Here are some of the common questions our clients usually have around mineral rights. Please let us know if you have any additional questions you would like us to answer.
In most cases, absolutely not. Everyone in the family has their own portion of the inherited mineral rights. You are free to make any financial decision in regards to your mineral rights, without consent or blessing from any other heirs. The only instances in which you and others may need to agree is if you are equal trustees on the family’s estate.
Yes, the terms of the lease simply transfer to the new owner.
As much as we wish it were true, this unfortunately doesn’t happen.
We participate on the working interest side in the drilling of the wells. It’s a higher level of risk than simply leasing the acreage. However, due to our experience we’re willing to take on those risks whereas most mineral owners do not.
No. There are many instances where owners will carve out a portion that they want to sell and some they want to keep. It is not an all or nothing proposition.
Your royalties are taxed at the ordinary income tax rate which are some of the highest taxes that you can pay. The sale of your asset will be taxed as capital gains tax which has a maximum rate of 15% of the sale. Many times we can work with the seller and their CPA to drastically reduce the tax to well below this. Speak with us today to find out how little you could pay on the total sale.
An installment sale is recognized by the IRS as a method of selling an asset and receiving payments in subsequent years. These types of transactions allow for the seller to claim capital gains taxes across multiple tax years which allows for the strategic planning of tax payments. Not only is there a tax benefit to these sales, but the seller can also be credited with interest on the amount of the sale that is deferred! Ask us about our deferment rates!
No, unfortunately wells will not produce forever. The decline in oil production is very steep in the beginning of a well’s life and starts to slowly decline thereafter. Eventually, the cost of maintaining the well will exceed the value of the minerals being removed from the ground and the operator will plug and abandon the well permanently.
There are a number of factors, including price of oil, demand for oil, political turmoil and advancements in drilling technologies. It is a constantly changing environment with multiple moving parts and risk factors.