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Navigating the decision to sell your mineral rights

On Behalf of | Aug 22, 2023 | Oil & Gas Law

When you own mineral rights in Oklahoma, you have the option to either sell or lease those rights to oil companies or investors. Leasing is a common choice, but some may sell their rights instead. If you decide to sell, it’s crucial to consider the various factors that should be taken into account before coming to a final decision.

Reasons why people sell

Mineral ownership includes the right to explore, develop, sell or lease to companies or individuals. When you decide to lease your mineral rights, you may earn substantial money by allowing interested parties to extract oil, coal, natural gas and other minerals from your owned reserves. This can result in bonus payments and royalties from oil companies. However, some individuals may still choose to sell their mineral rights for various reasons. These reasons may include:

  • Avoiding future uncertainties
  • Diversifying assets, reducing risk and increasing liquidity
  • Simplifying estate planning

Oftentimes, people have other priorities than owning minerals. Similarly, you may have different preferences or financial needs that make selling a more attractive choice than leasing.

What to consider before selling your mineral rights

As a mineral rights owner in Oklahoma, you could weigh the advantages and disadvantages of leasing versus selling your rights. Both options have the potential to earn you money. To make an informed decision, it’s important to consider your individual circumstances and carefully assess external factors that may influence your decision, such as:

  • Changes in market conditions of the industry
  • The immediate revenue against the potential future income from royalties
  • Tax implications

Additionally, the value of your mineral rights depends on what a buyer is willing to pay after evaluating its income potential based on your reserves’ location and the type of minerals involved. It’s essential to do your due diligence and understand the value of your mineral rights before deciding to sell. This can be a complex process. So, you may seek legal counsel to help you decide before making a sale.