Determining the best time to sell mineral rights is an extremely difficult question to answer. It really does depend on a large number of factors and each can and should weigh into the decision. The following post will help you determine when is the best time to sell mineral rights FOR YOU.
Your property
Without knowing too much about the property, we know that you will want to sell them when the time and price is right. So, let’s assume for simplicity that you are in the heart of the Bakken/Three forks play and you have an active lease. (Because if you are in the heart, you will have an active lease).
The good news is that you have an active lease, but the value in the active lease is dependent upon the terms of the lease and the operator. For example, what is the royalty %? When was the lease signed and what was the lease term and paid up front lease bonus? Is there an option to extend the lease agreement and if so for how long and at what option bonus payment? There are other factors such as how are the wells in the immediate area performing and what are the current permitting levels? Lastly, current market factors such as the sharp decline is crude oil prices have no doubt impacted offer prices. I bring all this up to suggest it is very difficult to determine a “best time” to sell. However, we can provide you with some insights from our experience.
Should you sell before or after royalties are received?
1 – There are two buyer camps. Royalty hunters and mineral rights purchasers. In our experience, if you elect to sell the minerals, you will want to sell them before the well has started producing as we find royalty hunters swoop in and try to convince owners to sell based upon current royalty income only. Mineral buyers will often pay more per acre if they believe they can get all future royalties. By selling before the first well is completed, you also eliminate the risk a dry hole drastically reduces the amount you could have sold for. However, the risk to this strategy is if the well performs better than expected and you still own them, your sales price could have been higher.
2- Mineral owners needs to sell greatly impact the timing of the decision. Our readers looking to sell mineral rights often have a financial need or are looking to diversify out of a mineral rights position altogether. In both these cases, it is usually best to just list your mineral rights for sale and see what the market will pay. However, be very careful to understand any agreements you enter and the process for selling mineral rights.
Our recommendations
I wish we could simply tell you that now or later is the best time to sell your mineral rights, but it is just not that easy. However, I would like to suggest that you list your mineral right for sale at US Mineral Exchange.
Here are the benefits:
1. There is no cost to list your mineral right for sale and the buyer pays all closing costs/fees.
2. You are not locked into an agreement and you can still look for buyers on your own.
3. You are under no obligation to accept any offer presented and no minimum sales price is required. The decision to sell will always be yours.
4. The Exchange has access to thousands of mineral buyers across the country.
Your question is very common but also very difficult to answer with certainty. If you have any additional questions, please let us know. We would be happy to help further. Simply fill out the form below and we will get back with you.
