Whether you are selling all of your mineral rights or just a portion, these are the steps that most mineral buyers will follow and these are the steps that guide our mineral investments.

1. Due Diligence

First, we research the property in question and offsetting activity in the surrounding area using our extensive database. If your minerals are leased or if you have a royalty interest in producing well(s), we also request a copy of your oil and gas lease and three of your most recent check statements so that we can validate Net Revenue Interest (NRI) % as well as the detailed production breakdown.  This will help us assign an accurate value to future production revenues.  Click here for a sample check statement.

2. Valuation

We have significant experience in many of the major producing plays of the United States.  This expertise allows us to perform an efficient analysis and accurate valuation for each unique property.

We model current and future production based on expected development scenarios and apply our proprietary pricing model in order to determine the value of your minerals today.  We combine this with comparable sales information and anticipated risk profile to determine fair market value and our offer amount.

3. Offer

After evaluating your property, the mineral buyer will then submit an offer.  Make sure that the offer does not come with the obligation to sell and be sure to ask questions if anything is unclear or if you would like to know more about the assumptions used in coming up with the value of your property.  This is the step where it is helpful to have your accountant and attorney review the language in the offer letter for any red flags.  It is important that you carefully think about the decision prior to selling to anyone.

4. Decision

Once you come to an agreement on the terms of the offer, this is where a purchase and sale agreement document (or similar) is signed.  Make sure all of the terms of the offer are in writing and don’t rely on verbal agreements because we have seen many mineral owners get burned by this.   This is when most buyers will prepare the necessary agreements and closing documents.  Make sure that all document creation, closing costs, and county recording fees are on the mineral buyer.

5. Agreement

The full terms of the sale will be outlined in an offer letter.  This includes the purchase price, effective date, closing date,  and the individual responsibilities of each party.

6. Title Search

Before most buyers will close, they will verify that you own the property in question.  This is done through a mineral rights title search in the county in which your interest is located.  This process includes researching the historical ownership of the property to locate any transfers of ownership and/or the separation of the mineral rights from the surface rights.  For a single property in one county, the review period can take from a few days to a full week.  For more complex title searches, this process can take from a few weeks to up to a month to complete.  Assuming you have clear and marketable title, the buyer’s attorney will then draft the necessary conveyance documents required for you to sell your property.  Again, the buyer should bear the cost of this step which can often be expensive.

7. Closing

The final step is the actual closing where a mineral deed is executed and notarized in exchange for payment.  It is best practice to use an escrow service from a neutral third party such as a bank or an attorney to handle closing or to obtain a cashiers check or wire transfer before handing over the deed.  Always have your attorney review the language in the deed before signing to ensure that you are selling what you think you are selling and there are no surprises!