Selling Mineral Rights in Texas – 2021 Guide
In 2019 and 2020, many oil and gas mineral owners in Texas were not interested in selling their oil and gas mineral rights. In fact, they wanted LandGate to assist them in getting their minerals leased. What we started seeing at the end of 2020 was an increased desire to sell. Why the change? Seems to be a combination of oil prices bouncing back to $70/bbl and the financial stress placed on a lot of Texas mineral owners due to the pandemic. LandGate wants to answer many of the questions we are hearing from our Texas mineral owners. This guide will focus on selling mineral rights, as well as selling monthly royalty payments owned by mineral owners who have leased their minerals to a company that has successfully drilled a well.
What is a Mineral Interest?
Mineral ownership constitutes the right to explore for and produce oil and gas. The mineral owner has the right to:
- Enter onto the property to explore
- Authorize another to enter onto the property to explore (by granting an Oil & Gas Lease)
- Receive the benefits (from granting a lease), such as bonus and royalty payments
What is a Bonus Payment?
A bonus payment is a one-time payment made to the mineral owner at the time the oil and gas lease is signed. It is calculated on a per net mineral acre basis.
Example of a bonus calculation:
- If you own a 25% mineral interest in a 640-acre tract, then you own 160 net mineral acres
- Net acres = Mineral Interest x Gross acreage, or 25% x 640 = 160 NMA
- If the offer is $350/net mineral acre, you will receive a bonus check in the amount of $56,000 ($350X160)
What is a Royalty Payment?
When a mineral owner grants an oil and gas lease to a driller, the exclusive right to drill and develop is transferred to the driller. In exchange for granting the lease, the driller agrees to pay the mineral owner a royalty. The royalty is a percentage of the proceeds from the sale of oil and gas produced, which is paid monthly to the mineral owner.
Why Would Someone Want To Buy Texas Minerals If They Are Not Producing?
Just because your Texas oil and gas mineral rights are not producing now, does not mean they won’t be producing in the future. There are a lot of reasons why your mineral rights might be more valuable in the future than they are now. Specifically, changes in the price of oil and gas and technology play a big role in Texas mineral valuations. The improved technology to drilling horizontally along with hydraulic fracking has improved the economics for the drillers and made minerals more valuable.
Why Would You Want To Sell Your Texas Minerals?
Common reasons why our clients have decided to sell their oil and gas mineral rights in Texas:
- Unexpected medical expenses
- College expenses – their income decreased during the pandemic
- They are elderly and want a big cash payment now to enjoy their retirement
- They saw the price of oil drop to below zero last year and now want to sell at $65/bbl
- They know they will receive more money selling their oil and gas minerals instead of leasing
Why Would You Want To Sell Your Texas Minerals If They Are Producing?
Texas mineral owners like getting that royalty check in the mail every month. But many mineral owners would like to know how much cash someone would pay them today for all of their future royalty payments. Most oil and gas mineral owners do not realize there is a market to sell oil and gas minerals and royalties until they receive an unsolicited offer in the mail. What you probably do not realize is that there are thousands of individuals and companies trying to buy Texas oil and gas minerals.
Unfortunately, oil and gas mineral buyers prefer to make offers to un-informed mineral owners. Some Texas oil and gas mineral rights owners might have noticed that their royalty checks are steadily decreasing, which is not good news when mineral owners rely on that check every month. So, when someone offers to pay you 24 times (2 years) your last check, you might be tempted to take it. But what you don’t know is that the operator may be getting ready to drill more wells which would result in your royalty check increasing every month. Mineral buyers are not going to inform you of future drilling. LandGate, however, knows exactly what is happening on your Texas oil and gas minerals now and in the future. And LandGate knows the value of your oil and gas minerals rights and will get you more cash if you list your oil and gas minerals for sale on LandGate.com.
Why Is Landgate The Leading Resource For Selling Texas Oil And Gas Minerals?
- We are Best in Class in running SEC guideline royalty valuations
- We will include un-drilled (future) wells in your valuation to maximize your sales price
- We provide free well and production data for mineral owners to understand our valuations
- Will prepare your personal LandGate Data Room for mineral buyers to review before offering
- Will market your Texas mineral interest for sale to thousands of buyers each month
- Will guide you through the process of accepting an offer, closing, and getting paid when you sell oil and gas minerals
What Is A Landgate Valuation?
A LandGate valuation report is a forward-looking financial review of projected oil and gas reserves and the value those reserves can generate. Most companies claiming to get you the highest offer do not know the true value of your oil and gas mineral rights. Some companies will take the average of the last six months of your royalty checks, multiply that number by 36 (3 years), then shop your oil and gas mineral interest at that price. Was that the average of royalty checks when oil was selling at $40/bbl? And how about the wells they have drilled but not yet completed on your minerals? And how about the wells that have been permitted, but not yet drilled on your oil and gas mineral rights?
LandGate provides an expert valuation from a team of geologists and reservoir engineers at no cost. If you want to maximize the value of your Texas oil and gas mineral interest to put the most cash in your pocket, you need LandGate to manage and market your mineral interest for sale.
Free Texas Well And Production Data
LandGate makes well and production data available for free. We will show you how we locate your property on LandGate.com and show you the drilling and production activity. We will also show you how to locate this detailed data and information. This well and production data will also be a part of your Personal LandGate Data Room on LandGate.com, where buyers will understand why the asking price for your oil and gas mineral interest is as high as it is.
Why Landgate Will Get You More Money
LandGate has successfully assisted hundreds of Texas mineral owners in closing at a price averaging 4 times their original offer. LandGate’s appraisal expertise, global-reach website, and large network of oil and gas mineral buyers are key components for creating competition and getting better deals.
LandGate will post your Texas oil and gas mineral rights and personal LandGate Data Room on LandGate.com to expose it to as many potential buyers as possible. Marketing your Texas oil and gas mineral rights online with LandGate equals more money and better deals. LandGate will not sit back and wait for offers. LandGate takes an aggressive approach to marketing mineral rights. LandGate.com is the ideal marketplace to list your Texas oil and gas mineral rights.
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