Selling Mineral Rights in 2023

Are you a mineral rights owner in Texas considering selling your rights in 2023?

At Texas Royalty Brokers, we can guide you through the entire process of selling mineral rights in Texas.  We’ll ensure you get the absolute highest price and make the process simple.

There are a lot of things to consider. We are going to break down everything you need to know to sell mineral right in Texas.

Timing the market is nearly impossible. There is never a perfect time to sell mineral rights in Texas.  In most cases, it really comes down to your personal situation.

If you look at the last 20 years of oil prices, 2023 is a very good time to sell mineral rights.  We would have to go back to 2014 to see sustained prices above $60/barrel.   If the price of oil is above $60/barrel, it’s a very good time to sell because it’s profitable to drill new wells and existing wells produce solid royalty income.

A lot of mineral owners we talk to are concerned about the fact that prices were above $100/barrel and now they have dropped back into the $60/barrel to $80/barrel range.

It’s important to understand that mineral buyers do not pay based on the current price of oil today.  They pay based upon what their long term model shows the average price of oil will be.

Most mineral buyers use a conservative $55/barrel to $65/barrel long term estimate for oil prices.  What this means is that if oil prices are $60+/barrel, buyers are going to be aggressively purchasing.   When oil prices are $100+/barrel, mineral buyers do not pay a substantially higher price.  They simply get more aggressive in purchasing as much as they can.

We expect the first half of 2023 to be a great time to sell mineral rights with oil prices sustaining above $60/barrel.    If oil prices drop back into the $40/barrel to $60/barrel range, this would be an average time to sell.   If you have been considering a sale of your mineral rights and the price is above $60/barrel, we highly recommend listing as the market is still very strong.

There are a lot of different reasons to consider selling mineral rights.  Some of the reasons to sell mineral rights include:

1. Simplify your Estate
2. Qualify for Medicaid
3. Financial Need
4. Pay off Debt
5. Pay for School
6. Starting a Business
7. Helping a Family Member

Deciding whether to sell mineral rights is a personal decision.  There is no right or wrong reason for selling mineral rights.

While all of the reasons above are valid reasons to sell mineral rights, there are two more reasons for selling mineral rights that every mineral owner needs to consider:

If your mineral rights represent a significant portion (more than 10%) of your net worth, it may be beneficial to consider selling them to diversify your investments.

Why?  Most people own mineral rights in a single location.  If you get stuck with a bad operator, if new wells are drilled next to your acreage that start depleting your oil and gas, if a dry hole is drilled in the area, if a new technology makes your acreage less desirable, etc etc etc you may find the value of your mineral rights going down dramatically.

The old adage to “never sell mineral rights” is terrible advice.  For many, it makes sense to sell mineral rights and put that money to work in the stock market.  You’ll be better diversified and you can start earning dividend income that compounds the value of your investments.

If you own valuable mineral rights in Texas, you may receive offers to sell them in the mail or by phone.  If you are in a really good location and you have a lot of royalty income, you may be getting offers to sell minerals on a weekly basis.  Some mineral buyers will even take the time to locate your phone number and call you directly.

There are four types of mineral buyers who will contact you with letters in the mail:

• Low Ballers:  If you have ever received an offer in the mail that was substantially lower than the other offers, this was a low ball offer.  These mineral buyers are hoping that you’ll sell below market value.  They may attempt to make the process appear easy in order to convince you to sell below market value.
• Teasers: Some mineral buyers will throw out teaser offers.  These offers use language like “Up to $30,000 acre in your area.”  Any time you see the words up to this is not a real offer.  This is a buyer who simply wants you to see a large number and pick up the phone.
• Flippers:  These “mineral buyers” are not actually buyers.  In fact, most do not have any cash at all.  Their goal is to put you under contract at any price, then find someone to pay a higher price.  It’s important to understand that these flippers will misrepresent themselves.  They will tell you point blank they are buyers.  At the very end they will bring in a “partner” who is the actual end buyer.  If they do find you a buyer, you sold way below market value. If they don’t find you a buyer, you may have spent time and resources on the process without achieving anything.
• Quality Buyers:  A very small percentage of offers you get in the mail are from reputable buyers.  Some very high quality buyers do send offers in the mail.  Well over 95% of the offers you get in the mail will not be high quality buyers.  More importantly, only a very small percentage of quality mineral buyers send letters in the mail.  Sending letters is time consuming and not cost effective.  Most high quality mineral buyers rely on Texas Royalty Brokers to locate deals and bring them to market where they can bid on them.

If you are getting offers to sell mineral rights in Texas, do not accept any offer until you get competitive bids.  A lot of mineral buyers will compare a few offers they got in the mail, and take the highest offer.  This is a huge mistake.

Just because you have one offer that is higher than the other offers does not mean it’s a good deal.  There are thousands of high quality mineral buyers who want to make a bid.  You will get a much higher price when you create a bidding war for your mineral rights.

The number one mistake mineral owners make when selling mineral rights in Texas is not using a mineral rights broker.  Without an experienced broker who knows the industry, you simply can’t reach enough buyers to get a fair price.

Selling mineral rights on your own without the assistance of a broker makes it nearly impossible to reach enough buyers to get a fair market value for your rights. Why?  There is no competition.  You’re allowing 2 or 3 mineral buyers to compete for you minerals when there are thousands of mineral buyers.

Finding an offer to sell mineral rights is easy.  Finding the absolute highest possible price from a reputable mineral buyer is the hard part.

A lot of mineral buyers in Texas have made a fortune reaching out directly with offers.  Most mineral owners will talk to 2 or 3 mineral buyers.  They negotiate the best price they can, and then sell.   These mineral owners don’t realize that they could have walked away with substantially more had they simply gotten competitive bids.

Let’s say you received an initial offer for $1,200,000 and were able to negotiate it up to $1,300,000, and had other offers for $1,000,000 or less. It may seem like you got a good deal, but it is important to remember that competition from other buyers could have increased the value even higher.

What many mineral owners don’t realize is that competition could have increased the value even higher.  If you found an offer for $1,300,000 on your own with a just a handful of buyers, imagine what the price would be if thousands of mineral buyers had an opportunity to bid?

It is extremely common for mineral owners to come to us with an offer they have already negotiated higher.  We’ll then hit the market and typically see a 10% to 30% price improvement over their existing offer.   If you get a 20% price improvement on a $1,300,000 offer, you just made an extra $260,000!

Competition is crucial when selling mineral rights in Texas.  You absolutely must get competitive bids or you are nearly always selling below market value.

If you are considering selling your mineral rights in Texas, let us help you get the best price.  The team at Texas Royalty Brokers has been helping mineral owners get maximum value for selling mineral rights since 2012.

At Texas Royalty Brokers, we focus exclusively on high value mineral rights sales in Texas.

Focusing on high value deals in Texas allows us to provide clients with the following benefits:

• Quality Listings:  While some mineral brokers prioritize quantity over quality, at Texas Royalty Brokers, we focus on high-quality listings to ensure that we can put all of our focus on the limited number of listings we are actively marketing. This attracts the best mineral buyers ensuring that you get the absolute highest price when you sell.
• Local Expertise: Our focus on the state of Texas allows us to have a deep understanding of the local market, and therefore, more effectively market your mineral rights to ensure the best price.
• Communication:  When you contact Texas Royalty Brokers, we will respond quickly.  Our focus on quality over quantity means our team is available to answer your questions and keep you up to date on your listing.

Our team is eager to answer your questions and help you better understand your mineral rights.

If you have any questions or are ready to discuss selling your mineral rights in Texas, please use our contact form and one of our team members will respond promptly.