What is a Mineral Interest?
Mineral ownership constitutes the right to explore for and produce oil and gas. The mineral owner has the right to:
Enter onto the property to explore
Authorize another to enter onto the property to explore (by granting an Oil & Gas Lease)
Receive the benefits (from granting a lease), such as bonus and royalty payments
What is a Bonus Payment?
A bonus payment is a one-time payment made to the mineral owner at the time the oil and gas lease is signed. It is calculated on a per net mineral acre basis. Example of a bonus calculation:
If you own a 25% mineral interest in a 640-acre tract, then you own 160 net mineral acres
Net acres = Mineral Interest x Gross acreage, or 25% x 640 = 160 NMA
If the offer is $350/net mineral acre, you will receive a bonus check in the amount of $56,000 ($350X160)
What is a Royalty Payment?
When a mineral owner grants an oil and gas lease to a driller, the exclusive right to drill and develop is transferred to the driller. In exchange for granting the lease, the driller agrees to pay the mineral owner a royalty. The royalty payment is a percentage of the proceeds from the sale of oil and gas produced, which is paid monthly to the mineral owner.
Why Would Someone Want To Buy Texas Minerals If They Are Not Producing?
Just because your Texas oil and gas mineral rights are not producing now, does not mean they won’t be producing in the future. There are a lot of reasons why your mineral rights might be more valuable in the future than they are now. Specifically, changes in the price of oil and gas and technology play a big role in Texas mineral valuations. The improved technology to drilling horizontally along with hydraulic fracking has improved the economics for the drillers and made minerals more valuable.
Why Would You Want To Sell Your Texas Minerals?
Common reasons why our clients have decided to sell their oil and gas mineral rights in Texas:
Unexpected medical expenses
College expenses – their income decreased during the pandemic
They are elderly and want a large cash payment now to enjoy their retirement
They saw the price of oil drop to below zero last year and now want to sell at $85/bbl
They know they will receive more money selling their oil and gas minerals instead of leasing
Why Would You Want To Sell Your Texas Minerals If They Are Producing?
Mineral owners in Texas enjoy getting that royalty check in the mail every month. But many mineral owners would like to know how much cash someone would pay them today for all of their future royalty payments. Most oil and gas mineral owners do not realize there is a market to sell oil and gas minerals and royalties until they receive an unsolicited offer in the mail. What you probably do not realize is that there are thousands of individuals and companies trying to buy oil and gas rights in Texas. Unfortunately, oil and gas mineral buyers prefer to make offers to uninformed mineral owners. Some Texas oil and gas mineral rights owners might have noticed that their royalty checks are steadily decreasing, which is not good news when mineral owners rely on that check every month. So, when someone offers to pay you 24 times (2 years) your last check, you might be tempted to take it. But what you don’t know is that the operator may be getting ready to drill more wells which would result in your royalty check increasing every month. Mineral buyers are not going to inform you of future drilling so that they can get the best deal for themselves.
Texas Well And Production Data
LandGate makes well and production data available for free in our free property reports for mineral owners. If you choose to list your mineral rights for sale or for lease on our marketplace, this well and production data will be included on your listing for interested buyers to see.
Why Landgate Will Get You More Money
LandGate has successfully assisted hundreds of Texas mineral owners with selling or leasing their mineral rights. By entering your asset into a competitive marketplace, you can ensure that you're getting the best deal. It starts by receiving your free lease and sale estimates after you generate your free property report on LandGate's map below: