Managing your mineral rights can be a challenging endeavor. With limited time and experience, you might find yourself leaving money on the table.
Will the oil and gas (and other minerals) on your land be an asset to your portfolio? And in what way? For example, whether you lease or sell your mineral rights, you'll likely want to consider how to reinvest that income. Experienced mineral managers can help you determine different ways to leverage your mineral rights, while helping you focus on your big-picture financial goals that can benefit you and your family.
Part of managing your investment property is its periodic review. Pay attention to its environmental scenarios and other asset management concerns.
Coordinate your mineral holdings with your trusted tax advisors or legal representatives. It takes an experienced financial team to help you assess the value of minerals to help you meet your financial goals.
If you're a property owner, you have to think about whether to lease or sell your holdings. Large, one-time sales of mineral assets can yield great short-term profit. But five-year leases and royalties may yield more long-term. Consider your short- and long-term financial needs and risk tolerance. The sum of all of these decisions will help you decide which option is right for you.
Before you try to transfer, sell or lease your property, consider performing a thorough title search. Sometimes properties can still be operating under decades-old leases without the property owner's knowledge. Consider conducting a full background check for ownership rights to the land, including mineral rights, surface rights and fee simple estate (complete ownership of the subsurface, surface and air above).
The regulations of drilling and mining for minerals vary state-by-state. If you don't already have a complete understanding of the legalities of mineral extraction in your state, consider consulting with an attorney who can advise you.
What makes for an effective lease agreement for property owners? Of course it will cover testing periods, payments and royalties. But a well-negotiated document will also spell out logistics like opening veins of excavations, the drilling of holes and bringing machines and instruments onto the property. The document should also outline the restoration of the property at the end of the term.
Owning rights to minerals, oil or natural gas assets provides the opportunity to generate income.
With more than 100 years in the energy industry, BOK Financial is committed to helping you succeed. In this issue of the Energy Outlook, you’ll learn more about the current environment and outlook for the energy industry, as well as emerging trends in oil, natural gas and contract drilling.
We look forward to helping you protect and manage your wealth. Give us a call, or complete the form and we will contact you.