4 Things to Consider When Selling Mineral Rights

Mineral-Rights

Whether selling or leasing mineral rights, such as giving oil companies access to your property to drill, may seem like an easy way to make money, but it’s not without its risks. 

You need to carefully consider the pros and cons of selling mineral rights before you decide if it’s the right thing to do for you.

Here are some things to consider if you are thinking about selling mineral rights.

1. How Are Mineral Rights Valued?

Valuing mineral rights is an uncertain process. There are often many unanswered questions around how much money you can actually get for your Grady County mineral rights. Like any property, mineral rights are only worth what someone else is willing to pay for them. 

The price also depends on where your minerals are located, as well as how close your property is to an existing oil or gas field or whether there is any current leasing activity.

Your personal situation could be another major factor in determining how much you are willing to sell your mineral rights for.

2. What Are the Terms of the Mineral Deed?

This is probably one of the most important things you want to review when selling mineral rights.

Are you selling “net acres” or “all of your right and title”? Are you warranting the title to the Grantee? Is the effective date correct with what you agreed to?

 These questions and more need to be asked before signing the Mineral Deed; otherwise, you may end up doing something that you did not agree to. 

3. Understand the Current Market Value of your Mineral Rights 

An informed decision based on solid research is always best. 

Take a look at the area by talking to an expert or other mineral owners about current activity, previous wells that have been drilled, or lease bonus amounts and terms, all of which can help you establish an idea of fair value. g. You can also research online about current and future energy trends and where commodity prices for oil and gas are headed. 

Remember to consider tax implications that can impact your gain or loss and tax liability. If you inherited your mineral rights, you might be entitled to a “stepped-up” basis, thereby limiting the amount of taxes owed on the sale of mineral rights.  Should I consult with an Attorney?

If you understand contracts and are comfortable in understanding what you have negotiated, then no.  If you aren’t comfortable or do not understand the process, then yes, seek legal counsel. An attorney knowledgeable in oil and gas is your best source for help.

An unrepresented seller may well make a mistake that costs them a lot of money down the road when problems arise after they have signed away their mineral rights.

Conclusion

Given these factors, you can now more clearly gauge your situation and decide whether or not selling mineral rights is right for you. 

Click here to learn more about Grady county mineral rights and everything else you need to know when selling your mineral rights!

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.