Mineral Newbie questions


I will first state that i know very little about how mineral rights sales work but I’m trying to figure out what is best for my family.

My wife and I inherited mineral rights in the Omega area of Kingfisher county and we live in the community so we know what the oil traffic is like. Over the years we have received many offers of purchase these right but we, along with the rest of the heirs, have been determined to keep them in the family. Due to medical complications, we are now a limited one income family with a young child and a large amount of debt. After a year or so of limited offers coming our way, we have started to be inundated with new, larger offers in the past week. While we only own a small 13 acre plot, we are now receiving offers in excess of $18K per acre and a verbal willingness to increase said offers should selling be a viable option at this point?

While I’ve tried to look into it, taxes seem nearly impossible to figure out for me. How do taxes equate on a mineral rights sell of say $240K?

Any help or advice would be appreciated as we need to decide what is best for our family. Thank you!



Charles: If you really intend to sell, you should visit with a CPA for tax implications. Your basis is the value of the minerals at time of inheritance, subtract basis from sales price to determine taxes.
You should also have an attorney review the sales agreement and probably handle the transaction. Look through this forum and you will find many individuals who are trying to fix preventable mistakes.

Richard Winblad, Attorney



Thank you very much! We are truly in the early stages of exploring selling as an option. We would love to keep the rights in the family but if the timing coincides with good offers then we might have to consider the possibility and want to be educated on the process and implications.



The income derived from selling your oil and gas properties would fall under long-term capital gains tax if you have held for over a year. Mr. Richard is correct, definitely consult with your CPA to determine the exact tax amount. I tell my clients to pay the taxes immediately upon receiving their check, this way all tax obligations are satisfied instantly and the remaining amount can be used as the individual intended. I am very sorry to read you folks are looking to sell your mineral rights due to your finances stemming from medical bills of all things. Should you indeed sell your right, make sure you do your homework on the company. Google them, ask questions on the forum about them, ensure they follow through with what they say they will do, get a personal feel for not only the company but the representative you are working directly with on the company’s behalf. Very best of luck to you folks!




Zach has good advice — one other issue I want to bring to the forum — I’ve now had two clients that were deep into selling their minerals (and probably the right decision for their circumstances). On one, the process went on and on and on until the purchaser finally came back and said "The economics have changed and now I can only offer you “this amount” which was considerably lower than the original offer! Client was now feeling pressure having “counted his chickens” and almost had to go with that offer…but didn’t…

The other client (not in this part of the state) got all the way in process to the actual payment and the purchaser backed out — again, “economics have changed”…

Not sure what to make of these two but tells me that once you go down this road, you need an attorney and probably some additional wording in the contract, maybe even some “earnest money” that would be forfeited…

Just an FYI…




Yes, I had a similar experience last year. Was referred to a supposedly reputable landman and the landman found a buyer whom he said he knew as reputable and well financed. Got good offer, signed/notarized purchase order then nothing. Couldn’t reach landman or buyer. A month went by and the buyer finally said that the production was not as described and made a new much lower offer which I would not accept. Basically a lot of B.S. since I had furnished ALL requested documents including production records. After that I decided not to sell. My opinion, there are a lot of real, crooked scum in the oil business. I’ve heard similar stories from similar people. I don’t trust anyone now. If someone wants to sell they should get referrals from people they know and trust and have a proven record of honesty. If you get an attorney make sure they are well versed in the oil business, if selling be sure the money goes into escrow before you sign anything, play hardball with these people and be sure you have a clause that limits the time for payment.