Should You Sell or Lease Mineral Rights?

Posted by on Jun 20, 2017 in Mineral Rights

The most common question mineral rights owners have in mind is – should I sell or lease my mineral rights? It is understandable that they are having difficulties in determining whether to sell or lease. But it is important to note that either has advantages over the other, so it all depends on the owners’ perspective on which advantages they would want to utilize. Below are either’s practices and advantages.

Selling Mineral Rights

If you want to sell mineral rights, the most important thing to know is that selling them means that you are transferring full rights to the buyer. In other words, you won’t have any rights to the minerals in your properties any longer, in the same sense that when you sell a house, you no longer have any rights to that house.

The clear advantage of selling mineral rights over leasing them is the lump sum you will receive. It is a good way to get instant money, a big amount of money at that. Selling right now is also a great idea. The prices are at their peaks because these minerals, especially oil and gas, are still on high demand. But that won’t last forever, because they are finite resources and the rise of renewable resources may reduce their value.

Leasing Mineral Rights

If selling mineral rights is like selling a house, leasing mineral rights is like making a house available for rent. You are giving an entity the right to use your house, but the house doesn’t belong to the entity. The entity who you have given the right to extract your minerals will be required to pay a leasing fee and royalty percentage from the valued and extracted minerals – either is under an agreed upon leasing period.

Even though leasing doesn’t translate as fast big cash as much as selling, there is still a considerable amount of money involved, not to mention that the flow of money is consistent, which could be a better financial device compared to getting a single lump sum. In fact, the accumulated money going into your pockets may even be greater compared to the lump sum from selling your mineral rights.

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