I am a total neophyte. My elderly parents own several mineral rights in 3 different Texas Counties. I am their executor & one of 6 kids. We are trying to learn about SELLING these assets to avoid the hassle of splitting into smaller units. Some of the properties have leases and are paying modest royalties & others are not. Where do I even begin? Do I post a listing here? Do I hire a broker? Do I hire a lawyer? Any advice or suggestions would be truly appreciated!
2 Likes
Would recommend that you talk to both a CPA and their attorney. You need expert advice on the tax consequences of a sale and the best way to get the best offer. There are way too many companies out there offering to buy and you need someone to help select the best outcome for their situation.
You need to find out if the potential for future drilling and additional royalties exists, etc. Some families establish a trust or an LLC to not fractionate the minerals. Some sell, some gift by probate. Lots of answers, so pro help is advisable.
1 Like
IMO, the whole thing (choices, headaches, etc) hinges on how much its worth. Roughly. So I would talk to a broker first if you have no idea what it is worth or don’t trust your idea of what you think its worth. Or you could post a listing here, depending on how much info you want to put out in the public space. But that would be the first step for me, narrow down how much $ you are talking about.
Attorneys/CPAs are largely fixed costs. Spending $5k on a $1M deal, sure. Spending $5k on a $10k deal, well…um… there is a reason that Sotheby’s doesn’t run local garage sales.
There is a non-zero chance that I don’t fully respect the work of attorneys and CPAs, so grain of salt. 
2 Likes
You are absolutely correct that it depends on the value of the assets. Thanks for the reality check!
1 Like
Consider putting the minerals rights in a Revocable Trust. That way the minerals are not divided but stay as 1 unit. In the Trust document you can specify who is in charge (executor), a succession plan of executors and how the $'s are to be divided. You would need to get an attorney and discuss everything you want so it can be written into the trust documents.
I did this for the same reason as you stated above. It also included new wills (synced to the trust), POA’s, MPOA’s and Living Wills for both my wife and I. The attorney did all the paperwork and title transfers.
Just an FYI about selling. My mother owned the land/mineral rights and it had 1 vertical well back in the 80’s. It paid some modest $'s for many years. However, it paid nothing for the last 20 years. 3 years ago they came in with horizontal wells and now it’s paying quite well.
All of the points made by Mbarnes and NMoilboy are spot on. I have quite a few small mineral interests that are already so small they are illiquid. Putting them in an LLC is a great way to avoid further fractionation down the line.
Regarding value, if it’s a vertical well with a flat decline curve, the rule of thumb is 4-6 years net revenue. The non producing acreage is tough to put a general valuation.
This topic was automatically closed after 90 days. New replies are no longer allowed.