In a Planned Unit - What should I do now?

So our property has finally been put into a proposed unit.  The hearing for the Withey NE and NW units are scheduled with the Ohio DNR in December.  Based on other units in the area, if the schedule is similar, royalty checks should start to come in within the next 12-18 months.  What should I being doing to prepare?  Are there steps that I can take to reduce our tax burden?  Also, I have heard many people on this site state that you should never sell your mineral interest.  However, I have received what I consider a good offer of $17,000 per acre on a 17% no deduction lease.  If we were to sell we would only sell 25%-50%.  Should I get an oil/gas appraisal for the property and what should I expect to get from that as a result?  A lot of questions, and there are probably some important ones that I haven't even considered.  Any input/advice would be appreciated.  Thanks.

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Permalink Reply by tacoma7583 8 hours ago

I received a very similar offer in Columbiana county per acre to buy my rights.  the current unit is only about 70% of my property, so if they come back and drill the NE laterals ill be really happy with my decisions.   The unit im has had higher oil production than the others in the area so this helps even with lower oil prices using the forecast for 12 months production even when I pay taxes, single no real deductions.   I'll break even on what I would have earned if I would have sold the rights.  I asked three different accountants about anything to help save taxes and they didn't have any solutions that seemed legit.  One presented a plan but it felt like a good way to get audited in the future.    The only other tax situation was like a 1031 exchange on the mineral rights if sold , but I didn't want to buy a property just to buy.    

Permalink Reply by Petroleum Agent 9202 2 hours ago

Call Appalachian Mineral Company at 724-320-9202 or oilgasmineralco.com  -  They are Petroleum Mineral Advisors who can help. I know a few others who used this company and were glad they did before selling any mineral interest.  

Permalink Reply by David Cain 1 hour ago

Tacoma7583,

Thanks for the response.  I'm a little confused.  Did you say that in 12 months of royalties you would basically match the best offer you had to purchase your mineral rights?  Even with the dramatic drop-off in production after the first six months or so?  I do appreciate the response and I don't want to do anything that would seem dodgy.  Just want to pay the lowest legitimate taxes that I am obligated to pay.  Thanks.

Permalink Reply by tacoma7583 29 minutes ago

In my math the numbers are fairly close,  but depends on how you figure it and your tax situation.    not accounting or tax  advice but if you sell  the mineral rights it is normally considered long term capital gains, these 0%, 15%, 20% categories and how it breaks down depending on filing statues. If you keep it the IRS gives you 15% depletion on the royalties for tax purposes.  Again the unit I'm in has produced about double the oil as similar size units in my area, So that was a gambling risk too  if it would have been equal to theirs I'd probably be mad for not taking the $17,000 per acre.   I think that's why selling the mineral rights is a personal choice.  The dollar offered might provide that person to be able to pay off there home,  retire early, buy another income or retirement property.    I know most of my neighbors that kept there rights and have receive royalty's have spent the checks already, bought new truck, new SUV.   While, I'm still here eating ramen noodles trying to figure out how to make the money work for me.   

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