It sort of appears that some Companies may be trying to buy mineral rights instead of leasing them. Their thinking might be that it is easier. Case in point is the Leon County area in Texas.
It’s not easier. It is a completely different business model.
I’ve been leasing and buying land and minerals for 45 plus year’s. I’ve made a mistake or two. It is kind of sicking all the so called mineral offers being made in Leon County, Texas
Unless you are very hard up for cash, DO NOT SELL your mineral rights, as they have inherent value that can give you excellent lease bonus income and cash flow in the event a well is drilled that produces. This can go on for years and years. They can be passed on as real estate to your heirs, and are a valuable part of your overall estate, costing you virtually nothing. The companies wanting to buy your minerals are offering you only a fraction of what they are really worth, hoping you’ll bite!
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That is so true. My grandfather always regretted selling some of his mineral rights. And we are continuing to get good royalty income from the acres that he did not sell fifty years later.
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A great alternative to selling is borrowing on your producing mineral rights.
Most royalty lender won’t take non-producing minerals as collateral. We’ve done that in a few instances, when the producing minerals were on the light side of what was needed for the loan.
I think it is dangerous to listen to advice that says Never do something. As to selling vs. selling minerals, two things to consider.
I’m sure there were individuals who were offered a goodly sum of money to sell their interest. He/she didn’t do so, and subsequently passed away. The interests have been fractionalized and the heirs have taken no action to take care of the interests. So, in essence, the interest is worthless to the family.
Second, I can name you a dozen counties that had producing interests where the owners could have sold the interests and banked the sum. Now these counites have no drilling activity, no production and are unlikely to have any for the next several years, if ever.
In both of the above situations, for the good of the family, the individual(s) should have sold their interest. This is not a one size fits all situation.
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Yes they should have sold them to you and your group so you could make all the money!
MO5. If it is as easy as you think, why aren’t you buying minerals? FYI, Mr. Dow’s is 100% correct.
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Mineral_Owner5, Mr Dowd is one of the most respected oil and gas attorneys around, he certainly isnt throwing out advice to benefit himself as he doesnt buy and sell minerals/leases. Im not sure why you and many others on here think that selling minerals is such a bad thing, the good pros do it all the time when the price is right? 80%+ of the private equity mineral groups over the last 15 years have gone out of business due to overpaying. All the folks that had high offers and held are now mad, myself included, that the offers are 2/3rds lower, the production/wells drilled didnt meet the expectations and their neighbor or family member that sold are looking pretty.
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Just so I understand, MO5. Above, you stated that you’ve been buying minerals for 45 years. So, you encouraged those sellers to sell? Or those sellers were wise to sell, but others are not?
I’ve been known to say never sell your minerals, but then when I’ve received what I consider to be a crazy offer, like 100 times monthly revenue (with no new wells on the horizon), I have sold. And I’ve never regretted the sell decisions I’ve made. 
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Agree totally. As I said, one size doesn’t fit all situations.
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If you are a real estate buyer, mineral or royalty buyer or seller then that’s you business to do so. Some people want to sell their mineral rights, water rights, royalty and so on. I do not encourage anyone to sell their mineral rights. The average person does not know what the future development prospects may be in the future. Some of us speculate and guess right and wrong. I won’t sell mineral rights period. I’ll starve to death before I do!.
That makes sense in your situation. But your situation is not the same for everybody. Thus, my statement, one can’t give absolutes to everybody.
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Great post and great advice. All the year’s that I have been able to lease mineral rights, the bonus money has always increased, the lease terms were better for me. For me it’s been a learning experience. I’m still learning. I’ve always tried to learn and listen to others.
A nice mea culpa. Hope you have given the minerals you purchased in your 45 years back to the folks you stole them from.
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MO5, what happens when all your minerals are leased, you can no longer lease them bc theyve drilled 1-2 horizontals that were average? 5 years from now, the minerals are marginally producing and theres no future development on the acreage? These multi unit well proposals have given false hope to many mineral owners thinking that the same income lasts for years and they will have 4-6 wells drilled after the first one they get that will never happen. Ive sold acreage I wish I would have kept a 1/2 interest in and held on to acreage I dang sure wish I would have sold. If you can sign a lease, get 6 months of payments on it and get a good offer, Id sell 1/2 interest 99% of the time, but to each their own.
You question and statements are super easy for me to answer. I don’t value my mineral interest as worth anything, only any income that they might produce in the future. Each year and as time passes there are new technologies that might come along that will allow them to possibly be productive. There are also way more than one formation that might have oil, gas and liquid hydrocarbons. It’s constantly evolving. If your lease forces them to release all formations above and below the producing formation you could lease them again. Also have a “minimum royalty clause” per year so that they can’t HBP your acreage for $10/year. I want to lease the minerals not give them a deed to them. That’s what a lot of leases really are.
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