A Success Story for Mineral Assets

A Success Story for Mineral Assets

When the COVID pandemic and the ensuing economic downturn caused the oil and gas market to plummet, one Texas family (among thousands) watched their land’s most valuable asset—the mineral interests—become almost worthless. But their story, thanks to patience and expert assistance from a LandGate professional using LandGate’s trusted third-party data, had a happy ending: the family secured a better deal on their mineral rights than they ever thought possible.

In late 2019, several family members who owned a large mineral holding came to LandGate to market their property. The minerals, which had been family-owned for many years had never been developed despite being surrounded by productive oil and gas wells.

Despite owning minerals in a very productive and valuable location for oil and gas, the family had never received significant revenue from their minerals prior to using LandGate. Find your parcel(s) on LandGate.com to see resource data for solar, wind, carbon, minerals, and water rights for free.

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Some family members wanted to sell the mineral interests outright, while others wanted to keep the minerals in the family, but all were concerned that the minerals might never make money.

After consulting with their LandGate land professional, the family listed the minerals to see what options the marketplace would bring to them. Within a short time, mineral buyers from across the country began offering to purchase their interests.

Then, COVID hit and global demand for oil and gas plummeted. Seemingly overnight, the price of oil—and the relative value of the family’s listed property—went to zero. Investments into oil and gas mineral purchasing virtually stopped and the family’s chance to capitalize on its minerals essentially vanished.

While the outlook was not great, LandGate’s no-listing, no-marketing fees platform offered the family a no-risk option for keeping their mineral interests in front of buyers. Although the family was worried about the potential outcome, regular consultations with their LandGate land professional helped them remain positive.

The graph shows a roller coaster of an oil market that almost immediately followed the listing of the seller’s minerals. Leveraging LandGate’s platform, the family was able to weather the most turbulent oil market in history to get the perfect deal for them.

Then in late 2020, the price of oil gradually started to rise. While the majority of mineral buyers and operators were still inactive, there were opportunities on the horizon for the family:

1. All of their oil and gas was still in the ground and becoming more valuable by the day;

2. Their minerals were not controlled federally, and investments were beginning to flow back into West Texas where the minerals are located;

3. The world runs on energy, and demand was going to rise as the
global economy began to get back up and running.

Quickly the price of oil hit $40/barrel (11/2020), then $50/barrel (12/2021), then $60/barrel (4/2021), then $70/barrel (6/2021). After nearly two years of witnessing the most turbulent oil price fluctuations in history, the family’s patience paid off and offers started flowing again.

Numerous lease and purchase offers were submitted through the LandGate platform. Working with their land professional, the family members reviewed their offers and negotiated a deal that allowed them to sell a portion of their minerals and retain another portion that were to be immediately leased for the highest rate in the area. The deal exceeded the family’s expectations, delivering large upfront monetization and shared upside of future potential drilling on their legacy family minerals.

The family was extremely satisfied, but the opportunities weren’t over yet. Several family members decided to 1031 exchange their minerals for other property while others chose to take cash and pay capital gains tax on the sale. LandGate provided the sellers with IRS-approved capital gains tax reports, which ended up saving several family members tens of thousands of dollars that they would have lost by claiming $0 value when the minerals were inherited.

This family’s experience illustrates why thousands of landowners and land professionals rely on the LandGate platform to monetize the natural resources associated with real estate including renewable energy, oil and gas, carbon credits, water, and mining.

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LandGate not only connects brokers with a new class of buyers, it also connects brokers with landowners who want to work with folks just like you. Contact LandGate today to begin expanding your business into the $4 trillion/year energy market.

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