WARNING: Selling Mineral Rights vs Leasing Mineral Rights

I have seen many posts on here lately that concern me slightly so I just wanted to post a comment.  Please make sure you understand the difference between selling your mineral rights and leasing them. 

Selling your mineral rights permanently separating your mineral rights from your surface rights.  You will receive the one time payment for that sale and that is it.  This sale is forever, unless by some chance the mineral rights are abandoned in the future and the owner at that time files the correct paperwork and is able to rejoin them.  If you have property that you want to pass on to your children and grandchildren this is something you may not want to do. This can affect property value too if your heirs one day want to sell the land. You are selling all your mineral rights oil, gas, coal, or some future discovery.

Leasing your mineral rights does potentially have some endpoint and you can specify specific minerals, oil and gas but not coal, coal but not oil and gas, and even different layers can be leased to different companies by lease language.  Also the lease language can specify an endpoint five years plus option for second five years if no production then lease ends.  Also if production does occur but later ceases then lease ends.  You are paid for production.  Your land both surface rights and mineral rights remain joined and pass on to your heirs even though minerals may still be encumbered by the lease the payment would go on to heirs as well.  And the rights go back to heirs when lease ends.

PLEASE, PLEASE do not sign any paperwork from anybody without taking the time and the roughly $200 for one hour of an attorney's time to look over said paperwork before you sign it.  There are several posts on here talking about payment for mineral rights and it is not at all clear if the company is leasing or buying.  They use the term bonus which is not accurate when selling minerals.  That is not a bonus.  It is payment for permanent ownership of your mineral rights.  It is a one time payment and you do not get royalties. The new owner gets them.   You will receive letters from various companies even if you have a lease asking to purchase your mineral rights.  If you are already leased you can not lease again so any conversation you are having is one about buying your mineral rights.  Just be cautious and make sure you understand fully what you are signing.

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Permalink Reply by Diane Sutherland on June 16, 2014 at 1:37pm

Hello Finnbear - will call both and thank you. No - mom doesn't need the money. Net asset value is probably $1M. She said she has to have it because (are you sitting down) she wants a hearing aid and wants to lease a car. She isn't thinking logically. I have no control whatsoever; my brother has it all, including durable and medical power of attorney. If I block this sale, my sister and brother will unite against me along with mom and I am quite confident she will write me completely out of the will (if she hasn't done so already). Again....I'm holding my 33 1/3% so please, if you pray, please pray for the big gusher to hit soon so my value soars.

Permalink Reply by jackson sleet on June 18, 2014 at 3:46pm

could you go to mom's lawyer and have him intervene?

I asked a lawyer to protect my mother's interest from my brother and sister.   mom really liked the lawyer and things settled down.

I went w/ non-attachment.  I told her she could do anything she wanted from an honest place.  I ended up in her will better than I ever expected.

 your mom might think that  everyone is after her money.  she sounds like she is in fear..

I've learned that the more non-attachment I practice, the more my life is improved.   (it's a spirtitual thang.)

Permalink Reply by jerry lee nichols on June 16, 2014 at 1:42pm

I guess it is where you are money wise, My farm is in Monroe county ohio in the central area. I was contacted recently to sell my mineral rights for 10000 per mineral acre with production clauses. My reply was that the price for this product was recently set 23,300 per acre in a corporate to corporate sale so that is what I would take with no clauses.They said they would get back to me,yeah right. Please tell your family to help mom out and say no.

Permalink Reply by Dexter Green on June 16, 2014 at 2:50pm

"My reply was that the price for this product was recently set 23,300 per acre in a corporate to corporate sale so that is what I would take"

Your reply was fairly preposterous.

Permalink Reply by Diane Sutherland on June 16, 2014 at 3:46pm

Hello Jerry Lee Nichols and thank you. Is it possible to share who offered you the 10k per acre? I'm researching, researching and researching....Thank you for your thoughts, recommendations and first hand experiences.

Permalink Reply by jerry lee nichols on June 18, 2014 at 6:04pm

You know I looked but I can't seem to find this this letter,I get so many I generally throw them away. The next one I receive  I will relay their info.

Permalink Reply by Jack Young on June 10, 2014 at 8:31pm
Just a quick reply to Jerry Lee Nichols: Most banks do lend on properties without their oil and gas rights. In many parts of Pennsylvania and New York the majority of the oil and gas rights were sold off a hundred years ago. There was never any problem getting mortgages on those properties until a few banks recently got influenced by anti-gas activists and started to make a big dea of it. Luckily it's a rare problem.
Permalink Reply by time will tell on June 10, 2014 at 11:28pm

Thanks James for the info .

Permalink Reply by time will tell on June 10, 2014 at 11:36pm

My opinion is Belmont Savings is the worst bank in the valley from experience .Look for another bank . 

Permalink Reply by Diane Sutherland on June 11, 2014 at 8:06am

Thank you, James.

Permalink Reply by Rachael M Rollson on June 11, 2014 at 8:59am

I would love to sell - permanently, but I can't seem to find a broker to help me do that. I was in touch with someone who keeps putting me off and putting me off - they say they are willing to help and then I hear nothing. It's been like this for two months now. If you have any suggestions, they would be very appreciated.

I have about 80 acres of mineral rights in Potter County, PA. There is not a lot of activity there and they have not been leased and could be part of a 400 acre parcel (if the other rights holders are interested) but like I said, I am looking to permanently sell.

Permalink Reply by Finnbear on June 11, 2014 at 11:04am

...80 acres of mineral rights in Potter County, PA. There is not a lot of activity there and they have not been leased...

This pretty much answers your question. There is no current value if there is no activity in your area. You have nothing to sell, right now. If you're willing to give away your rights for a pittance today, someone may be willing to gamble on the possibility that something may be discovered there in the future. Hold onto what you have until it is worth something. Just curious, is this minerals only, or are you also the surface owner?

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