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Mineral Rights question

2,756 Views | 13 Replies | Last: 2 yr ago by BoerneGator
coupland boy
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8:48a, 7/26/21
AG
My family is negotiating the sale of my grandmother's land in an area that is not currently or ever had any oil and gas. There is a shallow water well on the property. The property is a little less than 100 acres.

Trying to judge how much of a sticking point mineral rights should be in our sale. We stated that we want to keep them but the potential buyer wants them as well which I understand.

Somewhere in the Thrall area if that helps. Just looking for some good advice of if only some data points of consideration. Thanks
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hammerhead
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11:16a, 7/26/21
You never know..

I was always told to never get rid of all of them.

Sold a piece of property 35+ years ago, kept 50% of the mineral right and royalties and they drilled a Taylor sand well a few years later and I still get a check every quarter for a $125 or so. I know it is not much but for 4 or so years after they drilled it was real nice.

Then about 6 years ago I get division orders in the mail...had no clue. Well a well about 1.5 miles up the road was part of a larger pool (same producer) and 50% of that property was was included and we continue to get checks from that.

Wish like hell I would have kept that property but I was super young and looking for a quick $.

Thankfully I kept what I did.

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Martin Cash
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6:54p, 7/26/21
AG
If he refuses to let you keep mineral rights, you might try retaining a royalty interest. That gives him control over leasing or not leasing, but gives you some income if there is production.

For the record, I think Texas should outlaw retention of mineral rights, and put a time limit on royalty reservations. I have worked on leases where there were literally more than 500 royalty owners that could be identified, and God know how many more that couldn't be. It's a nightmare.
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CS78
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7:08p, 7/26/21
I wouldn't let it blow up your sale. Offer to give up rights of ingress/ egress and see what they say. That's really where a lot of concerns are.

If that doesn't work offer to go 50/50.
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Ribeye-Rare
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In reply to coupland boy • 9:22p, 7/26/21
AG
Usually the buyer in cases like this is just trying to ensure that in the event the property is ever leased for oil and gas (e.g. - by you if you retain the minerals) that his surface won't get all torn to hell, that he'll have to see and/or hear production equipment, that he'll have to deal with abandoned tanks, allowing others on his property, and all the other things that are incidental to oil and gas production.

So, you could craft your retained mineral interest (ask a lawyer if you're uncomfortable here) to exclude surface rights, and in the event someone ever leases the property for minerals they will have to deal with staying off the property without getting an agreement from the surface owner.

In these days of horizontal drilling, that is a workable deal. In places where wells are still drilled vertically, the lack of access to the surface is usually a deal killer.
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Harkrider 93
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8:07a, 7/27/21
AG
I recently talked with a few bankers/investors in this area and they feel pretty confident prices double in 2 yrs or less.
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ToddyHill
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5:17p, 7/27/21
AG
Personally, I would keep them...or split them (keeping 50%).

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localag88
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2:07p, 7/28/21
Keep all you can of course, but I wouldn't blow the deal over minerals in that area
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Kenneth_2003
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In reply to Martin Cash • 2:10p, 7/28/21
AG
Martin Cash said:
If he refuses to let you keep mineral rights, you might try retaining a royalty interest. That gives him control over leasing or not leasing, but gives you some income if there is production.

For the record, I think Texas should outlaw retention of mineral rights, and put a time limit on royalty reservations. I have worked on leases where there were literally more than 500 royalty owners that could be identified, and God know how many more that couldn't be. It's a nightmare.


I believe Louisiana does it that way. You can only sever surface and mineral estate for 10 years unless held by production.
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histag10
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4:04p, 7/28/21
AG
Thrall is pretty close to some areas that produce off the Austin Chalk Shale. I wouldnt let them go....

Give them water and surface, obviously; but I would retain mineral rights. I feel like most land sales do not include minerals these days. Heck, when drawing up legal agreements in Montana for land sales, minerals were always a separate thing, and very rarely were they ever conveyed with the property.
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flyingaggie12
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5:28p, 7/28/21
AG
Was the property marketed without mineral rights? Is seller asking for a discount on price if mineral rights are not included?

What is that difference (if any)?
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coupland boy
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In reply to flyingaggie12 • 5:34p, 7/28/21
AG
flyingaggie12 said:
Was the property marketed without mineral rights? Is seller asking for a discount on price if mineral rights are not included?

What is that difference (if any)?


Was marketed without. Got several offers - about 40% of which didn't include the stipulation of wanting mineral rights. Those that didn't were on average 10% lower per acre.

Hope that helps. I don't want to divulge any more.

Appreciate folks weighing in. Thanks
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Martin Cash
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In reply to histag10 • 7:26p, 7/28/21
AG
histag10 said:
Thrall is pretty close to some areas that produce off the Austin Chalk Shale. I wouldnt let them go....

Give them water and surface, obviously; but I would retain mineral rights. I feel like most land sales do not include minerals these days. Heck, when drawing up legal agreements in Montana for land sales, minerals were always a separate thing, and very rarely were they ever conveyed with the property.
Again, it should be illegal to retain minerals rights. If you want to sell the property, sell the property. If you don't, don't.

At most, you should be able to retain a royalty interest for a limited period of time.
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histag10
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In reply to Martin Cash • 12:46p, 7/29/21
AG
Should be and is are two different things. If minerals had to convey with property, my family's financial standing would be WAYYYY different. It would be nice. Of course now you have people arguing over air rights above a property (for the ability to put up wind turbines)
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BoerneGator
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In reply to coupland boy • 3:33p, 8/2/21
AG
coupland boy said:
flyingaggie12 said:
Was the property marketed without mineral rights? Is seller asking for a discount on price if mineral rights are not included?

What is that difference (if any)?


Was marketed without. Got several offers - about 40% of which didn't include the stipulation of wanting mineral rights. Those that didn't were on average 10% lower per acre.

Hope that helps. I don't want to divulge any more.

Appreciate folks weighing in. Thanks
There's your answer.

If you don't think the minerals are worth more than a 10% premium, let them go. Otherwise, hang onto them and take your chances. (which is what I'd do)

As for the poster claiming the mineral estate should not be allowed to be severed from the surface, I say BS! Private property can be negotiated any way the owner wishes. Just because it may make one's job more difficult is of no concern to an owner.
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