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Selling Oil and Gas Mineral Rights
Selling oil and gas rights can be a big decision for any mineral owner. Because these rights can be worth a lot, the choices you make can affect your future. Before you proceed with a sale, it’s important to know exactly what you own and what factors influence the value of those rights. Knowing these details helps you see the true value of your rights and also gives you the confidence to approach the process.
Keep reading to learn more about selling oil and gas rights the smart way.
Key Takeaways
- Before selling mineral rights, always confirm what you actually own by reviewing deeds, county records, or seeking legal help.
- Selling mineral rights is different from selling oil and gas royalties. Selling rights involves transferring full ownership of the minerals beneath your land, while selling royalties only transfers the right to receive a share of the income from production.
- To sell for maximum value, compare multiple offers and work with brokers or auctions to secure the best deal.
Determining What Mineral Interests You Own
Before you think about selling your mineral rights, you need to be certain about who truly holds those rights. Many landowners assume their deed automatically includes mineral rights ownership, but that’s not always the case. By confirming ownership first, you can avoid legal disputes, missed value, or selling mineral interests you don’t fully control. Here's how to determine what interests you own:
1. Review Your Property Deed
Checking your property deed is the best place to begin. It may state whether the mineral rights were included when you purchased the property. If the previous property owner kept them, the deed should also mention it.
2. Check Records at the County Clerk’s Office
Visit the county clerk’s office in the area where your property is located. Take the legal description of your land with you, or request a copy from the local tax office if needed. With this information, you can review past deed records connected to your property.
3. Read the Deeds in Reverse Order
Start with your most recent deed and work your way back through older ones. As you read, check if any past owner kept the rights to oil, gas, or minerals. Phrases like ‘mineral rights reserved’ are a sign that those rights were not passed along in the sale.
4. Consider Hiring a Landman
If reviewing the property’s deeds feels overwhelming, you can bring in a landman for assistance. These professionals specialize in researching property and mineral ownership, and they know how to follow the ownership trail through county records.
5. Get Help from a Title Company or Attorney
Title companies and real estate attorneys can also investigate mineral ownership for you. Working with an attorney with experience in mineral law is helpful if the ownership has been split among multiple heirs.
Factors Affecting the Value of Your Oil and Gas Mineral Rights
When it comes to selling mineral rights, it’s important to understand what influences their value. Several factors can affect the price a buyer is willing to pay, so being aware of them helps you negotiate your rights for a better price. Below, you can find some key factors you’ll need to consider when determining the value of your oil and gas rights:
Oil and Gas Prices
The value of mineral rights is closely tied to oil prices. When prices are high, buyers are willing to pay more because they expect higher profits from drilling. When prices drop, offers usually decrease as well.
Location
Where your mineral rights are located can affect their value. If your rights are in areas with proven reserves, favorable geology, and nearby infrastructure, they may attract higher offers. Also, clear legal ownership of your rights can make your property more appealing to buyers.
Mineral Type
The type of minerals beneath your land can affect their value because some contribute more significantly to the overall worth of your rights. For example, oil and natural gas are usually in higher demand and tend to attract more interest from buyers than many other minerals.
Production History
Past production can affect the value of your rights. If oil or gas has already been extracted from the property, there may be less remaining, which can influence offers. At the same time, a strong production history can make your rights more attractive because it demonstrates proven potential to produce oil. Whether production history will increase or decrease the value of mineral rights largely depends on the age of that production, with younger reserves generally being worth more than well-developed estates, with all other things being equal.
Mineral Interests
The portion of mineral rights you actually own can significantly affect their value. Mineral owners need to pay close attention to their ownership percentage, since a smaller share can reduce the amount they can sell. Determining your mineral interests, or what percentage of the property’s mineral estate you own, is covered in the section above.
Royalty Interests
Your royalty interest determines the share of oil and gas payments you receive from production. The higher your interest, the more income you can expect. This differs from mineral interest in that your mineral interest accounts for the percentage of the actual mineral rights you own, while your oil royalties account for your percentage of the production profits. Royalty owners do not hold control over the minerals themselves.
Tax and Inheritance Considerations
Selling mineral rights can have tax implications, including potential capital gains tax. Talking to a tax professional about selling your rights is a good idea. If you hold inherited mineral rights, understanding ownership and any shared interests among heirs is also important before negotiating a sale.
Selling Oil and Gas Rights vs. Selling Oil and Gas Royalties
When it comes to mineral rights, selling means transferring the ownership of the minerals under your land to someone else. This means giving up all rights to the minerals, including the ability to lease them to others or receive future royalty income.
Selling oil and gas royalties involves transferring the right to receive a portion of the income from production. However, you still keep ownership of the minerals themselves, while the royalty payments are redirected to the buyer through a royalty agreement.
Both options are handled differently in the industry, and property owners often review them carefully before deciding which fits their situation.
Selling Your Oil and Gas Rights
Deciding whether to hold or sell mineral rights is one of the biggest choices mineral owners face. The right decision depends on your financial goals, market conditions, and the long-term potential of your property. Many mineral owners choose to sell to gain access to a guaranteed lump sum, while others choose to lease for access to monthly mineral royalties while retaining ownership of mineral rights.
If you decide that selling is right for you, selling your oil and gas rights, there are certain steps you need to follow if you want to get a better deal. To sell your mineral rights, you’ll need to follow the steps below:
- Determine if the timing is right to sell.
- Understand the legal steps involved in selling.
- Collect GIS mapping information.
- Market your mineral rights to potential buyers.
- Review incoming offers carefully.
- Prepare a Purchase and Sale Agreement (PSA).
- Execute the Buyer’s Deed.
- Finalize the transaction and receive payment.
How To Sell for Maximum Value
While the mineral rights sale process generally follows the same steps, there are additional tips that you should take into account if you want to maximize the value of your mineral rights at market. Here's how to sell mineral rights for maximum value:
- Consider multiple offers to compare options and choose the strongest deal.
- Work with an experienced oil and gas broker.
- Sell your rights at auction to maximize your chances of getting top offers.
- Know the true value of your mineral rights so you can negotiate with confidence and secure the best deal.
- Market your mineral rights effectively to increase the offers you receive.
The Mineral Auction Can Help You Sell Your Rights for Maximum Value
Profiting from the sale of oil and gas mineral rights takes more than knowing there are valuable resources beneath your land. Before making any major decision, you need to understand ownership, market conditions, and the factors that affect the value of your mineral rights.
That’s where The Mineral Auction comes in. With our expertise, you can connect with qualified buyers, market your natural resources effectively, and avoid undervaluing your property. Get fair compensation for your rights with help from our brokers, and gain access to our vast network of interested buyers.
If you want to maximize your profits through a mineral rights sale at auction, partner with The Mineral Auction today.
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We’re located in Austin, TX, and because we have connections to thousands of oil and gas royalties and mineral rights buyers, we know that we can get you the best deal if you are looking to sell your mineral rights, whether you’re located in Texas or anywhere else in the U.S.
The Mineral Auction provided me with an invaluable exit strategy when selling a mineral interest that one of my clients had. I’d recommend them to anyone who has the need to create some liquidity.
Blake is excellent. We have used him in numerous family issues and find him always direct and very helpful. He is incredibly informed and our go-to guy.
Blake and I have worked on several deals together and they have always gone off without a hitch. Both parties leave the table satisfied. Highly recommended!
Blake hit it out of the park! He did everything he said he would do, and then some. He far exceeded our expectations within a day! If you are concerned about paying commission or being restricted to a broker – don’t be. He will max out the value of your minerals. I tried to negotiate with several buyers on my own and didn’t come within the same universe.
Blake Bergstrom helped my family negotiate the sale of our mineral rights for our small ranch outside of San Antonio. I found Blake to be very knowledgable about whole process and took the time to answer all our questions. We were very satisified with the transaction and have already recommended Blake and The Mineral Auction to some our friends. Thanks again.
I have mineral rights to natural gas and Blake was excellent in his advice regarding my situation. Thanks a lot for your help!
