If you have land in which you also hold mineral rights, then you can either choose to sell your mineral rights or lease them. If you already have minerals that lie just beneath the surface of your land, you may as well forget about buying a lottery ticket as you probably will be seeing a good deal of revenue.
One Lump Sum or Cash Payments?
Therefore, you will need to decide if you want to receive annuitized payments or one sizable sum of cash. Naturally, you will want to sell your mineral rights if receiving cash is your main objective. Otherwise, you can choose to lease the rights.
If you do go ahead and sell your mineral rights, you will be very happy when you receive your first and only payment as it will be much larger than receiving the first cash payment through a lease. However, both selling and leasing carry their own special sets of risks.
The Pros and Cons of Selling and Leasing
If you do lease your mineral rights, you might discover that your well does not produce as much gas as was originally anticipated or that prices will subsequently fall. On the other hand, selling your mineral rights may not give you as much cash as if you had waited and sold the rights at a later date.
Mild Winters Can Cause a Loss in Revenue
Because of the economy, people have resorted to using fewer fossil fuels. In addition, mild winters have caused less of a need for natural gas and oil, causing the price of the commodities to drop. Therefore, a number of factors can go into your decision to lease or sell, especially if you are leaning in the direction to sell your mineral rights.
Hydrocarbon Use
Selling also involves thinking about just how much land you have available for sale as well as how the mineral is derived. While the sale of rights for a small piece of property can be fairly simple, the sale of larger tracts is definitely more involved. In many cases, the sale rights are related to hydrocarbon use.
If hydrocarbon use is involved, neither buyer nor seller has to deal with the addition of pipelines or drilling equipment on the property. In these cases, the gas is extracted from wells that are located far beneath the ground. Talking to legal counsel is advised if you wish to sell rights that are connected with a large piece of real estate.
