct seller outreach and petroleum engineering underwriting through title review, closing, and fund distribution.
Grant’s current mineral rights investing fund, Llano Peak, can be accessed at laplatapeakfund.com. He is reachable on LinkedIn under the name JC Grant, where he offers a five-step mineral evaluation guide to those who connect and message him with the word “minerals.” For those introduced through Making Billions, referencing the podcast in that message confirms the connection context.
Questions Answered in This Article
How do mineral rights generate passive income without drilling operations?
Mineral rights owners receive royalty payments directly from oil and gas operators who bear all costs associated with exploration, drilling, and production. The mineral rights holder has no operational obligations and no exposure to drilling expenses, yet receives a contractual percentage of revenue from every barrel or unit produced. This structure allows investors to participate in energy production economics without taking on the capital-intensive responsibilities of running field operations.
Hear the full breakdown on Making Billions with Ryan Miller — and fund managers ready to implement join the Fund Raise Capital community of fund managers and deal syndicators learning first-hand from Ryan Miller, The Wolf of Alt Street.
What is the difference between royalty interest and working interest investments?
Royalty interest holders receive a share of gross production revenue without bearing any portion of the drilling or operating costs, making it a cost-free income position once the rights are acquired. Working interest holders, by contrast, are responsible for a proportional share of all capital and operating expenditures in exchange for their share of production. The distinction is critical for investors evaluating risk exposure, as working interest positions carry ongoing liability that royalty interest positions do not.
Hear the full breakdown on Making Billions with Ryan Miller — and fund managers ready to implement join the Fund Raise Capital community of fund managers and deal syndicators learning first-hand from Ryan Miller, The Wolf of Alt Street.
How do institutional investors underwrite and evaluate oil mineral interests?
Institutional underwriting of oil mineral interests centers on analyzing existing production data, operator quality, acreage location within a proven basin, and the reserve life of the underlying assets. Investors assess net revenue interest, production decline curves, and commodity price assumptions to build a cash flow model that supports a bid price. Due diligence also includes title verification to confirm clean ownership and confirm that royalty obligations are properly structured and enforceable.
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Which energy basins offer the best mineral rights acquisition opportunities today?
The Permian Basin in West Texas and New Mexico remains one of the most actively targeted regions for mineral rights acquisition given its prolific multi-zone production and density of large operators. The Haynesville Shale and Appalachian Basin continue to attract interest for natural gas-weighted mineral positions as LNG export demand grows. Basin selection depends heavily on operator activity levels, rig counts, and the probability of future development drilling on undeveloped acreage.
Hear the full breakdown on Making Billions with Ryan Miller — and fund managers ready to implement join the Fund Raise Capital community of fund managers and deal syndicators learning first-hand from Ryan Miller, The Wolf of Alt Street.
What returns can family offices expect from oil royalty investments?
Oil royalty investments are valued based on production yields, acquisition multiples, and commodity price assumptions rather than guaranteed returns, and actual results will vary based on market conditions and asset quality. Family offices typically evaluate mineral rights as a yield-generating, inflation-sensitive allocation within a broader real assets portfolio. The income profile of royalty positions is tied directly to production volumes and prevailing oil and gas prices, both of which fluctuate over time.
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How are oil and gas mineral rights acquired through public auctions?
Mineral rights are frequently sold through county tax auctions, estate sales, and specialized online platforms where sellers list acreage for competitive bidding. Buyers submit offers based on their internal valuation of current production, undeveloped upside, and operator activity in the surrounding area. Winning bidders must complete title searches and finalize deed transfers to establish clear legal ownership before royalty payments can be directed to the new interest holder.
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Can accredited investors earn monthly cash flow from oil royalties?
Accredited investors who acquire producing mineral rights can receive royalty checks on a monthly basis, as operators are typically required to remit payment within a set number of days following the production month. The consistency of that cash flow depends on the productivity of the wells on the acreage, the reliability of the operator, and the stability of commodity prices during any given period. Investors should treat royalty income as variable rather than fixed, since production volumes and prices both shift over the life of an asset.
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Why are mineral rights considered lower risk than direct drilling investments?
Mineral rights investments carry no drilling cost exposure, meaning the royalty owner does not absorb the capital risk that operators face when sinking wells that may underperform or prove uneconomic. The absence of operating liability means that even in a scenario where a well is less productive than expected, the mineral rights holder has not deployed capital into the ground alongside the operator. This cost-free participation in production upside, combined with the perpetual nature of mineral ownership, is why the asset class is viewed as a more conservative entry point into energy investing compared to direct working interest positions.
Hear the full breakdown on Making Billions with Ryan Miller — and fund managers ready to implement join the Fund Raise Capital community of fund managers and deal syndicators learning first-hand from Ryan Miller, The Wolf of Alt Street.
Topics Covered in This Article
- What mineral rights investing is and how it differs from working interest participation in oil and gas
- The three-tier valuation framework used in mineral rights investing: PV10, PV15-PV20, and PV30-PV40
- How to execute direct acquisition in mineral rights investing by bypassing public auctions
- Title chain review and closing mechanics specific to mineral rights investing transactions
- Basin selection strategy for mineral rights investing across major U.S. shale plays
- How family offices and private equity firms are allocating institutional capital to mineral rights investing
- Natural gas demand from AI data centers and LNG exports as tailwinds for mineral rights investing
- How petroleum engineering underwriting works in a mineral rights investing deal
- Capital raising strategies for fund managers building mineral rights investing vehicles
- The role of TCPA compliance and CRM infrastructure in a mineral rights investing acquisition operation
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