The Ins and Outs of Owning Mineral Rights

Feb 6, 2018 by

Winning the lottery and striking oil have a lot in common when you think about the emotions that are associated with each. It’s a very exciting rush to consider the prospects of each if you’re lucky enough to experience either. However, there’s a critical distinction between the two; one is money, and the other is the prospect of money. For those who have minerals rights, they also have responsibilities of a high magnitude to decide exactly what to do with those rights.

 

There are two primary ways of dealing with mineral rights if you’re just a private citizen and not an excavating or drilling company selling or leasing the mineral rights to your property. Selling your mineral rights brings much more immediate results, while leasing will deliver more prolonged results. It’s critical to know which one of these options is best for you because misjudgment can be expensive.

 

Choosing one over the other could have you selling out for pennies on the dollar, or waiting ten or more years to see a return on your investment. That’s why it’s highly recommended that you speak with a broker who can evaluate the value of your mineral rights. Selling your mineral rights is more often than not the best choice, as it relinquishes the responsibility of the mineral rights to begin with, and guarantees a sizeable payout regardless. Selling the rights to the minerals is different than selling the rights to the land they’re on, which is important to note. Leasing works the same way, however the payout will trickle in over time, while the rights to the land are maintained. Depending on what kind of rights you own, be it minerals, oil, or natural gas, leasing may be the better option if prices are expected to rise.

 

Leasing can often be misjudged, which is why a mineral broker is key. Mineral brokers are usually well connected with buyers and will do their best to drive the price up on your mineral rights. Since mineral brokers have a better idea of what your mineral rights are worth than you do, they’re less likely to get swindled by a buyer and can protect you from buyers who prey on less knowledgeable owners.

 

Since brokers have a vast network of buyers they’re often in touch with, they will drive up competition for your mineral rights, raising the price and attracting many prospective buyers. On your own, it’s much more difficult to get in touch with all the people necessary to do this. For those lucky enough to have mineral, oil, or natural gas rights, they should exercise care to get the most worth out of their rights. Taking the necessary precautions to maximize profit on your mineral rights is a move that could help you set yourself up for great financial success.  

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