We inherited several fractions that are in the 1/64, 1/32 range. It’s confusing receiving random letter with offers to lease and buy and we have de used we would like to sell everything but not sure the best process; ideally one entity to take everything. Any suggestions on how to start this? Thank you
Don4, there are a number of ways to sell this interest. Honestly, unless it is just not your cup of tea, many folks have highly fractionalize minerals these days. My family has numerous tracks all over Oklahoma that are small, when the leasing activity is hot, it can be a chore keeping up with it. There are organizations that help mineral owners understand this like NARO.org and there are mineral management folks and companies that can take over the process of managing them for you too, for a fee of course. If you are set on selling and these are inherited, it may make sense to reach out to others in your family that may have inherited the same interest. Bring this interest into a family LP or and LLC will increase your interest and give you more leverage in leasing these tracts. Selling outright, there are companies that advertise on here that do mineral auctions. They will also, take a percentage or charge a fee for the selling of your minerals. If you have been receiving letters to buy your minerals, that is a good indication that development is moving your way, so be cautious, the offers are based on what the current status is and not what is heading your way.
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Keep in mind that you will need to do a capital gains return if sold. You will need to know your basis in the minerals.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
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The best way is to talk to the people that are currently offering to buy your minerals and ask them if they would be interested in buying all of your interests. Theres no point in wasting the time nor money to put all the interests into a new unity if you want to sell them.
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@Jack_Fleet and @Richard_Winblad provide solid thoughts for you to consider. I will offer you some thoughts as to what may be a good Buyer if you go in that direction and some realistic considerations.
Do you have a combination of producing and non-producing assets? Do you have a solid income history for the properties that you can present to a Buyer? Do you have deeds and division orders? These are a few of the things qualified Buyers will want to review, so take the time to organize the information. This organization will help you to collect your thoughts on the expected values.
If you have a mix of producing and non-producing, then I would lean toward a single Buyer if you do not want to put forth the effort in marketing the properties. If your records are incomplete and not well organized, then again a single Buyer is a better option.
Marketing to current owners in the property is generally a good strategy. We always seek to acquire additional interests in our current properties since there is no increase in administration cost and we have excellent historical information. Selling in this manner will require more effort on your part, but you may achieve greater value. The risk is you may have non-producing properties that remain or have a lack of interest on properties due to a disparity in values.
I have worked on dissolutions for clients in the past as well as acquiring diverse interests from families. If you want the best results, be prepared for a lengthy process and significant work on your part. If not, then you are best to get a professional involved to assist you with the process. However you elect to proceed, inform all Buyers this is a open bid process, you will not share your expected price or share the offers from other potential Buyers. This will help to define the Buyer pool significantly.
As you go through this process, seriously consider the speculative future value of the properties versus the current value of any sale. Good luck to you. This forum is here to provide valuable information exchange for people such as yourself.
Welcome to the forum.
It is always wise to find out what activity is going on around you before selling or you may get low ball offers instead of robust ones. The best place to start is by understanding what you have. Then you can decide whether to sell all, sell part, or keep part. It depends upon what your goals and needs are.
It is helpful to make a list by state, county/parish, township, range, section (or block, abstract, section in TX). Then ask questions on the forum in the state and counties where you own minerals. If you inherited a jumbled pile of jewelry, you would probably sort through it and figure out what was costume versus the real valuable items, so same idea here.
The 1/62, 1/32 are probably a probate percentage handed down through generations. For example, if the original tract had 160 acres and now you have 1/32, you have five (5) net acres.
Offers to buy indicate that there might be pending drilling and possibility of royalties which would be more than a sales price. Lease offers would also be an indication that someone is interested.
Good thoughts, will probably take a pause and research more. Thanks!
Thank you everyone for the insight! I remember my mother and uncle spending a lot of time with leasing over the last ten years and was surprised to find out when she passed that her income was about $1000 a year on average which makes me wonder about just selling. But maybe an oil gusher is just waiting for me! I will research more, thanks!