A Guide to Selling Oil, Gas and Mineral Rights

by | Jul 29, 2020

You’ve decided it’s time to sell your mineral rights. So, what’s next? First, get organized! Gather up as much documentation as you can regarding your oil, gas and mineral rights. You can never arm yourself with too much information regarding your property.

Herco recommends the following documents will ensure a smoother, faster process to sell your mineral rights:

  • Mineral Deed or Royalty Assignment
    • Identifies you as the owner
  • Probate Document
    • Detailing oil, gas and mineral interest and you as the heir.
  • Oil and Gas Lease
    • If your property is currently leased, you’ll want to know the terms of that contract, including the royalty and year term of the lease. A potential buyer is going to ask.
  • Division Orders
    • You should receive this document from the oil company when a new well is drilled on your property. This is going to tell you the name of the well(s) on your property, the location and the amount of interest you own in that well.
  • Royalty Check Stubs.
    • A potential buyer is going to ask how much you are currently receiving on a monthly basis. This will be something a potential buyer with require before making an offer.

So now you have your ducks in a row, what’s next? There are not as many resources for selling mineral rights as there are for selling surface real estate. When you’re selling your house, you call up a real estate agent and get your property listed on the MLS and interested parties can come look at your home. It’s not so simple when it comes to selling your oil, gas and mineral rights. You have options, certainly but most are skewed in favor of the buyer.

The following scenarios occur far too often when people are trying to sell their oil, gas and mineral rights.

  1. You’ve received an unsolicited form letter offering to purchase your mineral rights. Typically, these types of letters are very vague and may offer high prices in order to entice you to sign. Occasionally, they come with sight drafts that look like checks. Do not sign these letters or cash those drafts! If you do, you’ll likely become contractually obligated in a deal that won’t give you fair market value for your minerals.
  2. You have decided to list your mineral right with an online oil and gas auction site. This does offer you great exposure to the market, however, you are awash in a sea of other sellers. You will likely pay a fee regardless of whether you sell or not. There is no guarantee that your mineral rights will be seen by top buyers.
  3. You’ve engaged with a “brokerage firm” that has offered to appraise your minerals and buy them from you. Seems a bit of a conflict, right? Telling you what they are worth and then buying them for the price they quoted. Those types of brokerage firms are rarely the end buyer, so they are giving you a low purchase price and reselling your minerals for a profit.

In order to get the most out of your mineral rights, contact a mineral rights broker that is working for you in every aspect. They are not the end buyer, and they are incentivized to get you the best price for your interest. This type of broker is going to use their expertise to make sure you and your oil, gas and mineral rights are protected throughout the sale process. Showcasing it to top buyers that are specifically buying in the area you own and getting competitive bidding from multiple buyers.

You don’t need to go at this process alone. When you sell your house, you want someone that knows the market, understands what buyers are looking for and can get you the best possible price. Why should your mineral rights be any different? Please feel free to reach out to us at Herco to discuss your options.