Selling mineral rights can be a profitable process depending on timing and size of the asset you own. It can also be an intimidating process if all your questions are not answered ahead of time with complete transparency. Most mineral owners are not in the oil and gas business so our goal is to educate first so you can pick the best option for your family.
Stag Minerals strives to answer all questions ahead of time so there are no surprises and the closing is straightforward and timely. Stag has helped mineral owners all over the nation get top dollar for their mineral rights and truly understand their mineral rights value. Prices for minerals are at all time highs so the argument for selling mineral rights has never been stronger.
Asking questions before starting this process is imperative. Here are some of the most common questions we are asked before making a decision to selling your mineral rights.
Selling minerals is a real property transaction and is as simple as a deed being exchanged for compensation. The process goes something like this:
Companies and individuals who buy minerals tend to have large portfolios of mineral assets. This way they do not have all their eggs in one basket and can have exposure across several wells. Minerals are bought and sold constantly, and even the biggest buyers divest at some point or have an exit strategy.
The main types of mineral buyers are individuals, small companies, large mineral funds, and oil and gas operators. Stag Minerals has a strong track record of closing deals as agreed upon with money down and strives to be the number one choice for mineral owners when it comes to getting the most out of their valuable asset.
Not all mineral sells will have you feeling like the Beverly Hillbillies; it is all about the rock. When we say rock, we are referring to the geology in the area of where the minerals are located. Even in the hottest of counties there are some minerals that simply do not have good rock or have other geological deformities such as faults that oil and gas drillers will shy away from. Minerals that are currently leased by an oil and gas company or ones that have permits for new wells or currently producing wells will have the most value. If your minerals are not leased that is usually a good indication that your minerals might be outside of the good rock.
The most profitable minerals are ones located in the prolific oil and natural gas producing basins of the lower 48 states that are capable of being horizontally drilled. Across the United States there are currently several plays that oil producers are interested in mining.
If you sell your mineral rights you no longer own them. This is crucial to understand prior to making your decision to sell. By selling mineral rights the buyer steps into the shoes of the seller and recoups and collects any compensation from these minerals. Some mineral owners prefer to sell a portion of their mineral rights rather than selling all of it, this way owners can get some immediate cash and wait on future production for additional cash flow.
Once you are paid the agreed upon price and have executed the deed or conveyance, that document will be filed of record in the County where the minerals are located. A copy is also sent to the oil and gas operator or current lease holder as well as the appraisal district to update their records.
To find out how much your property is worth it is best to contact a company such as Stag Minerals to evaluate the property. Not all minerals have equal value, so it is easiest to value minerals that have current production or producing wells nearby.
Using this well data and geology for the region one can roughly estimate how much oil a property with the right operator attached might yield. If your minerals are in an area without much production, then a common formula for selling mineral rights is two to three times the lease bonus. Minerals that are not being held by an oil and gas lease or located in an area with no other active leases will not command much of a sales price.
It’s all about timing in the mineral game and since minerals are a form of real property, they are much like real estate transactions. There are ups and downs in the market and timing can help or hurt you depending on your situation.
Minerals in the past were purchased very cheap considering current market rates, but those days are gone as technology has improved and data on what a buyer is purchasing is more concrete. For instance, prices in the Permian Basin have doubled in the last 4 years even with oil prices plummeting in 2015. We do not anticipate prices jumping this quickly any time in the near future so now is as good a time to sell as any.
Stag Minerals is the go-to choice for selling all or a portion of your minerals in the lower 48. Our straightforward and transparent approach will continue to keep us ahead of the pack and able to compete with mineral buyers for decades to come. We believe that a good deal happens when both parties are happy and strive for that in each closing. Repeat business, testimonials and referrals are the biggest compliments we can get as a buyer and we look to get one of those from you. We invite you to call, email or stop by our office to get our best offer and answer all of your questions.