Many of our clients have been approached by companies that have expressed an interest in buying their mineral rights. This, of course, is different than leasing property in that such companies will pay the landowner a lump sum of money in return for the landowner assigning all future royalties from the lease that they previously signed.
Below is a list of some common questions that I am being asked with respect to the sale of mineral rights:
Question: Does it make sense to sell my mineral rights?
Answer: If for some reason you need money at the present time, for example, for a college education, to pay off debt, for medical expenses, etc., it could make sense for you to sell your mineral rights. Additionally, I have clients who have no children or grandchildren and who would like to be able to immediately realize the benefit of their mineral rights instead of possibly waiting many years down the road to do so. As one of my clients said "Jeff, I have one foot in the grave and one on a banana peel, I want to enjoy my money now, while I can."
Anybody who makes the decision to sell their mineral rights, however, must recognize how valuable such rights could be, and to make certain that they are getting a fair value for such rights. Unfortunately, many of the people who have now been approached to sell their mineral rights are landowners who signed leases in the early stages of the leasing process, and therefore did not receive fair consideration for their lease. The last thing I would want to see is the same people being taken advantage by people paying them far less than fair value for their rights.
Therefore, if you are considering such a transaction, you should seek legal counsel before doing so.
Question: How do you determine how valuable my rights are?
Answer: There are a multitude of factors that would determine how valuable your mineral rights are. Some of the factors to be considered are as follows: How large of a tract of land do you own and what was the royalty rate that you are entitled to receive in the lease that you have signed? How close is your property to a well that has been drilled? Have you received notice that your property falls within a pooling unit? Which company did you signed the lease with? How close are you to the intrastructure necessary to take the oil and gas underneath your property to market (i.e., pipeline)? Most importantly, where is your property located? Location is critical insofar as certain areas of our region are now being recognized as more productive than other areas based on the geological surveys and production results to date.
Qusetion: Does a person need to sell his entire interest in his mineral rights?
Answer: No. In many cases the purchasers of mineral rights will purchase a fractional interest. In other words, you can sell half of your mineral rights receive immediate cash for such rights and retain the remaining half and therefore receive in half of the royalties that may result from future production.
If you would like to submit a question for publication, email it to email@example.com. Jeffrey J. Rokisky is an elder law attorney with offices in Wheeling, Weirton, Elkins, Clarksburg and Robinson Township.