Buying Mineral Rights Archives | Ten Cow Holdings L.L.C.

April 18, 2023 Staff Writer No Comments

The Eight Types of Mineral Rights

The Eight Types of Mineral Rights

Mineral rights may be acquired via purchase, inheritance or court order, and the various types each come with their own plusses, minuses and risk profile.

There are eight types of mineral rights you should be made aware of, and these include mineral interest (MI), royalty interest (RI), overriding royalty interest (ORRI), working interest (WI), non-operated working interest, net profits interest, leasehold interest and non-participating royalty interest (NPRI). In this post, we will briefly explore each of these – also important to keep in mind is that “working interest” is the only type of mineral right that comes along with an obligation to pay expenses related to drilling, operating and plugging a well.

Mineral Interest (MI)

A mineral interest ownership includes the executive rights to explore, develop and produce the minerals under a specific tract of land. Put simply, a mineral interest refers to a real property interest, which can be received when minerals are severed from a land’s surface; this is different from, say, royalty interests, which ensure that holders enjoy a fraction of the generated production revenue.

Further, a mineral interest grants its holder the right to explore and exploit subsurface minerals, and when the aforementioned severing from the surface occurs, the entity that acquires the mineral interest may have complete control of the subsurface resources – even though the right over everything above the land belongs to another party.

Royalty Interest (RI)

As we alluded to above, royalty interest owners are entitled to a percentage of the well’s revenue without having to pay for any of the expenses associated with drilling or operating the well.

Working Interest (WI)

Working interest includes the right to explore, develop and produce minerals granted by an oil and gas lease, in addition to the obligation to pay expenses (along with royalty payments).

Non-Operated WI (Non-Op)

Non-operated working interest owners do not make operating decisions, but are still obligated to pay for the drilling and operating expenses; both types of working interest are eligible (and receive) tax benefits.

Non-Participating Royalty Interest (NPRI)

An NPRI is an interest in the proceeds from the sale of minerals, carved out of the mineral estate. These types of owners do not possess “executive” rights, meaning they cannot sign an oil and gas lease.

Overriding Royalty Interest (ORRI)

An ORRI is an interest in the proceeds from the sale of minerals instead of an interest in the actual minerals, carved out of the working interest.

Leasehold Interest

A leasehold interest is another term for working interest, and is often used to describe working interest in a lease that has not yet been developed.

Net Proceeds Interest

Net proceeds interest (also referred to as net profits interest) describes an interest in proceeds from the net profits; this is the least-common type of mineral rights.

If you’re in the market to buy mineral rights or are looking to sell your mineral rights, get in touch with Ten Cow Holdings by calling (210) 960-1564.

January 12, 2023 Staff Writer No Comments

Mineral Management and How it Affects Your Assets

Whether you find yourself immersed in good times or more challenging ones, mineral interests can provide you with income streams unlike any other assets. Into this foray have come entities such as Ten Cow Holdings, with teams of specialists who provide a turnkey solution to the often complex and time-consuming responsibilities that come with mineral ownership.

Indeed, protecting and maximizing the value and potential of minerals, oil or natural gas assets – because of the complexity of this asset class – can present itself as a full-time job. The right kind of mineral management will handle the following in a concise, professional manner:

Title analysis and research
Turnkey lease evaluation and negotiation solutions
Division order processing and verification
Lease administration and compliance monitoring
Well proposal analysis
Portfolio performance reporting and analysis
Sales and auction coordination
Research and recovery of escheated and suspended funds
Ad valorem tax administration
Regulatory compliance monitoring via SSAE 16 (SOC-1) audit report
Dormant mineral review and claim filings
Dynamic energy environment to keep clients informed

Mineral management firms, essentially, are comprised of oil and gas professionals who run the gamut from attorneys and accountants to landmen, estate planners and even geologists and reservoir engineers. Regardless of where a client or mineral interest is located, the assets an individual such as a landman manage are more than just an asset to be managed and extrapolated for wealth – rather, these assets are safeguarded for future generations.

If you are a landowner, we can tell you that you’re better off taking advantage of mineral management firms to manage your mineral assets, thereby avoiding the possibility of entering into a poorly-negotiated lease agreement that could cost you dearly in terms of additional expenses and lost revenue.

Understanding the Bottom Line

It’s unlikely that you or your beneficiaries are experts in mineral rights, and one primary challenge of inheriting rights to minerals is ensuring that you are capturing their full value – an effort that oftentimes (as we mentioned in the beginning of this article) becomes a full-time job. Your best bet is to seek out an experienced mineral management entity to make sense of your assets, ensure you hand them down with accurate documentation and make the most of them in the form of lease bonuses and royalties.

Ten Cow Holdings can be a knowledgeable, invaluable wealth management partner that understands specialist information such as the cost basis for inherited mineral rights and the day-to-day operational concerns connected with oil or natural gas assets. While no one will ever accuse selling mineral rights of being en vogue, Ten Cow Holdings can make the entire process easier to understand. Call us today at (210) 960-1564.

Buying Mineral Rights Selling Mineral Rights

January 17, 2022 Andy No Comments

So You Have Mineral Rights You Want to Sell… Here’s What You Need to Know

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.

Buying Mineral Rights

December 15, 2021 Staff Writer

Top Five Tips Regarding Buying and Selling Mineral Rights

Selling and buying mineral rights isn’t that new of a concept, normally being handed down through generations – in fact, families have been receiving royalties from oil and gas entities for over 100 years. Until recently, the sale of oil royalties primarily involved institutions, as these transactions have traditionally been tied to large endowment funds and “ultra-high net families.”