Guide to Mineral Rights Ownership | Why Should I Sell?

Mineral rights can turn out to be some of the greatest assets you have, depending upon the country you are living in. The ownership of the subsurface of a property is known as mineral rights, which means that if you have mineral rights, you have the authority to access, extract, or even sell the resources you find under the surface of your property. The minerals you extract from below the surface of your property can be fluid minerals in the shape of natural gas or even oil, which are extremely valuable at this time of the century.

Types of Mineral Rights

Types of Mineral Rights

Here are a few types of mineral rights that you can buy or sell;

Royalty Interests

When we talk about royalty interest, it’s about producing minerals with a well that has active oil and gas. When an owner sells oil and gas, they receive royalties. However, when the oil and gas run out in the well, the royalties also end.

Royalty Interests

Mineral Interest

When you see mineral interests up for sale, it’s talking about non-producing minerals that are for sale. The owner is not entitled to royalties and in the coming future, a company might drill a well but not all of them are not successful in finding or extracting minerals from the site.

Mineral Interest

Why Should I Sell?

One of the most common questions that landowners usually ask is if they should be selling mineral rights or not. Selling mineral rights can be a great decision as you can receive quick and heavy cash payments rather than waiting for monthly royalty payments. When you are a mineral owner, you have very little information about how long you will be able to cherish the royalty payments, as the risk factor is high.

Any negative fluctuation in the oil and gas prices can stop the companies from further drilling. You can receive decent cash by selling mineral rights that can be further used for paying college fees for your children or even buying new property by adding some money on top of it. You can invest this money in many other opportunities that might benefit you a lot in the future, with the minimal risk factor. Investing in other assets with higher potential can benefit you in the coming future. Here are some of the factors due to which you should sell the mineral rights;

Selling mineral rights

Taxes

One of the most important reasons to sell your mineral rights is surely the taxes. When you have mineral rights and sell them, you’ll have to pay a very little amount in taxes. However, if you plan to collect royalty income, the tax would certainly be more. If you have inherited mineral rights, the best option is to sell them to avoid heavy taxes for a very long period.

Taxes

Control

Another major reason for selling your mineral rights is the control over the assets. When you own mineral rights, you have got a minimal say in whether drilling is going to take place or not, and when it is going to take place. You would expect the oil and gas operator to drill for you as soon as possible, but you have got minimal control over this situation, some owners wait for years and nothing happens. On the other hand, if you have assets such as real estate or stock, you’ve got good control over them, unlike mineral rights, and this is a major reason to sell mineral rights.

Control

Prices of Oil and Gas

The changing economic trends in the world are causing heavy fluctuations in the prices of oil and gas. You can expect what’s going to happen with the oil and gas price in the next few years. The prices of these resources have always been volatile, and your royalty income is directly dependent on the oil and gas prices in the market, if they go down, you are surely at loss.

Prices of Oil and Gas

Financial Needs

When you have a family or even live on your own, there are hundreds of expenses to manage. Such as the college fee of your children, the down payment on your home, or any other reasons. Sometimes people lose their jobs and the first thing they do is sell mineral rights to fulfill their financial needs. Apart from this, you can invest in several other opportunities or start a new business too.

Financial Needs

Conclusion

You need to have a clear understanding of what mineral rights are and how to use them properly. Many companies and individuals can buy mineral rights from you, looking for a buyer isn’t a problem. There are thousands of mineral rights buyers out there. However, you need to wait for the right offer and sell it as you like. You need to also carefully analyze the right time for selling mineral rights

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