In our experience, there are numerous reasons people want and need to sell their mineral rights. Some of those are:
• Liquidity – Mineral Rights are not commonly considered liquid assets. If you need to maximize cash flow for college, medical expenses, taxes, home improvements, business expenses or other costs we can help you get the most for your assets. Whatever your circumstances, we offer you an opportunity to profit from your mineral interest today and not wait months or many cases, years for drilling to occur.
o Delays in Development – As a mineral owner you are not in control of the timing of the development of your mineral interest. The simple truth is that a typical oil and gas lease gives exploration companies 3, 5 or in some cases, 10 years in which to begin drilling. This means your mineral interest may not be scheduled for drilling for many years. Farms and ranches located away from existing pipelines may be drilled last. For this reason, a mineral owner may prefer to capitalize on a portion of their minerals and royalty today, rather than waiting years for development to take place.
• Marginal or Non-Economic Wells – Unfortunately, there is no “sure thing” in the oil and gas business. Even when wells are generally productive in an area, there can be considerable variation between them – uneconomic wells can occur right beside economic ones. And some wells, (“dry holes”) may not even produce at all. This means, even if your land is drilled, your royalties could prove of little value. By selling a portion of your minerals now, you hedge against the real possibility of an uneconomic well being drilled on your property and assure yourself of a payday.
o Capitalizing on the “Boom” Today – Oil and Gas trends and “plays” come and go. What is hot today may be old news in 6 months. Many ‘shale plays” across the country have already began to lose steam and drilling has slowed significantly or come to a halt due to falling commodity prices. By capitalizing on your asset today, you can hedge against any uncertainty that the future holds.
• Favorable Tax Savings – If you recently signed an oil and gas lease on your mineral interest, this may have resulted in a hefty tax bill because lease bonus payments are treated as ordinary income. However, a sale of your minerals and royalty may qualify for long-term capital gain tax. Selling before tax rates go up or after they go down is often done by shrewed mineral rights owners.
• Reduce Financial Risk – Mineral rights owners sometimes feel that it is a time in their life where they need to eliminate risk as they age. We can help you sell them so that you can invest in more secure assets.
• Simplification – Consolidating and organizing you assets in one place can make it easier to manage.
• Estate Planning – Being prepared for your final day is important. Leaving your family the income earned from the sale of your mineral rights could be a way to support them when you no longer can yourself.
• Diversification– Few markets are as variable as those of oil and gas. For your peace of mind, it may be time to rebalance your assets.
• Invest In Non-Depleting Assets – Mineral rights seem to be in bubble territory. Demand is increasing while supply keeps decreasing. There are rising political efforts to curb reliance upon fossil fuels. Perhaps it may be time to switch to another form of investment.