Questions You Need to Ask Before Selling Your Mineral Rights

Selling Your Mineral Rights

Texas is not only home to numerous mining companies, but it will soon be home to a pilot plant that is set to refine strategic minerals. This is the industry’s answer to the concern of its citizens on the increasing control and influence of Chinese businesses over this sector. This strategic domestic project was announced last December and is expected to start operating mid of this year.

If you want to invest in this industry, now is the right time. But if you are selling your Texas mineral rights, your more urgent concern is to understand the process of selling.  Selling your rights can be an intimidating process if you are confused, and your questions are left unanswered. You cannot trust that your buyer will also be transparent as they, too, are aiming for more profit.

Here are some questions you need to ask before making a significant decision to sell your mineral rights.

What are the processes involved in selling your mineral rights in Texas?

Selling your mineral rights follows the same process as selling your real property. A deed is drawn after the buyer pays the full price for the sale. The method may vary from state to state, but in Texas, it goes like this:

  1. You, as the seller, agree on a specific price for the minerals, with the buyer.
  2. Both parties sign the Purchase Sale Agreement (PSA) or Letter of Intent (LOI) unless any party opens the table for further negotiations.
  3. Once the paperwork is signed, the said agreement is now binding between the parties to the contract.
  4. The examination of the title commences with the landman sent out to the county where the minerals subject of the deed is located to verify the title for the said property.
  5. Once everything is verified, the deal will be closed with the exchange of the deed or conveyance for the agreed consideration.
  6. Wait for the mineral selling process to take effect.

In Texas, it will take around 30 days before the said sale can take full effect.

Who will buy your mineral rights?

Individuals or companies who usually buy these mineral rights tend to have more significant mineral asset portfolios. This makes them spread their investments and expose themselves across several wells. Minerals are always sold and bought, and its biggest buyers usually divest at some point or even have an immediate exit strategy in place.

There are five main mineral buyer types, and they are gas operators, oil operators, large mineral funds, small companies, and even individuals. If you are indeed selling your Texas mineral rights, work with an excellent track record in closing sales and deals. It would also be best if they set the rules of requiring the other party to put the money down before the sale.

What is the most valuable mineral at the moment?

Remember that not all your mineral selling deals will leave you feeling like one of the Beverly Hillbillies. The rock matters. This means that the geology in your minefield plays a massive role in the valuation of your rights. Take note that not all hot countries have great rocks. These rocks may even show deformities and faults that gas and oil drillers will stay away from. If you are looking for minerals with the best value, look at the types of minerals gas and oil companies lease. Take note of the minerals with new well permits. If what you own is not currently leased, then this most likely means that the minerals you have maybe outside the good rock definition.

If you are not sure about your land, it would be best to seek professional advice. If you know the answer to these relevant questions, you can secure yourself a better and more profitable deal later on.

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