Having inherited minerals in 2010 that went in to production late in 2011 and began receiving residuals in 2012, I am one of (3) that split ownership. It turns out that 1 sold his rights in 2018 that was not identified to me (not a big deal) and the 3rd was deceased in 2015, passing along her rights to 2 daughters who have “yet” to receive “anything” from Continental in this case even after submitting paperwork twice up until Covid hit.
As a minor share owner, the niece simply put the thought aside “but” the thought remains about deceit and that is a different story.
In the past 6 months I have received notice from more than one company if I wanted to sell my rights in section 6 township 160-94.
I do not stay up on what production is, what is shut down due to weather, time of the year, maintenance or governmental decisions but continue to receive (fortunately) money for my share.
Question: Where to look for a valid list of buyers of mineral rights?
Question: How does one determine the actual “todays” market value to be valid when discussing selling?
Question: Is it logical (of course it is) to seek enough to cover “capital gains” when selling and not doing it over a long term effort?
If you are getting offers to buy, then you might want to find out about potential drilling as those offers usually come before the bit. Those are the interested buyers or you can work with an auction group. But they will take a cut for their efforts.
The nieces may want to circle back and work on their claims again!
No valid list of mineral buyers exists. It could vary from day to day.
As my attorney said, “a wiling and informed seller under no compulsion to sell and a willing and informed buyer under no compulsion to buy agreeing on a price is the fair market value”. The problem is that the buyer is usually much more informed! They usually work off of a price deck such as the NYMEX five year strip and discount the production from the known wells. What they don’t tell you, the seller, is that there may be potential for future wells in the next 3-5 years. That is how they plan to make a profit.
If you inherited and you sell, then you may be subject to capital gains. Your accountant can help you on that part.
If you want to share the section, township and range, we may be able to help you with any activity that is public at this time.
Yeah, talk to an accountant about the capital gains issue. Depending upon what state you live in, the combined capital gain taxes may be 30% - maybe more once you are subject to the alternative minimum tax and taxes on social security income. If the state where the property is located is different from your home state, you may have two states to worry about (although there should be a credit). The gain might be quite a bit if you got this property when it was worth almost nothing before modern drilling methods - low basis. There might be a stepped up basis to the date of death coming after the new drilling methods.
Because of this, I have not sold. At least the depletion allowance helps with royalty money.
The potential buyers wave cash under our noses and it is up to us to figure out the consequences.
It can get complicated, so getting good tax advice is essential. My comments are anecdotal as I am not a tax professional. I am just suggesting questions to ask.
All comments are viewed as constructive John. Capital gains tax is a pitfall in life where the one that makes out is not the consumer. At some point a person has to face that wall and stare straight at it and make a choice.
Speculation on the future is difficult when your pulse isn’t on the true activity taking place and not just in ND but any state where oil/gas is produced.
I would expect at a minimum 15% for capital gains if not more and this to be taken in to consideration if parting with the minerals.
Above all, thank you for the very decent reply. My being absent to acknowledge this prior to now is due to being busy as anyone can be these days.
Confronting this issue when a layman not in tune with particulars is over-whelming as you might imagine. The lack of help from those companies wanting to buy but not inform a consumer how they have to adjust for Capital Gains tax etc but like others point out to “consult your tax accountant” when you have never had a need to use one compounds the issue.
I now have access to a huge list of potential buyers that will require time to find valid phone numbers, email addresses, etc that makes it tricky also.
But thank you, not just for myself but others in the same boat!
My two cents, but google the you know what out of all those companies that want to buy your minerals. And even then, who knows if they are reputable.
You’re in 160 Township I see. I’m in 161N township.
I live up here close by Williston and I see the action getting busier with drilling and workers.
I agree with M Barnes. My opinion is that these sketchy companies want to buy minerals, because they know what’s coming down the ‘pipeline’.
Maybe look at companies to lease your minerals and not sell.
Call Lone Tree Energy who used to and maybe still do write leases for Continental. (Lone Tree is in Williston, ND)
A landman there can sure give you some great advice for either lease or sell. They are a wealth of knowledge.
I’m receiving offers to buy our family minerals too. We’re throwing them all away.
Our 4 wells are on the ND Confidential Oil well list. Time will tell. (not drilled yet, no date yet, we had a date right when Covid hit, then our company went bankrupt, and a new company kept the same name of wells)
Beth