Too many people who own mineral rights think only in terms of dollars and cents without looking at the big picture. Oil companies want to get as much oil and gas as they can from a property and pay the smallest price possible. So when a company offers you a substantial amount of money to drill on your land, it’s not usually the best decision to jump at the offer. There’s so much more you need to know about oil and gas mineral interest, but as long as you’ve got the basics covered then you can leave the rest to your expert advisors. Here are some tips to think about regarding mineral rights investing.
What Happens When An Oil Company Wants To Drill?
If an oil company identifies your land as being a place they want to drill, you will likely be contacted with an offer. They will propose a certain area on your land where they believe drilling will be most beneficial, discuss any potential damages that may occur to the land and offer payment for those damages and more. Leases can extend anywhere from several months to several years, so it’s important to understand the impact a lease will have on your land.
The Price of Mineral Rights is Negotiated
The foundation of any lease includes the owner receiving an upfront payment in exchange for the oil company having the right to drill on their land. And if there’s any production, the owner will receive a royalty from it. Of course, mineral rights owners don’t have to accept the first offer they receive. Once you accept an offer for your oil and gas mineral interest, you are locked into it for the duration of the lease. It’s important to not rush into a deal and work with an expert to ensure you’re maximizing your benefits. A lot of different factors go into the price of mineral rights, so it’s always wise to pursue expert advice and even allow an expert to negotiate on your behalf.
Understand Your Rights Completely Before Signing A Deal
Most mineral rights owners don’t completely understand what they own until an oil company approaches them about possibly drilling on their land. It’s important to remember that what may seem like a significant amount of money for you is not that much for a major oil company. When it comes to mineral rights investing, understanding everything in the contract you sign is critical to ensure you’re getting what you are owed and that there are no surprises along the way.
Eckard Land & Acquisition takes the time to educate investors on what their rights are. We start by answering the question “can you own mineral rights?” and then get into the details of what exactly this means for you. The good news with mineral rights investing is the investor doesn’t have to be the expert. As long as you understand some of the basics, we can help you with the high-level negotiations and transactions to ensure you’re getting the most out of your investments. Always feel free to contact us with any questions you may have about your mineral rights.