10-Point Checklist to Selling Mineral Rights

10-Point Checklist to Selling Mineral Rights

Are you considering selling some or all of your mineral rights? The following checklist provides step by step information to help you avoid risks and ensure you get the most for your mineral rights.

1. Know the Value of Your Mineral Rights
Should you sell your mineral rights? By understanding how much your assets are worth you can make the most informed decision about whether to sell or hold. Buyers may insist on a simple formula of multiplying past annual income by 3 or 4 times to estimate value, but it also depends on the quality of your mineral rights and where they are located.

2. Avoid Common Pitfalls
First and foremost, selling your mineral rights shouldn’t be rushed. Just like selling a home, it takes time and preparation. Don’t take the first offer or be pressured into making a decision with a limited time offer.

3. Understand what Type of Interest You are Selling
Be sure to review your records to identify what types of mineral rights you have. If you have leased property to an operator you own Royalty Interests. If not, you likely own Nonparticipating or Overriding Royalty interests.

4. Identify How Much to Sell
Royalty interest owners of all types can sell all or a portion of their interests. Royalty Interest owners have additional flexibility to sell portions of a section or even the rights to a single wellbore on a well.

5. Find a Buyer
There are many ways to market and sell your mineral rights, however, some of the most common methods include online auctions and listing sites. Other methods include sealed bids and selling directly to a buyer.

6. Evaluate Offers
To maximize the selling price, be sure to get multiple offers. Consider each offer and whether it matches your own estimate that incorporates multiples as well as asset quality.

7. Accepting an Offer to Buy
Look for buyers who do not require special purchasing terms, such as an option to buy after 60 days. These buyers may intend to flip your mineral rights by accepting a lower price with you and selling at a higher price with another buyer.

8. Transfer Ownership
Depending on whether you used a broker to close your sale, conveyance and deed records may be forwarded to your local courthouse or require you to manually record these documents. In addition, the buyer must review and sign the revised Division of Interest provided by the operator.

9. Keep Careful Records
Just as with any important transaction, be sure to keep copies of all sales contracts and land records for future reference or auditing purposes.

10. Continue to Sell
If you have sold off portions of your mineral rights, you can continue to sell incrementally over time. And if you have leased specific wellbores you can continue to sell these mineral rights as additional wellbores are added to wells on your property.

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