One of the many questions we receive from mineral owners is about selling mineral rights vs leasing mineral rights. This topic will help you understand the difference and how to avoid selling when you intend to lease.
Leasing Mineral Rights
When you lease your mineral rights, you are giving an oil and gas company the right to drill and extract your minerals. The mineral rights are still yours and you are still entitled to be compensated when the minerals are extracted. Think of a mineral lease like renting out a home that you own. The renter does not own the property just because they are using it, they are simply paying you for the right to use it for a specific period of time.
If you have an offer to lease your mineral rights, carefully read the contract and make sure the contract is for the lease of your mineral rights and not for the sale of your mineral rights. One of the best ways to determine if the contract is for lease is that there will be a “lease bonus”, “royalty percentage”, and “Lease term” within the agreement. A mineral lease will always have these pieces of information and a sale will never have this information. As always, we highly recommend having a qualified professional review the contract to ensure it’s in your best interests.
Selling Mineral Rights
When you are selling your mineral rights, you are giving up all future rights to proceeds from minerals extracted. Selling grants the buyer all mineral rights under your acreage and all future proceeds if/when these mineral rights are extracted. Using the example of a home, you are giving away your property forever and you have no future right to this property. If you have made the decision to sell your mineral rights, carefully consider the fact that you are giving up a potentially large sum of money in the future for a higher up front payment today.
For most mineral owners, it’s better to lease your mineral rights than sell them. This is because you will still receive an up front lease bonus for leasing your mineral rights. In many cases, the amount that you receive for selling may not be substantially higher enough to justify selling mineral rights vs leasing mineral rights. Each situation is different though and you will need to determine your current needs to make the best decision.
We highly recommend working with an industry professional when leasing or selling mineral rights. Having a trusted third party advise you with a sale or lease can help you make a smart decision that will maximize the value for your property. We recommend US Mineral Exchange to many mineral owners because they are experts in leasing mineral rights and selling mineral rights in the Marcellus Shale. In addition, we speak with mineral owners ourselves all the time. Just fill out the form below or visit our free mineral consultation page:
If you own mineral rights and have questions, fill out the free consultation form below. We can help you with the following questions:
- Mineral Rights Value
- Evaluate whether you have a fair offer to sell mineral rights
- Answer questions about selling mineral rights
- Understanding Market Value of Mineral Rights
- + Any other questions related to mineral rights!
No matter what question you have regarding your mineral rights, we can help! We usually respond to your inquiry within 1 to 2 hours!
Whether you want to sell mineral rights, determine mineral rights value, or simply have some basic questions regarding your mineral rights ownership, fill out the form and we will quickly be in touch.