Selling Minerals or Holding
I keep hearing in the news that oil and/or gas prices are low, can I still make money on my mineral rights?
Oil and gas is a cyclical commodity, meaning that there are periods of high demand followed by periods of high supply. While these prices will impact the perceived value of an asset, most oil & gas companies and buyers understand supply and demand cycles.
The reality is, if your oil and gas minerals were valuable before, they are still valuable today. You can make money on your mineral rights even when oil or gas prices are low. Perhaps more important than oil or gas prices is the development by operators in your area. The old adage holds true, even for oil & gas mineral rights: location, location, location.
LandGate closes deals for our clients on a regular basis. In any market, it’s best to understand the value of your minerals before accepting an offer. That’s why we start with an accurate appraisal of your mineral rights. Our clients have the same information as oil and gas industry professionals regarding the value of their mineral rights. We also market your listing to many mineral lessees/buyers, so you get more offers on your mineral rights.
I am told I should never sell my mineral rights, is this true?
This is a very common theme that we often hear from mineral owners. The truth is that minerals should be looked at as a financial vehicle similar to stocks and bonds. Since mineral values are directly correlated to the commodity price of the minerals of concern, their value can dramatically increase or decrease based on market conditions.
For instance, oil and gas minerals will trade for a much higher price when there is a high commodity price compared to a low commodity price. Timing of production can also have a heavy influence on the value of minerals, but commodity price is one of the biggest drivers. In addition, production moratoriums and other government regulations can negatively influence mineral values. In summary, the value of your minerals can and will vary greatly over time.
The state I live in is cracking down on drilling. I held on to my mineral rights thinking I could get more money in the future, but now I am worried. What should I do?
If you’re a mineral owner in New Mexico or Colorado, and they are putting tighter regulations in place, it may serve you best to consider selling your mineral rights now. While oil and gas will continue to be produced into the near future out of necessity, there can be market corrections or political risks that actually lower the value of minerals in certain areas.
The LandGate marketplace is a great way to sell minerals in one state and buy minerals in another. Oil and gas companies do this all of the time and savvy mineral investors understand that hot plays come and go.
There is no obligation to sell your mineral rights on LandGate’s marketplace. We recommend you list your mineral interest, review the valuation and offers received, and make the decision that is best for you.
I own my land, but someone else is claiming to own my mineral rights? How is this possible?
Mineral rights ownership on a property is often different than surface ownership. While the original landowner may have owned both surface and mineral rights, these rights can be segmented, severed, or sold.
Typically a surface owner will own the entire surface. Very often the mineral rights on a parcel are owned by multiple owners, so it is possible that you also own the mineral rights with other mineral owners.
You can check if you own the mineral rights at your county clerk’s office. You need to trace the full history of your ownership through all the deeds and see if the minerals on your property (or part of them) have ever been ‘reserved’ when the property was sold or transferred. It would look something like “Reserve Minerals” on the Deed. If you see the minerals have been reserved in the conveyance of the title, it is likely that you don’t own them anymore. This process is called running title, which can be very complex and is usually handled by a professional landman.
If you need help determining mineral rights ownership, let us know and we’ll work with you. There may be other ways to profit with surface ownership, so give LandGate a call if you want to learn more.
What is a non-operated working interest?
Working interest is the owner’s share of the cost of oil & gas extraction. Revenue interest is the share of the revenue generated from the sale of oil & gas. A mineral owner typically owns only a revenue interest. The remaining working interest and revenue interest is owned by the operator and its partners. The operator may seek investors, called non-operated working interest partners, to share in the cost and revenue of a particular oil & gas drilling project, but the investor does not have control over the operations.
LandGate’s marketplace includes listing of non-operated working interest and of operated working interest. Our team of experts have past experience working with operators as well as transaction experience in acquisition and divestitures at the corporate level.
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