For families that own land in oil-producing regions such as Texas, dealing with mineral rights some members may have inherited can produce a long-lasting financial windfall. With a check reliably being delivered every month for years or even decades, some mineral asset owners gradually become accustomed to the increased income without stopping to question who’s actually paying them or whether they’re getting all the money they’re entitled to.
Then, there’s the situation wherein mineral rights contracts are established by a family member who worked in the oil industry or who took a more hands-on approach with regard to their mineral assets; when that knowledgeable person passes, a spouse or descendants might start to realize how little they understand about the mineral assets they own.
Inheritance of mineral rights can be a wonderful thing…or a hassle. Unlike surface rights, of which most of us are more familiar, inheriting mineral rights can present issues which are more often off the beaten path. Over the years, as families leave farms and relocate across the country, knowledge regarding mineral rights tends to get a bit hazy, or sometimes lost. If you’ve inherited mineral rights, or expect to, this article is for you.
The following represent the three major things to look out for, at least the way we see it, when considering the sale of mineral rights.
- Mineral Rights Fragmentation – This refers to a phenomenon unfolding every day with respect to America’s minerals: they’re being divided into smaller and smaller ownership pieces, a process known as fragmentation (or fractionalization). Here’s what you need to know about this: it is commonplace for people today to own small – and very small – fractions of mineral interests, and the administrative oversight demanded of such small interests is often what drives people to sell their mineral rights and inherited mineral interests.
- Ensure You Own Mineral Rights on Inherited Property – Has the mineral estate (i.e. the mineral rights) ever been served (separated/removed) from the surface estate? This is something that must be considered, though the answer is sometimes complex, taking considerable time and effort to confirm. Typically, an oil and gas landman is the professional discipline that researches and identifies mineral rights ownership.
- Know What to do When Receiving a Lease in the Mail – Often times, an oil and gas lease proposal that arrives in the mail is the first time people even become aware of inherited mineral rights, and as such have reason to educate themselves about the matter. This, in turn, prompts a bevy of questions that need to be answered, including is this a fair deal? Do other family members know about this? What is the “going rate” for royalty percentage and lease bonus payments? Will it be necessary to hire an oil/gas attorney, landman or accountant? It’s important to seek out and qualify competent professional help when you think you may need it.
Here’s the scoop: Ten Cow Holdings LLC can help you with any issues you may be experiencing as you sell mineral rights, buy mineral rights or when you’re thinking of leasing mineral rights. Call us today at (210) 960-1564 to learn more.
