10 Ways to Maximize Your Minerals*
Mineral rights are a unique asset, demanding careful attention and management in order to maximize their value. Because of this, mineral rights require diligence and maintenance on the part of owners. Kenneth DuBose, Petroleum Engineer, Maximizing Your Minerals© http://www.mineralweb.com/
1. Know what you own!
While it may seem simplistic, this is an obvious issue that many overlook. Mineral title can often become complex and convoluted over multiple generations. Knowing your mineral ownership and having the documentation to prove it is your primary defense against potential problems related to getting paid properly for any mineral production that may occur.
2. Stay on top of taxes
A common mistake mineral rights owners make is failing to account for taxes. In many states, producing minerals are taxed at the county level with an ad valorem (property) tax. Be sure to know your tax liability and keep current on your obligations. In some areas of the country, government entities have been known to foreclose on mineral owners as a result of delinquent taxes. Also, don’t forget the income taxes that will be due at the federal and possibly state levels. Additional information can be found in this article on Royalty Taxes.
3. Understand the oil and gas production process
Too many owners lack a basic understanding of what it takes to develop oil and gas. Take time to become familiar with the production and marketing processes. Oil and Gas Production in Nontechnical Language provides a good overview of the process. Knowing some of the lingo and understanding the basics of the industry can go a long way in negotiating a lease. Visit the MineralWeb oil and gas glossary for definitions of common terms.
4. Negotiate a quality (and reasonable) lease
If you’re fortunate to be approached about leasing your minerals, it only makes sense to negotiate the best deal possible. Often mineral owners focus too much on the lease bonus amount, missing other important elements of a well rounded lease. The key to maximizing your mineral assets is focusing on the terms of the oil and gas lease, the royalty percentages, and the lease bonus. Remember, there are no “standard” leases. See the short article on Common Oil & Gas Lease Mistakes for help with this key part of mineral ownership.
5. Use the Internet as a resource
The Internet is full of useful sites specifically designed for oil and gas mineral owners. For instance, you can find out about individual well production by visiting How to Verify Your Oil and Gas Production Volumes. Another great resource for in-depth coverage of mineral rights related issues is Geology.com. MineralRightsForum.com is a leading national forum for oil and gas mineral rights owners. The site features a lively forum where you can ask questions about anything related to mineral rights.
6. Keep past records of your royalty statements
Once you receive royalty checks from production, it’s a good idea to save these records. This will help you when filing taxes, recording past production, and will even help you value the property should you desire to sell your mineral rights. If you have substantial interests, using a spreadsheet or online management software may be for you.
7. Stay informed of current activity in your area
Mineral owners will benefit from maintaining knowledge of drilling operations. Timely information is key when negotiating lease terms. The websites of the various state oil and gas regulatory agencies often provide data on drilling permits, along with other informative data.
8. Plan for the next generation
Preserve the value of your mineral rights by minimizing further fragmentation of interests to multiple heirs. Seek to pass along whole mineral tracts instead of sub-dividing them further. One alternative is to pass the mineral rights on to a child who is financially savvy or has a background in real estate, while passing other children different assets.
9. Be “findable”
More often than not, oil companies seeking mineral owners will know who to contact through their search of the county property records. Make sure you are reasonably locatable. Are their differing variations of your name in the public record? Has there been divorce or marriage that affects your name? Are you known everywhere as Bill, but in the record as William? Have you married several times? You get the point. Consider whether a reasonably diligent person could locate you through the public record.
10. Visit MineralWeb.com for further details on mineral rights
MineralWeb.com brings news and information on mineral rights. Our site is regularly updated to bring you insight into the world of oil and gas leasing and mineral rights news. Call us at 713-893-4476 during normal business hours or email us at firstname.lastname@example.org
Get a Cash Payment for Your Royalty
If you own a producing royalty you can receive a no obligation cash offer for your producing royalties, from the MineralWeb experts.
About the Author
Kenneth DuBose is the past President of Cheyenne Minerals Inc., an independent oil and gas company operating in Texas, Oklahoma, and Mississippi. He began his energy industry career with ARCO Oil & Gas Company, performing oil & gas reservoir studies. As natural gas deregulation approached the industry in the late 80’s, Mr. DuBose directed development of natural gas storage projects along the U.S. Gulf Coast with Tejas Power Corp. He was a founding member of U.S. Minerals, (acquired by Novistar, a unit of Torch Energy in 1999) a provider of internet based education for America’s oil & gas royalty owners. Mr. DuBose holds a Bachelor of Science in Petroleum Engineering from Mississippi State University, later pursuing graduate studies in business at Baylor University. Mr. DuBose has served on various industry steering committees, nonprofit boards, and is an active member of the Society of Petroleum Engineers, the National Association of Royalty Owners, the American Association of Professional Landmen, as well as being a Registered Investment Advisor. He is currently the principal of http://www.mineralweb.com/ a website that offers insight for mineral rights owners.
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* This articles was licensed under the Creative Commons and the author, Kenneth DuBose is the inspiration and creation for the above work product solely.