Mineral rights owners in Texas can explore the surface below the area of the property and extract the minerals they find. If you own mineral rights, you can also sell the rights to a third-party entity, such as a private company, and receive either a large up-front payment or continuing royalty payments. Although, mineral companies may offer to lease your mineral rights instead.
Leasing your mineral rights
Mineral companies often prefer to lease mineral rights when they are unsure whether the land is rich in minerals and what minerals lie beneath the surface. Once they find the minerals they are looking for, they will extract them.
You can get royalty payments for the extracted minerals by receiving a percentage of the production value. Therefore, you must ensure your lease agreement protects your rights and allows you to profit considerably from the enterprise. Otherwise, disputes can arise during the mineral extraction process, and your mineral rights could become inconsequential.
The advantage of leasing your mineral rights is that you do not need a substantial capital investment to benefit from the oil, gas and natural gas liquids on the lease. You can also lease your mineral times over and over again. However, you may not receive any royalty payments if the company does not find any minerals. The company may also significantly exhaust the mineral supply before the lease ends, leaving you with mineral rights but without the minerals.
Selling your mineral rights
The decision to sell your mineral rights is more complex than it seems, and the market value of minerals fluctuates aggressively. Selling reduces the risks of disputes during the mineral extraction process because the rights already belong to the company. You can receive a quick and sizeable lump sum payment by selling your rights, regardless of whether they find minerals. The problem is you lose your mineral rights, which could be worth much more in the future.
Maximizing mineral rights involves careful consideration and patience. Owning mineral rights will not cost you anything, and, in some cases, the best option may be to keep your mineral rights until you get a favorable offer. It depends on your personal situation and long-term financial goals.