With the rapid expansion of the Permian Basin over the past few years, many owners of lands that have previously not been in production, or were only marginally productive, are now being contacted with offers to buy mineral rights.
In many instances, we’ve found that these mineral owners didn’t even know they owned minerals in the area. The minerals may have been passed down to them through inheritance or were reserved when landowners left the area decades ago. In many cases, we’ve found that there has already been a well drilled on the property, and the current well operators owe our clients money.
Give us a call if you’ve been contacted by a mineral buyer. We may be able to help you too.
Before You Consider Selling Your Mineral Rights
Before you agree to sell mineral rights or sign any paperwork, you should consider taking the time to determine what you own.
This information is critical in determining exactly what you should be getting paid in the sale of your minerals (we rarely recommend anybody sell their mineral rights).
In determining precisely what lands you own, we will also utilize the public records available at the Texas Railroad Commission to determine what kind of well production is nearby, whether a well has been permitted on your minerals, or even if a well has been drilled and is producing, but you aren’t getting paid for it.
We’ve seen numerous times that a well has been drilled and is producing, but a mineral owner is not getting paid due to problems with record title.
If you’ve been sent an offer to buy your minerals by mail or a landman has called you with an offer, please feel free to give us a call. We’ll be happy to discuss it with you before you commit to moving forward.
Before you call, it would be helpful if you have the following information handy:
- Where you believe you might have received the interest
- What county the interest is located in
- The legal description of the property in the offer letter (for example, Section 1, Block 35, T-1-S, T&P RR Co., Martin County, Texas)
If you don’t have all of the above information available, that’s okay; we can work with you to get it sorted out.
If You Decide to Go Ahead and Sell Mineral Rights
Although we rarely recommend clients sell their mineral interests, everybody’s life situation is different, and it may make more sense to realize as much value as possible now rather than looking toward a larger gain trickled in over the long term.
This is where knowing what you own is critical. To effectively negotiate the highest price for your mineral interest, you have to know exactly what you own.
Many mineral buyers capitalize on the fact that it is unlikely that you know what you own. If you get far enough in the mineral/royalty selling process that the potential buyer has sent you a copy of their proposed Deed, pay special attention to the fine print, especially in the paragraphs surrounding the legal description of the property described in the instrument. You’ll likely find additional language that, in effect, broadens the conveyance to include every mineral interest you own in that particular county.
If you are unaware of exactly what you own, you may inadvertently convey interest in additional tracts and never even be aware. You may possibly be able to recover a per acre payment if you become aware that an additional tract was conveyed (how will you ever know?), but likely not without the help of an attorney.
If you decide to move forward with selling your mineral or royalty interest, be sure to read the fine print in every document you sign. Also, it may benefit you to have competing bids on your property. We may be able to help with that. Give us a call or shoot us an email, and we’ll be happy to discuss it with you.
Remember, as you go through this process, you are in charge of the pace. Don’t let anybody intimidate you into signing anything by making you believe that you only have a few days or weeks to make a decision. You’re better off finding another buyer in that case.