Replies to This Discussion

Permalink Reply by Jon Williamson on July 9, 2020 at 1:15

Hello John, Leasing your mineral rights allows you to benefit from future production with royalties. Selling your rights will

give you a one time payment hopefully equal to future value from royalties and time value of money. Totally depends on

your financial situation and need. Minerals were scooped up in Texas during the depression and war time at very low prices.

People made millions. Will oil and gas production be lucrative for drillers and mineral owners in the future? Likely at some point

yes. Just my opinion, selling in historically depressed market is a bad idea, but some folks are still paying a lot for minerals. Also have

to consider the impact of capital gains tax when you sell. So plenty to ponder.

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Permalink Reply by Skip Peel - Mineral Consultant on July 9, 2020 at 1:35

Although there are basic considerations applicable to all cases, the details of a mineral interest and the current state of valuation metrics are unique to each.  An interested seller needs to take in to account both.  There are important variances in mineral law between states that may also be a factor.

FUNDAMENTALS OF LEASING AND SELLING MINERALS

By Skip Peel, Independent Landman

The following is intended to give mineral owners an idea of how minerals are valued and how they are commonly leased and sold. The comments are purposely general in nature as the subject is fairly complex, details regarding size and location of mineral ownership vary widely and those variations are critical to determining value. Anyone considering the sale of minerals should seek the professional assistance of a landman or attorney experienced in the leasing and sale of mineral interests and familiar with the  exploration and production history and current activity in the region where the minerals are located.

• INTRODUCTION

• UNCONVENTIONAL VS CONVENTIONAL RESERVOIRS

• LEASING

• NEED TO KNOW TERMINOLOGY AND VALUE METRICS

• OPTIONS IN STRUCTURING THE SALE OF MINERAL RIGHTS

• PROS AND CONS OF SELLING A MINERAL RIGHT VS SELLING A ROYALTY INTEREST

https://gohaynesvilleshale.com/mineral-owner-rights-101

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Permalink Reply by phoenix on July 9, 2020 at 6:38

It all depends on your financial situation but it may make sense to just sell a portion of your interest, say 1/4th or 1/2.  

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