We assist mineral owners in selling or leasing their mineral interests. In the last year, Utah mineral owners have been pressed by various companies with offers. Mineral owners are sometimes confused about what they own, what rights they have, and the value of those rights. Our experience can help you get top dollar for your rights.
If you own mineral rights in the Uintah Basin (Vernal, Roosevelt, Duchesne Counties), now is a historically good time to sell for a few reasons. First, oil prices are strong and steady. Second, oil exploration companies have developed horizontal drilling methods that show a lot of future potential. Third, a railroad line was recently approved from the Uintah Basin to the main rail line in Helper, Utah - which helps companies ship oil cheaply and to larger markets. These factors have caught the attention of larger investors, who are willing to bet that oil production will continue for years to come. They are paying top dollar to create royalty funds, often waiting a decade or more for a return.
There are lots of reasons to sell your rights, here are a few:
Immediate Cash Flow. You can realize most of the value from your mineral rights upfront, instead of waiting for royalties to flow in over a number of years. Investing this cash now, at high market rates, might prove a better financial return and diversify your portfolio.
Less Risk. Your royalties depend on the successful development of your minerals rights by the oil companies. The Basin has plenty of examples of good wells next to bad wells. When you sell your interest, you capitalize on the unknown potential of your rights.
Tax Planning. Royalties are taxed as ordinary income, which can hit 32% depending on your tax bracket. In contrast, if you inherited your mineral rights, then you only pay capital gains tax on the increased value. Depending on the timing, you may not pay any tax on a sale. Be sure to consult a tax professional (which I am not), for specific advice on tax matters, which this is not.
Avoid Administrative Hassles. Mineral owners receive a lot of complicated and confusing paperwork. You leave these hassles and uncertainty behind when you sell your rights.
Estate Planning. Leaving a mineral interest to the next generation may create difficulties for your heirs. The heirs will have less knowledge than you about these rights and how to capitalize on them. Further, the interests continue getting broken down into fractions of net mineral rights that are not worth the costs of transfer.
Despite these advantages, it's crucial to carefully evaluate the decision to sell mineral rights, considering long-term financial goals, the potential for future resource discoveries, and the overall market conditions. Consulting with financial advisors, legal experts, and industry professionals can help individuals make informed decisions based on their unique circumstances.
We are available to help you analyze your rights, ensure that you receive top dollar, and effective transfer your rights whether by a sale or by estate planning. Use the “Contact Use” form on the website for a free consultation.
