Frequently Asked Questions
If you are thinking about selling your mineral rights or your oil and gas royalties, it is understandable to have questions about this process, your options, and your future prospects. Unfortunately, finding answers to these questions is not always as easy as it should be. That’s why our experienced brokers at The Mineral Auction have put together the following list of some of the questions we are asked most frequently by clients and potential clients. If the information you’re looking for isn’t listed here, or if you’d like to discuss any of these topics with us in greater detail, feel free to call us today at (512) 698-2802 and learn more.
Mineral Rights FAQs
Where do you operate?
At The Mineral Auction, we have experience helping people across the United States to sell their mineral rights or their oil and gas royalties and are ready to work with people living anywhere in the country. However, the majority of our clients are located in South Texas and the Texas Panhandle, mostly in the areas of the Eagle Ford Shale and the Permian Basin.
What is the process of selling my mineral rights?
Rather than putting your mineral rights up for sale to a prescribed buyer, when you work with The Mineral Auction, we take your rights before a group of over 6,000 buyers who are ready and able to pay top dollar for your land rights. We sell your rights at auction, which encourages buyers to compete with each other, which consequently, increases the amount of money you will receive.
Can I sell my mineral rights on my own?
While you certainly can sell your mineral rights on your own, it is difficult to get the full value out of your oil and gas royalties or mineral rights without working with an experienced and well-connected mineral rights broker. By putting your rights up for auction with the help of The Mineral Auction, you have the benefit of selling your rights to our network of over 6,000 interested buyers who will compete for your rights, allowing you to hold out for the best price rather than making a decision based on a much smaller pool of offers.
What are some mistakes people make with their mineral rights?
There are several common mistakes that people make when they are looking to sell their mineral rights. One of them is waiting too long to sell, thinking that they will get more money ultimately. Another mistake many make is that they try to sell their rights themselves. Although this option might work for some, it can result in a lengthier, more stressful process and less profit for you. Fortunately, with the right mineral rights specialist working with you, you can avoid most, if not all, of these pitfalls.
Why is an auction a good idea?
An auction is one way to sell your mineral rights, which are rights to oil, gas, or other minerals, and it can be beneficial to you for one main reason: auctions for mineral rights unite numerous qualified and reputable buyers who can drive up the price for your rights if there is enough interest. This means that you might get more money for your mineral rights than you would if you sold your rights on your own.
Why should I sell right now, instead of waiting?
Some people wonder if waiting to sell their mineral, gas, or oil rights will result in more money for them in the long run. While, in some cases this may be true, there are still a number of reasons why it is a good idea to sell them now if you know you plan to in the future. One such reason is a potential reduction in the interest for your rights or the price for them. Also, selling your rights at an auction now can mean an immediate payout, allowing you to use the money on current needs or invest it to make more money over the long term.
What causes delays in development?
You may be holding onto your mineral rights because you’ve been told development will soon take place on your land, resulting in payoffs for you. However, delays in development are all too common and can be caused by numerous factors. Some of these factors might involve contract disputes, litigation regarding rights, building / mining regulation investigations, and other factors. If you have to wait and wait, then you might never see the payoff that you want. But putting your rights up for sale now might mean that you get the money you want for the use of your land.
Can having mineral rights influence my taxes?
Yes. This is especially true for people who decide to lease their mineral rights. Though you may be making more money now from leasing them, you could be hit with high tax responsibilities, as these rights and their payoffs are treated as regular income. If, on the other hand, you decide to sell your rights, then you may actually qualify for what is called a capital tax gain. You could see a lot more money in your pocket after taxes if you sell your rights now rather than lease them.
Will my mineral rights ever not be worth something?
It is possible that your rights will deplete in value. Though oil, gas, and minerals are in high demand currently, this does not mean that overall demand will not go down over time. This fact is one reason why it’s encouraged for many people to go ahead and sell their mineral rights now, before demand decreases and you can no longer get the price you once could. Though they will likely always be worth something, the value could decrease dramatically in the future.
What if I’m worried about having a dry well in the future?
This is a very real concern for many people who currently have oil, gas, or mineral resources on their property. Those resources might not always be available, and the risk of a dry well after development is very possible. This is one reason that putting your oil up for sale, gas, and mineral rights can be a good idea; it maximizes the monetary value of those rights right now, rather than risking you having a dry well and not getting paid at all for those resources.
Is there a risk associated with selling my mineral rights?
Actually, many see selling mineral rights as avoiding risks. There are many risks of holding onto your rights to resources, such as future dry wells or a sudden drop in demand for these resources. Since mineral, oil, and gas are in such high demand right now, it’s less risky to sell your rights to them because you will be paid, rather than holding onto them and risk never receiving any monetary benefit.
What is a non-depleting asset?
A non-depleting asset is a resource that is not expendable. Oil, gas, or minerals are not non-depleting assets. Though these depleting assets are in high demand currently, the world is focused on more renewable or non-depleting assets for future work, so selling your rights to these assets right now may be a way to ensure that you get paid for them. In the future, non-depleting assets may be in much higher demand, so the rights to your finite resources won’t be worth as much.
What are mineral rights?
As you begin your research into selling or leasing your property’s mineral rights, it is important to understand exactly what mineral rights are. Texas law separates land ownership into two sets of rights, mineral and surface. Two different parties can own these distinct sets of rights. One party can own and control the surface of their property (surface rights), while another party owns and controls what is below the surface (mineral rights). Whoever holds the mineral rights is allowed the right to explore, develop, extract, and market whatever resources are found below the surface. These resources could be oil, gas, coal, gold, or many other substances besides sand, gravel, or water.
What are surface rights?
If you are a property owner, Texas property laws enable you to sell your mineral rights while retaining the rights to the surface estate. Surface rights allow owners to keep control of buildings, crops, water, or anything that lies on top of the surface of your land. If you are considering selling or leasing the mineral rights below your property, you should make sure that your surface rights stay protected by selling through a trusted mineral rights broker, such as those at The Mineral Auction. Our mineral rights brokers are devoted to getting the best prices for our clients while ensuring they are satisfied with their rights agreement.
How do I know if my property has valuable mineral rights?
This is a hard question to answer upfront. Many factors go into determining the value of a property’s mineral rights. The size of your property, the area in which it is located, the current market price for mineral rights, and the competition prices are a few of many variables that buyers and sellers need to consider when determining a price for the transaction.
Do surface estates and mineral estates have to be sold together?
No, in the state of Texas, surface estates and mineral estates are separate legal estates which may be severed from one another. This separation is what allows homeowners to sell or lease their mineral rights to oil and gas companies for profit. Additionally, if you own the mineral and surface estate of your land, you can sell the surface estate (such as a home) to another party while keeping the mineral estates. However, if you sell your home and the mineral estate is not expressly reserved, it will pass on to the new buyers. Surface estates and mineral estates can be confusing, so trust the Austin experts at The Mineral Auction to help.
Does the owner or lessee of the mineral estate have access or rights to the surface estate?
Though the owner or lessee of the mineral estate does not have ownership or rights to the surface estate, they can still have access to the surface and affect the surface in the drilling process. According to Texas law, oil and gas companies who have mineral rights to an estate also have access to the surface estate as much as is “reasonably necessary” for mineral exploration. Examples of what is “reasonably necessary” includes storing equipment, installing pipelines, and using groundwater under the surface of the estate. Not everything that an oil or gas company does to a particular surface may be “reasonably necessary,” and if there is extensive damage done to the surface and the surface estate owners can prove that the damage is beyond what is reasonably necessary, the oil and gas company can be found liable for that damage.
What protections are in place for the surface estate owner?
Because lessees and owners of mineral rights have access to the surface estate to do what is “reasonably necessary” for mineral exploration, it is important for surface estate owners to know their rights and what protections are available to them. The best way to do this is for the surface estate owner to be present in lease negotiations with oil and gas companies, especially if the surface estate and mineral estate owner are different parties. This ensures that the interests of the surface owners are protected once drilling and exploration begin. Some examples of protections that can be included in leasing agreements include requiring the oil or gas company to return the surface estate to its pre-drilling condition or allowing the surface owner to be involved in decisions concerning the surface estate.