I recently inherited part of a relative's mineral rights in 10N57W and 5N64W. I have received an offer to sell my rights for 7,900/NMA in 10N, and 3,100/NMA in 5N. This offer is from an end buyer and has a deadline in week. They say that once they receive the signed agreement, they will pay me earnest money within 5 days, and transfer the rest of the amount within 45 days. They also state that if it is determined that the Mineral Interest owned is less than ## acres, the company can adjust the amount paid. The company claims that the other inheritors already agreed to sell their rights to them. I am hesitant to sell what feels like 'the last of my family's land' (I'm at least the third generation owner), but the cash would be helpful.
So here are my questions that I'm hoping you all can help me (begin to) answer:
Are the prices offered fair? Should I hire an appraiser, and if so, do you have any recommendations?
Do I own the full amount of the acreage listed on the agreement? How do I confirm this?
Will the value of my rights likely decrease over time? Will I receive more offers in the future? As far as I know this area is currently non-producing.
What is the history of this area? How did my family acquire these mineral rights?
Where can I learn more about the tax ramifications of having these assets/having income from selling the rights?
How can I determine if the company itself is reliable and trustworthy?
1.SHOP AROUND!!! I would call other companies like Bison and Mallard. They seem motivated to buy at good prices. I wouldn't give them the range you've been offered. Wait to hear what they would offer. That will tell you what the going rate is.
2.If you are the sole heir of the person who has died and the will has been probated then you own the full amount your relative had. If there are other heirs and nothing has been specified then acre would be split among you. the The company should do work on the front end to determine what you truly own. It can cost a couple thousand dollars to determine rights. ** Would love to hear others thoughts on this!!!
3. In some regions drilling and intent to drill is picking up quite a bit. I know that my family has leased our mineral rights several times but the area hasn't been drilled.
4. Your family either invested in mineral rights or were homesteaders (you know 40 acres and a mule) and were gifted the land and mineral rights from the government.
5. I would assume any money you make off these assets would be taxed at 15 percent because they would be considered investment income.
The "title verification" period should be no longer than 30 days, I have never heard of 45 days unless its a large number of tracts and a large amount of net acres.
Valuations in 10N-57W can be anywhere from $7000/nma to $11000/nma. 5N-64W can go anywhere from $3000/nma to $13000/nma. So yes your offer may be fair based on your limited info provided. Knowing your section and any associated lease royalty rate is essential for accurate valuation. I would not hire an appraiser but if you do, know their qualifications (petroleum/reservoir engineer) and yrs experience valuing in the DJ basin.
Most likely the offer nma count is in the ballpark. Full title, patent to present, must be run to be absolutely sure.
Value increasing is predicting the future and I havent found anyone yet that can do that. Decreasing, possibly. Mineral Interests are a depleting assest..less in reserves = less valuation.
History-google that my friend. Family acquisition, Weld County assessors office will most certainly have a deed on file with that info. Access to those docs is available online.
Taxes, after 1 year of ownership will be subject to 15% long term capital gains. Here is a link to the relevant tax code:
Hi, did you get your questions answered? Happy to answer any more questions you might have. I know alot of the buyers so happy to tell you what I think of them. We help alot of mineral owners as we are mineral owners ourselves! Michelle msmith@quiatcompanies.com
Values can vary widely on this type of issue and can fluctuate over time both up and down. The structure on a sale is also very important to make sure you avoid inadvertently encumbering for long periods of time and also to avoid issues on discrepancies or disagreements on ownership. Proceed cautiously and seek professional help whether accountant, appraiser, or attorneys as needed.
The information is for general information purposes only. This should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided.