7 Things to Know about Selling Mineral Rights

Selling mineral rights and earning oil and gas royalties is becoming increasingly popular with landowners. In USA, more than a million leases selling mineral rights have been signed from 2001 to 2011 by landowners for royalties, and many more are landowners are likely to follow suit (Journal of Accountancy). Are you considering selling the mineral rights on your land and earning a royalty? Here are seven things you need to know:

Sell Mineral Rights for Royalties

Mineral rights can be sold by landowners for earning handsome royalties. A royalty in the oil and gas extraction context is a percentage of profit that the lessee shares with the land owner or lessor from the production of the land. It is the percent of profits generated by the minerals extracted from a landowner’s property.

Gas and Oil Royalty Yield Handsome Profit

 Selling mineral rights to oil and gas companies can help you earn a minimum royalty of 12.5 percentage. Great negotiation skills, a property’s value and intense competition amongst the various oil and gas companies may raise this percentage to 15 percent, 20 percent, 25 percent or more.

Share Only Profit and Not Expenses

When you sell mineral rights of your land to a company, you do not have to contribute anything to the production expenditures while still retaining your share in the profit. This means that whatever the lessee has to spend on the exploration or extraction, you, the owner, will not have to bear any of the cost.

Bonus Culminating into Royalty

You can also lease the mineral rights to your land for a short term. Landowners are also paid up front, a signing up bonus for leasing their property for a short-term period. This bonus culminates into royalties if the lessee company is able to find the oil, gas, minerals it is looking for.

Ownership Details

 Before selling mineral rights to your land, get its ownership details and prior leasing agreements (if any) in order from the courthouse. Get the paperwork in order related to your ownership such as deeds, trust, maps, wills, previous leases, etc, before seeking or responding to buyers.

Expenditures and Processing Fees

Oil and gas royalties come with taxes of different kinds. If you are weary of expenditures and processing fees that would incur during the leasing and royalty settlement process, you would be amazed to know that leasing company may even bear certain transaction fees.

Legal Help

When drawing out a contract with a mining company, get the necessary legal help. Hire an attorney, with expertise in mineral transactions, who can review the contract to make sure it is fair and just. He should be able to negotiate and educate you about the potential risks and implications in your and protection from damage on your property.

UniRoyalties, Ltd. is a professional company that can review and process your lease and help you capitalize on your assets. A qualified company like UniRoyalties, Ltd. takes the guesswork out of selling mineral rights of your land.

Selling Mineral Rights for Profit

What are Mineral Rights?

Mineral rights are basically the rights of the owner to extract, mine, produce minerals from a piece of land. Selling mineral rights to companies (lessee) makes the landowners (lessors) get a chance to earn profit from the minerals found under their land. A land may contain hidden precious metals and minerals like,

•           Gold
•           Gas
•          Oil
•           Coal
•          Ores of metals
•          Gem stones
•          Salt

Leasing and Bonus

•          Instead of purchasing the entire land before mineral extraction, a company firstly may want to explore the potential of that land.
•          The owner of the land will then share with or lease the property to a mining or exploration company for a certain amount of money called bonus.
•         This lease will give the company the right to enter the property during a certain time period and conduct tests to determine the potential of minerals found there.
•          If the company is able to find what it’s looking for then it will buy, rent or lease the property to extract minerals and the owner will be selling mineral rights to that company.

Royalties

Once the minerals are extracted from the leased property, the company will pay royalty to the landowner. This amount can be fixed or based on a percentage of the yield. A contract is drawn to determine the royalty percentage.  

How to Sell Mineral Rights

Selling mineral rights can be a lucrative deal for land owners; however, they must possess the necessary knowledge and expertise related to minerals in order to strike a fair deal with a mining company.  In case you do not happen to have this kind of insight, then consider hiring the expertise of professionals for this purpose. It is beneficial to hire the services of professional companies as they:

•          Have the knowledge about the exploration type to draw minerals (drilling, mining, extracting, etc). 
•          Hold knowledge of state and federal regulations regarding mineral exploration.
•          Settle royalty/ profit percentage between the lease owner and the lessee.
•          Have awareness of implications of mineral extraction on the environment and the land owner’s lifestyle.

Hire the Professionals

•          Owners of land selling mineral rights must bear in mind that the buyer gets the right to explore the property and get the right to access and enter the property and extract the resources any time in the near future.
•          In majority of the contracts, the lessor cannot control when and how the extraction will take place; what kind of machinery and equipment would enter the property; and how the damage to the property will get fixed.
•          Thus, the seller and all future owners have to accept and live with the consequences of entering a legal binding contract. Thus, it is crucial to hire a professional company before you sell your land’s mineral rights.

UniRoyalties, Ltd. is a professional company capable of reviewing your oil and gas investment lease and helping you draw a lucrative contract on your land’s mineral assets. If you are thinking about selling the mineral rights of your land, seek assessment from a professional company like UniRoyalties, Ltd.