So I recently discovered that I own a bunch of mineral rights and it is paying off like crazy. How do I go buy mineral rights? I used to have a gambling problem, so maybe it is that part of me coming back haha? Anyway I wouldn't even know where to start or who to talk to.
There are websites that advertise minerals for sale such as "Mineral Hub". I would be very careful and conduct extensive research prior to purchasing minerals. In most cases, the mineral owner will be asking a high price even in areas which are under risky conditions. Also, the legal paperwork will most likely fall on the purchaser and this could become quite expensive.
You find out who the owner of the rights are, usually via title research, and then make them an offer. Good luck!
Who would you get advice from to make sure its a good deal? You can see how green I am at this.
Cara:
That is a hard question when you talk "good deal". What might look like a good deal to one person might seem high and out of line to another. It will all come down to you doing some homework in regards to the existing wells in the area and their production output. You might want to pay close attention to the decline curve in production so mapping wells that have been producing over a year would be a wise move. There are so many variable factors to consider when making this type of investment and one being will the price of oil remain stable, rise or begin a decline over the next ten years. If a decline begins, will drilling slow and chances of a well on these minerals might deminish. Bottom line, consider all the factors that will directly effect your overall investment. Good luck!
Cara Simmons said:
Who would you get advice from to make sure its a good deal? You can see how green I am at this.
Cara, are you certain you want to buy more mineral rights ? You put off dealing with your mineral rights with interest in your mineral rights building for the last few years. If you bought more mineral rights, in an area with alot of interest right now they will be expensive, and if drilled immediately may not pay you back for years. If you buy outside a hot area you might be waiting a decade or more for a well. In neither case do I think there will be the instant gratification you are getting from your minerals that you own now. I believe I said before that the now factor has it's attractions. You have wells you are unleased in, people may well pay a premium to participate in a well now, and not have to wait 5-10 years. I would not buy more minerals until you have a firm grasp on what you are doing with the ones you already have.
Cara,
Many people such as yourself might do better investing in an oil and gas royalty trust, or buying shares in an oil and gas related mutual fund, rather than buying mineral rights directly. Without the ability to determine whether a purchase opportunity is a "good one" or not, you're likely to overpay for some "goat pasture" that has little hope of ever having a well drilled on it, or overpay for a producing property or leased property thus making it more unlikely that you'll ever see a return on your investment.
One simple way to "buy mineral rights" directly though, if you really want to go there, would be to first pick an area you are interested in, and then visit the local county clerk's office in the county where the mineral rights are located to see who owns them. The clerk's office is where all the land records are kept showing who owns what. In Oklahoma, and many other states you can simply "pick an area" and search the records for that area to find out who owns what there in the way of mineral rights.
Contact the owners and make them an offer. As other posters above have mentioned however, as the buyer you will likely be expected to prepare the deed and other paperwork at your expense, which means you may need to hire an attorney to do it for you if you have no experience drafting deeds. Yet another reason to just stick to mutual funds or stocks in oil companies.
Best to have at least some knowledge of WHY you would want to buy a specific property before contacting the owner, and even more importantly know the approximate VALUE of said property before making an offer. You don't want to overypay, and you don't want to insult your seller by lowballing them either. Many buyers simply mail out offers to potential sellers rather than contacting them by phone. You've probably received such unsolicited offers yourself since you have mineral rights. I receive them too, and save them "for posterity" but don't usually respond to them unless I was already planning to sell. Some of these types of offers can be fair, but as an owner you also need to know the value of your own mineral rights.
Buying oil and gas properties directly from owners should be approached from a position of knowledge. There are plenty of people out there who will sell their mineral rights, but without first learning what a fair price is you're likely to overpay for something if you're not careful. Many sellers have no idea of what their mineral rights are worth and so are ripe to be taken advantage of. Alternatively, there are "very optimistic" sellers out there as well who believe they are sitting on a gold mine and thus expect to make a killing by selling their mineral rights. These are the sellers you'd want to talk to armed with knowledge, rather than taking their word for what they think their rights are worth.
Many county clerk's have their land records available online these days, as least for the most recent transactions, thus if you're going to buy directly from owners rather than investing in mutual funds or something you might want to consider checking the records in areas you find interesting and look for recent oil and gas leases, then contact the owner at the address they have listed on the lease or try to find a phone number for them. Finding owners from recent leases works well because a recent lease is likely to have a current address, and if a property is already leased, it's more likely that it will be, or already is, in a producing area.
You can use sites such as this one to find out which areas are most active by scanning the message boards. If you see people talking about lease offers they've received, or hot new wells that have come in recently, then that area might be one to consider. You can also scan newspapers for drilling and completion reports, or visit one of the many subscription-based online services that provide detailed maps showing where all the "activity" is.
You can Google such terms as "what are my mineral rights worth" in order to get a better understanding of how buyers value potential properties, and thus be better prepared to make a fair offer to someone you want to buy from.
Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
Thanks a bunch for the advice! I'm not so sure I know enough to compete with those who know what they are doing.
So lets say for some reason I do decide to buy something. How much should I pay a landman? Do they go by the hour or how does it work? What would be a reasonable rate?
Cara:
This will be a hard one to answer since landmen usually demand different rates depending on the nature of the transaction. If I were going to hire a landman, I would try and find one who had retired from a lease broker and was just working on the side for some extra cash. I might know one that fits the description and resides in the Williston area. Don't know if he is working on the side but I know he retired from that business after many years.
Cara Simmons said:
So lets say for some reason I do decide to buy something. How much should I pay a landman? Do they go by the hour or how does it work? What would be a reasonable rate?