Hello everyone! I have recently inherited land & mineral that has been in my family for quite some time. The mineral is located in Southern West Virginia. Most of the neighboring plots of land have already been leased or sold to gas companies. I am pretty clueless as to where to even begin to lease my mineral. Could someone help me? What is the first step to get the ball rolling? Any advise?
Not knowing anything about what state agency in W. Virginia handles mineral sales, I would advise you to research this and find out what companies are leasing minerals in the area. You can always contact them to find out who is interested in leasing your minerals. Also, I would do some research on the current terms of lease agreements in your area such as $/Mineral Acre; Length of Lease; and %/Royalty. Hope this bit of info will get you started.
Hey Cassie -
First of all, never ever ever ever sell your minerals, only lease them and then only to a legitimate company.
You will need to negotiate terms for the Bonus Payment to be paid to you (based upon a per net mineral acre price), the Royalty to be retained by you (anywhere from 1/8th to 1/4) and the length or Term of the lease (typically 3 to 5 years, sometimes with an option to extend).
You will also need to negotiate terms to protect your surface and provide for adequate payment of damages / loss of use and that sort of thing.
It would be best if you consult an Attorney when negotiating any lease.
I am only so familiar with Southern West Virginia, but know of one company that may be interested in the area - do you have a legal description of your lands? County, Township, etc.? How much acreage do you own?
I advised someone just yesterday to stop by the County Courthouse (the Clerk's or Recorder's Office, whatever office handles the recording of Deeds, Leases, etc.) and ask the people researching the records if they are Landmen - they may be able to help you.
If you know any of your neighbors, call them and ask about who they leased to and what terms they negotiated for. That should help you get an idea of what you can expect to receive for your lease and what companies might be interested in your land. They may also have the name and contact information of the Landmen they dealt with when negotiating their leases.
Hope this helps -
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
I have been in the oil and gas business for over 28 years involved in numerous aspects of the land business. The majority of my time was spent curing title issues so that the Operator could properly pay the royalty owners in their wells. I also spent 5 years in extensive study with well production and operation information. Next I went on to acquire leases for oil and gas companies wanting to put a prospect together to drill. Sometimes these companies actually drilled one or two wells and then farmed their acreage out and went on to other areas.
In 2004 I joined with an oil and gas professional out of Dallas, TX and began acquiring minerals. We do evaluate every mineral opportunity on its own, by studying the area and reserves, while other mineral/royalty buying companies simply pay on a multiple of the mineral owner's current revenue. There are many variables involved in valuating a mineral offer - if the offer is being based on a 'multiple' it leaves alot on the table for the royalty owner.
I have received so much appreciation from people who I have helped. I don't believe that selling 100% of your minerals is a fit for everyone - but I do believe it is the best decision for many many people. By selling a portion of one's minerals, I have seen a man have a heart transplant that he badly needed because he didn't have insurance to pay for it; I've seen an 80-year old lady who had suffered with cancer for many years take a cruise before her death within the year; I have had a widow, whose husband left her with alot of debt and phone calls from debtors driving her crazy be able to sell half her minerals, pay off her mortgage and other hospital bills - and today, a year later since - is a happy woman. Sure, now there is a well being drilled close by - but, with a horizontal well taking anywhere from 90+ days to drill, with over 518 wells 'waiting on completion operations' - and another long list of wells 'waiting to be fraced', how long do you think this lady could have hung on had she not been able to sell half of her minerals?
As Vincent Scope, Jr. writes in his book, "Come Drill a Well in My Backyard", the oil and gas is a fascinating industry, one where the property may be a valuable asset in the morning, yet worthless by night..... There are no 'guarantees' - many times by selling half of your interest, you reduce your risks, and pay less taxes. Did you know that revenue received from selling minerals is only taxed at the 15% Long Term Capital Gains Tax Rate? Or, you can actually choose to do a 1031-LKE (Like Kind Exchange) - where the revenue from the sale of minerals is used to purchase real estate and you do not pay ANY taxes????
There's certainly alot to know. What I like to say to landowners inquiring is this:
I don't know what the right decision is for you - but I can explain your situation to you so that you can make the best decision for yourself. That's all I can do. And, I love to help people - so I feel I am doing what I am supposed to be doing.