If you own mineral rights in the United States, you may be sitting on a potentially large stream of income. Thousands of property owners across the country have contacted oil companies and investors in order to drill and profit from the precious minerals in the Earth. This is your guide on how to get oil companies to drill on your land too.
In general, this is accomplished one of two ways: by selling or leasing mineral rights. In this article, we are going to explore the pros and cons of selling or leasing your mineral rights as you seek to find an answer on how to get oil companies to drill on your land too.
Selling Your Mineral Rights
When you sell your mineral rights, an interested party becomes the owner of your property’s subsurface and has the right to explore it for valuable minerals. If you aren’t selling directly to the oil company, the buyer likely has plans to start or continue a drilling operation.
Pros of Selling Your Mineral Rights
- Mineral rights sales are generally settled with large lump sums of cash.
- The sale of mineral rights is eligible for a 1031 exchange, which can be used to strategically acquire another property without the income tax.
- You will no longer have to pay taxes on your mineral rights or oil royalties.
Cons of Selling Your Mineral Rights
- Your mineral rights have the potential to become more valuable in the future.
Leasing Your Mineral Rights
Alternatively, if you do not want to give up your mineral rights entirely, you have the option to sign an oil and gas lease. In a mineral rights lease, you can sign a temporary agreement to let an oil and gas company explore, procure, and sell minerals from your property.
Pros of Leasing Your Mineral Rights
- You may receive an initial bonus, signing payment.
- If the production is successful, you will earn oil or gas royalties on the precious minerals produced.
- You still maintain ownership of your mineral rights and have only agreed for the temporary exploration of the site.
Cons of Leasing Your Mineral Rights
- Leases dependent on large oil production levels may not cash out as well as expected
- Oil lease ownership can change hands without your involvement.
Contacting the Right People
Once you have decided whether a lease or sale is best for your mineral rights, then it becomes time to get into contact with the right people. There are many companies and individuals who are going to be interested in acquiring the right to drill on your land for oil or gas, so it is important to work with someone you can trust. Ranger Minerals is a Texas-based company with over 100 years of combined industry experience that can help with mineral rights transactions all across the country.