I Just Inherited Mineral Rights — Now What?

A maze representing the complexities of understanding recently inherited mineral rights.

Oil and gas mineral interests are frequently passed down from one generation to the next as mineral owners pass away. Unfortunately, younger generations are often unprepared to take over and manage the assets at the time they inherit them.

Mineral management is a learned skill, and even understanding the basics can take years. If you have recently inherited mineral rights and are left in the dark wondering where to start, follow these 5 steps to take control of your new assets:

1. Follow the Money

As often seen in great crime novels and shows, a good detective always starts an investigation by following the money. The same approach should be applied when trying to solve the mystery surrounding your inherited mineral rights.

By looking into the last two years of banking history of the deceased family member, you should be able to determine if you are entitled to royalty checks from any producing assets. Automated Clearing House (ACH) transfers, direct deposits, cashed checks, or deposited checks from any oil and gas company should be collected, saved, and printed out.

A mineral owner researching banking history to identify unpaid royalty checks from her inherited mineral rights.

2. Transfer Payments into Your Name

Next, you will want to research and contact each oil company that has been making royalty payments to the deceased family member. Inform them that you have recently inherited mineral rights, and politely ask them what they will need from you in order to transfer the payments into your name. Sending an email is always the best place to start because you will have an established paper trail to refer back to if needed.

Once you have provided the oil company with the necessary paperwork, they will have 120 days to send you a division order to sign and put you into pay (120 days to pay royalties is the standard in Texas, but time may vary depending on the state). When speaking with the oil and gas companies try your best to gather as much information as possible about your interests so you can begin to build out a file for each tract of land you own into. Maps, title opinions, notes, check stubs, and oil and gas leases are all great things to include in these files.

After completing this research, you can feel confident that you have identified all of the producing minerals to which you are entitled.

3. Search for Dormant Minerals

After you identify all producing mineral assets, it’s time to determine if you own any non-producing or “dormant” minerals. Hopefully, the decedent created a will that specifically identified and outlined any non-producing minerals.

However, in the event that non-producing minerals were not listed in the will and you are interested in determining if you own any other interests, it may be time to speak with an attorney or landman. If possible, you want to contact someone who is local to the county in which you believe you own minerals as this will usually be the cheapest option. This type of investigation will likely cost a minimum of $500 and might not be worth the time and financial costs unless you are reasonably sure you own additional non-producing minerals.

Books and online resources providing education about oil and gas rights.

4. Get Educated on Your Newly Inherited Mineral Rights

After getting organized, it’s now time to get as educated as possible. In order to understand the basics of oil and gas, the following books and tools are a great reference:

Oil and Gas Law in a Nutshell, by John Lowe — This will give you a legal overview of the most common rules that govern owning oil and gas minerals. It covers everything from leasing minerals to taxation. This book is available on Amazon here.

Oil & Gas Land Reference Volume & Study Guide — This is the book every new landman uses to learn the business. It has review questions at the end of each chapter and is a great reference. If you can grasp the terms and principles outlined in this book you will be ready to manage your minerals with confidence. This book is published by a trade organization called the American Association of Professional Landmen (AAPL) and can be purchased for $50.00 on their website found here.

The National Association of Royalty Owners (NARO) offers free educational videos on its website that are another valuable resource. The Mineral Management 101 series is a great starting point for mineral owners.

There are also many universities that offer community workshops and certification programs. These classes vary but are often geared toward teaching land and royalty owners the basics of mineral management. For more info on upcoming courses or seminars check with your local universities.

5. Determine Your Long-Term Goals

The last step toward taking control of your new mineral assets is to determine what to do with them moving forward. Managing your own mineral interests can save you money, however, it can be a tedious and time-consuming task. If you do decide to manage your inherited mineral rights, be sure to check out our article on maximizing the value of your oil and gas lease.

If you’re not interested in keeping up with managing your minerals due to the small size of the interest you own or because you don’t have the time or desire to do so, you are usually left with two options:

  1. Hire a Mineral Management Group — If you decide to use a mineral management group they will likely charge fees, so this may not be a viable option depending on the size of your mineral interest. Companies such as Farmers National, US Trust, or Bank of Oklahoma are common mineral management options. Mineral Insight also provides a basic mineral management software suite designed to assist smaller mineral owners with keeping track of their estate with little effort, time or cost.
  2. Liquidate the Asset — If you decide to sell your inherited mineral rights, make sure to contact an attorney or trusted company to assist in the sale. Conveyances can be tricky and having an educated landman, attorney or company on your side of the transaction is critical. Marketing the property in an effort to get as many bids as possible will also be crucial. Utilizing the Mineral Insight Marketplace is a great way to generate additional offers with no contracts or fees for the seller.

If you’ve recently inherited mineral rights and want to learn more, the team at Mineral Insight is happy to assist you in any way we can. Just let us know how we can help!

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