I have been approached by ga company wanting to manage my mineral rights in Oklahoma. Most of these rights are in Grady county. Have any of you have experience in using these type of companies? I have many small rights and it is a hassle trying to keep up with all the changes. Thanks, John
They are going to charge you for taking care of your rights. You have to decide it that is worth it. You should look them up on the BBB or Bizapedia and other sites to check their reputation. You should get a very clear agreement of service of what they will provide and what they will charge for doing it. There are many good companies (and a few bad apples) out there that will provide those services. Some bank trust departments do that as well. Last time I checked with my bank, they would charge 6% of gross royalties for passive minerals and 8% if you have working interests. And they charge a yearly fee for each tract that you own. Some banks are higher. I decided that I would rather manage myself by using Excel and organizing my records better. Every family should do what is best for themselves. You may want to check with your accountant and attorney to see if they can provide insight as to reputation or whether they might recommend someone else.
John: To expand just a little bit on what M Barnes is saying. Ask yourself, why would a company in GA know much about minerals & the oil patch in Oklahoma? Probably just that they want to learn on your dime. As stated, get all of your small rights in manageable order so you know where & what you have. If still a hassle, wrap them up in a nice package and sell them. Maybe hand them off to your heirs that may be interested in dealing with the hassles. I understand the hassles involved because I have lots of small pieces that take up several filing cabinets that I can’t give a way.
Good Luck to you.
Thank you for the insight. I think what I need is some one to review my records to determine if I’m missing something
If you manage your own rights, who pays you the royalties? And if you want to change ownership, who would issue out the new deed?
I manage my family rights and each company that operates production wells sends the check to my PO Box. We have a family LLC. We distribute to the members according to our LLC rules.
You do not want to change the ownership unless you put the minerals into an LLC or a trust which requires legal help. If someone manages for you, the minerals are still yours. They are just providing a professional service. (Be careful that they are not trying to get the minerals away from you.)
I am doing the same thing as you–LLC and I do the banking and distribution of the money per the LLC. Some checks are direct deposit to the LLC account and some come to the LLC address. The major problem for me is the filing of INcome tax return. I use Turbotax for small business. However It seems to miss some things on the K-1’s and I have to manually add the information. Any ideas on how to do the tax returns?
We use an oil and gas accountant to make sure the tax returns are correct. Those K-1s can be complicated.
Also, if you have someone else manage for you, you need to ask tough questions as to their training, experience and ethics requirements. Are they CPL or RPL (Certified or Registered Landmen with strict ethics codes), Certified Minerals Manager through NARO (also ethics codes), trust officer with bank-their professional training, certified petroleum engineer or certified geologist, CPA, etc.
Why would a company from another state that doesn’t really have oil and gas activity want to manage minerals in a state that does? It’s a digital world, so maybe they just live there, but what is their training? I am assuming the “ga” meant Georgia. Or maybe it meant a “gas” company. I would have even more questions!
good advice, I think I will just keep on puddling along and see if one of the grandchildren will take up the burden! The use of an accountant would put us out of business!! I will have to find some help on doing the Turbo-tax. Thank you for the good advice. John
Maybe you could get some one time advice from an accountant so that you understand what to do. Ours has saved us lots of headaches by doing the K-1s properly and taking the deductions and depletions properly.
K-1s are for partnerships, one type of LLC. Seems to me that John needs a simple LLC, one that flows through to the owner. No need to complicate things for small mineral owners.
The LLC is set up for several partners, but only two at the present time. Later it will have 6-7. Our accountant does review the K-1’s and suggest changes if needed. He retired this year, so I’ll be looking for a new one.
Seems like a lot of trouble for what you said are small interests. Good luck to you.