Factors to Consider When Buying and Selling Mineral Rights
There are many different aspects to take into consideration when you want to buy oil and gas minerals. However, there are just as many things to think about if you are a current mineral owner thinking about selling your mineral rights. While mineral rights investing can be incredibly lucrative, it’s also extremely complex. Working with an expert in the industry can ensure you maximize the value of your minerals as a seller and get what you think you are buying as a buyer. Here are some neutral factors to consider regardless of the side you’re on currently.
Terms of The Contract
Every contract dealing with oil and gas minerals is full of legal language and terminology the average person may not understand naturally. Regardless of whether you’re buying or selling oil and gas minerals, knowing the terms of the contract you’re agreeing to is essential. And it’s also critical to make sure the other party understands them exactly as you do. Otherwise, you could be put in a difficult and stressful situation if an issue arises later on.
As a mineral rights owner who is selling their interest, you need to understand the compensation structure. For example, you may be receiving a one-time payment, an annual payment, royalty payments throughout the year or other compensation structures as defined by the contract. This is arguably the most important component to understand when it comes to mineral rights investing.
Plenty of environmental concerns go along with mineral extraction. Not only will the process be loud, but the surrounding air, water and soil could also become contaminated due to the regular activities that go on at the site. These concerns may not be incredibly important to you on the surface, but you owe it to yourself to address them to avoid issues in the future.
Requirements and Obligations By The Lessor
Some of the requirements and obligations by the lessor include ensuring there are no additional leases or contracts affecting any aspect of the mineral rights. The lessor is also responsible for making sure no hazardous materials are present on the property that could create a negative impact on the environment. Other specific requirements by the lessor should be outlined clearly in the agreement.
Requirements and Obligations By The Lessee
The lessee must remain in compliance with all regulations and laws, be able to provide proof of general liability insurance, keep the property in good condition and more. Liens also can’t be created on the property when a contractual agreement has been entered. Too many lessees believe they don’t have any obligations once an agreement is made, which can lead to significant problems at times.
Eckard Land & Acquisition often gets asked, “what do I need to consider to sell my minerals?” The truth is every transaction is unique and should be treated as such. While these are general factors to consider when buying and selling oil and gas minerals, it takes a consultation to fully understand what you’re working with. We are always willing to take the time to discuss your options with you, so contact us today to get the process started.