Leasing Your Mineral Rights

Mineral rights give a property owner the right to keep, sell, mine, produce, or extract the minerals on that estate. As an owner interested in putting these rights up for sale, oftentimes you will encounter oil and gas companies that favor a lease agreement to the mineral rights. Sometimes companies prefer a lease agreement when they are uncertain exactly what minerals and how many are present in the land. If the company finds suitable material, it will extract the minerals. If it doesn’t, officials will wait for the lease to expire, and the rights transfer back to the owner.

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Surface vs. Mineral Rights

Property owners in the United States often own surface rights and mineral rights, and these rights can be transferred to another party for money. Surface rights refer to the rights relating to the surface of the land, which usually includes existing structures. Mineral rights refer to rights relating to the minerals below the surface of the land, and oil, gas, salt, uranium, and sulfur are the most common kinds of mineral rights. 

When people are offered money in exchange for their property rights, they are often eager to try and negotiate an agreement on their own when they do not have a full understanding of the true value of their property and what they might actually be entitled to. The Mineral Auction can discuss the possibility of leasing your mineral rights in more detail when you call us at (866) 322-8136.

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How Mineral Leases Work

In order to sustain the oil and gas supply needs of consumers, oil companies secure a legal contract under an “Oil, Gas, and Mineral Lease,” which allows them to tap into the rich mineral resources beneath the land of a mineral rights owner.

Under such a contract, oil companies or operators pay mineral owners for allowing them to tap into their mineral resources and mineral owners who strike a deal with oil companies automatically receive a lease bonus. Mineral rights owners under certain contracts are entitled to get an additional payment from oil companies in the form of a royalty percentage upon conducting any mineral-related activities, such as drilling. Oil companies initially make a proposal to notify the landowner and pay them before conducting any drilling activities, which may last from several days to several months.

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Royalties on Leased Rights

When you lease your mineral rights, you get a return on what is extracted in the form of two payments. This includes either a one-time payment when the lease is signed, or a royalty rate on everything extracted from the land. Privately negotiated royalty rates can be determined on the basis of:

• Percentage of return on all extracted resources
• Other producers offering leases in the area
• Number of nearby mineral owners

The lease agreement you make with a company will specify how much you will be paid in royalties. Royalty payments are typically a share of the production income. Royalty payment amounts are usually specified in leases and may be a percentage of the production value, another fixed amount, or possibly even other terms. When a mining company leases your mineral rights, they have rights to the land and are entitled to explore, drill, bring large machinery, and excavate your land. If you are unsure about the leasing process, it may be in your best interest to sell your rights with the help of The Mineral Auction.

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Are You Really Ready to Lease Your Rights?

If you hold on to your mineral rights by leasing them, you are engaging in a business that has its own unique dangers. The question is, are you really prepared to take on the challenges?

Volatile markets, strict federal and state regulations, and the likelihood of experiencing a dry well are just among the myriad of different risks oil and natural gas players face every day. Fortunately, these companies have the resources to tackle each of these risks without much damaging impact. For instance, oil exploration companies have the capital to effortlessly spread the risk of dry wells over large land areas, sometimes even across several states and countries.

By selling your mineral rights upfront, you are sparing yourself from the possible harm of engaging in a venture that won't pay off. Speak with our team of mineral rights brokers at The Mineral Auction by calling (866) 322-8136 today to learn more about selling your mineral rights today.

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How Can The Mineral Auction Help?

Disagreements can arise during the mineral extraction process, and it can be difficult for the average person to understand some of the contractual issues involved in these disputes. Disputes can often be avoided by ensuring that all of the important issues are addressed before a lease is signed. Patience can be key in many cases.

At The Mineral Auction, we can provide an accurate assessment of the risks and benefits of selling in the current market. Some people may benefit from minerals increasing in value by waiting while others might be more inclined to sell now.

After compiling data from Geographic Information Systems (GIS) maps and other relevant databases, we can begin advertising to buyers. We can help you identify the most serious and trustworthy potential buyers.

After you have settled on an offer, The Mineral Auction can help draft a Purchase and Sale Agreement (PSA) specifying the terms of the sale. You will want your lease agreement to specify the types of equipment that can be brought on to your property. Protecting your property can be just as important as any monetary payments. You will be paid after agreeing to the PSA and the deed.

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Our Service Areas

Our work largely focuses on West and South Texas in the Eagle Ford Shale and Permian Basin, but we also have experience with the Brown Dense Shale, Mississippi Lime Shale, Granite Walsh Shale, Haynesville Shale, Marcellus Shale, Utica Shale, and several others. We serve locations in Karnes County, La Salle County, Dimmit County, Live Oak County, Zavalla County, Frio County, McMullen County, Atascosa County, Atascosa County, Lavaca County, Gonzales County, Dewitt County, Bee County, Maverick County, and Webb County as well as Permian Basin counties such as Andrews County, Borden County, Coke County, Crane County, Crockett County, Dawson County, Ector County, Gaines County, Glasscock County, Howard County, Irion County, Loving County, Martin County, Midland County, Pecos County, Reeves County, Sterling County, Terrell County, Upton County, Ward County, and Winkler County.

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Why You Need a Mineral Rights Broker

Most agreements concerning mineral rights involve large sums of money, and you should absolutely seek professional assistance for every step of the mineral rights sale process. Do not try to handle your lease on your own and risk possibly having to wait several years or decades to see any return on your investment.

When you sell your mineral rights now, you can be guaranteed a payout for your rights even if your well is not productive. The buyer would be responsible for whatever losses they incur but you will retain the amount you agreed to.You should also be aware of potentially significant tax benefits you could stand to gain from selling your mineral rights. Long-term capital gains taxes of gas, oil, and minerals can be available for some sellers and others with leased rights could face income taxes and tax penalties.

The key in many cases is to find the best possible buyer, and this can be a process that requires a lot of patience as well as some solid negotiating. The Mineral Auction has a network of buyers nationwide as well as international buyers who will provide the best possible financial return for your mineral rights.

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Contact an Austin Mineral Rights Broker for More Information

If you or someone you know is thinking about selling your mineral rights, contact The Mineral Auction at 866-322-8136 for a quality, no hassle experience dealing with the transfer of this ownership. The Mineral Auction has thousands of reliable connections to oil and gas and mineral companies, and we are confident we can provide you with the knowledge and results you are looking for regarding your mineral rights.

The Mineral Auction has developed a network of 11,000 buyers since our founding in Austin in 2008. We have a team of commissioned brokers who make sure our clients never feel any pressure and can comfortably communicate throughout the entire process. Owner and founder Blake Bergstrom has compiled the most extensive list of mineral and royalty purchasers in the industry. The Mineral Auction can provide a solid estimate for your property based on multiple factors and considerations.