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Determining The Value of Mineral Rights

One of the most difficult things for most mineral rights owners that have no intention or capacity to do mining themselves is to decide is whether to sell or lease their rights. Some stress in no uncertain terms that selling mineral rights is the worst thing under any circumstances based on a limited set of facts. The truth is, the wisdom of selling your mineral rights depends on many factors.

Location is of course one of the most important factor in the valuation of any real property, including mineral rights. As stated on the The Mineral Auction website, the price will depend on the perceived potential of profit. For example, if your mineral rights are located in proximity to locations known to produce profitable amounts of natural gas, oil, or marketable minerals, then it will drive the price up. The reverse is also true.

The rule of thumb is, it is better to lease if you are sure that the land will produce because you will royalties. However, if there is no certainty that the land will produce, it may be a good idea to sell, especially in states where dormant laws (inactive mineral rights may revert to surface owner after a certain period) are in effect. Texas has no such law, but mineral rights in areas that are a considerable distance from known deposits may never be worked at all, so it would make some money with no repercussions to you when you sell your mineral rights.

Another big question is whether the offer is reasonable or not. Like in any business, you need to know which way is up, and that’s not easy when it comes to mineral rights. Don’t be afraid to ask around. Consult with two or more professionals that know the ins and outs of the business and compare their quotes to make sure that you get the best possible deal.

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