Mineral Management
Maximize Your Mineral Rights
Know What You Own
The first rule of mineral management is to know what you own. Knowing what you own puts you at a distinct advantage and will help you maximize the value of your mineral rights.
Let's review the:
Let's review the:
Advantages
Mineral owners who know what they own and actively manage their minerals are savvier and often:
- Know when new wells are permitted
- Catch underpayments and royalty errors quickly
- Know the going lease and royalty rates in the area
- Connected with other royalty owners
- Able to leave well-organized and managed minerals to their heirs
- Ready and able to teach the next generation how to manage mineral rights
- Know if they are not receiving royalties for a well on a tract of land in which they own interest
- More likely to negotiate favorable lease terms
Documents to Keep
There are a lot of ways to manage your records. At a minimum, you should keep original documents in file folders and digital copies similarly organized in the cloud. We recommend keeping both digital and paper records of:
Organizing Your Mineral Records
Choose the filing method that meets your needs. If you have multiple tracts of land in the same county, it may make sense to organize them by legal description with dividers by state and county.
For example, you might have a divider for Texas and subdivider for Ward County. Inside, there may be hanging folders labeled with the section, block, and abstract numbers.
Counties that follow the Public Land Survey System can be organized by section, range, and township.
Each folder will hold the title documents, leases, division orders, well documents, and a sample royalty check.
Keeping Digital Records
To keep things simple, create the same digital file on Google Drive, iCloud, or another cloud-based storage service. Inside each folder, create sub-folders for the different types of documents. It's also good to store maps of the basin, field, and the location of your minerals.
Try overlaying maps to see if your mineral rights are in an active drilling area.
For example, you might have a divider for Texas and subdivider for Ward County. Inside, there may be hanging folders labeled with the section, block, and abstract numbers.
Counties that follow the Public Land Survey System can be organized by section, range, and township.
Each folder will hold the title documents, leases, division orders, well documents, and a sample royalty check.
Keeping Digital Records
To keep things simple, create the same digital file on Google Drive, iCloud, or another cloud-based storage service. Inside each folder, create sub-folders for the different types of documents. It's also good to store maps of the basin, field, and the location of your minerals.
Try overlaying maps to see if your mineral rights are in an active drilling area.
Mineral Management Spreadsheet
Once you have your documents, you can create a mineral management spreadsheet, which makes it easier to quickly find the information you are looking for.
We have created a free Mineral Management Spreadsheet that you can download and modify to suit your needs.
The basic spreadsheet has tabs for tracts, wells/units, leases, and division orders. Populate the spreadsheet with data from your records and your state's oil and gas regulatory agency.
You might be amazed by what you learn while going through this process.
Need some help? The regulars on the Mineral Rights Forum are a friendly and knowledgable bunch.
Reading a few mineral management books and reviewing oil and gas terminology can also be helpful.
We have created a free Mineral Management Spreadsheet that you can download and modify to suit your needs.
The basic spreadsheet has tabs for tracts, wells/units, leases, and division orders. Populate the spreadsheet with data from your records and your state's oil and gas regulatory agency.
You might be amazed by what you learn while going through this process.
Need some help? The regulars on the Mineral Rights Forum are a friendly and knowledgable bunch.
Reading a few mineral management books and reviewing oil and gas terminology can also be helpful.
Monthly Production & Income Verification
Each oil and gas royalty statement should be carefully examined to verify the following:
- Decimal interest (should match your division order)
- Production volumes (should match what was reported to your state's oil and gas regulatory agency)
- Deductions (cost-free leases should remain cost free, all others should only include allowed deductions)
- Income (Gross values multiplied by your decimal interest should match net values)
Royalty check errors most often occur when operators change or the operator updates their software. As a rule of thumb, it's good to verify every single royalty check. If you suspect a serious problem, there are specialty firms that can perform comprehensive royalty audits.
Having trouble reading your royalty statement? We have a guide for that!
How to Read and Oil & Gas Royalty Statements
Having trouble reading your royalty statement? We have a guide for that!
How to Read and Oil & Gas Royalty Statements
Mineral Management Software
Mineral owners who manage multiple wells across many tracts of land may find it easier and more effective to buy a subscription to mineral management software.
There are several mineral management software packages, both desktop, and cloud-based. A demo with each will help you compare features and choose the right solution for your situation.
Keep in mind the following:
Documents
Some mineral owners prefer to keep their documents stored inside a mineral management software package. Others prefer to keep documents in the cloud, separately from the mineral management software. Just make sure the software you choose has a way to export your data.
Tracts & Leases
You might find it helpful to visualize the tracts of land in which you own an interest as well as your lease lines. Each software handled this differently and some allow will alert you of new activity in or near your tracts.
Income
Mineral management software can also help verify the accuracy of royalty payments. You should be verifying decimal interest, production volumes, and deductions on each check. Some software programs have advanced reporting that would be difficult for you to replicate without their software.
Recon
Mineral Management software can also help you keep track of new activity on your property as well as any offset activity.
There are several mineral management software packages, both desktop, and cloud-based. A demo with each will help you compare features and choose the right solution for your situation.
Keep in mind the following:
Documents
Some mineral owners prefer to keep their documents stored inside a mineral management software package. Others prefer to keep documents in the cloud, separately from the mineral management software. Just make sure the software you choose has a way to export your data.
Tracts & Leases
You might find it helpful to visualize the tracts of land in which you own an interest as well as your lease lines. Each software handled this differently and some allow will alert you of new activity in or near your tracts.
Income
Mineral management software can also help verify the accuracy of royalty payments. You should be verifying decimal interest, production volumes, and deductions on each check. Some software programs have advanced reporting that would be difficult for you to replicate without their software.
Recon
Mineral Management software can also help you keep track of new activity on your property as well as any offset activity.
Mineral Management Services
Managing a large portfolio of mineral rights is can be time-intensive and requires extensive knowledge (especially if the minerals span multiple states).
Some mineral owners prefer to outsource the management of their mineral rights.
Mineral management firms take care of:
Some mineral owners prefer to outsource the management of their mineral rights.
Mineral management firms take care of:
- Production and income verification
- Division orders
- Oil and gas lease negotiation
- Lease and offset activity monitoring
- Reporting
Mineral management firms often employ land-professionals, certified mineral managers, division order specialists, accountants, and even legal professionals. Some companies have their own proprietary mineral management software and others use one or more of the top mineral management tools.
Why Do Mineral Owners Sell?
Selling your minerals rights is easy. The hard part is deciding whether or not to sell - especially if the sage advice, "Never sell your minerals" haunts you. The fact remains that many people sell their minerals and they do so for a variety of reasons. One reason that many people sell is that they don't have the desire, expertise or experience to manage their minerals and they cannot afford to outsource the job - or they know their heirs will not make good mineral managers.
Why People Sell Their Minerals Rights:
With the price of oil declining and operators practically giving gas away, I decided to sell before the bottom falls out.
I am on a fixed income, and the sale of these minerals will help me secure stable housing. My children will be okay if even if they don't inherit these minerals.
My oil wells have been producing for decades and the reserves are almost depleted. Once the wells are plugged, the value will be significantly lower. I'd rather cash out now.
I inherited mineral rights, but don't want to be involved with fracking and fossil fuels. I would prefer to support renewable energy and do my part to reverse climate change.
Although everyone says, "Never sell your minerals", my daughter needs a series of costly life-saving medical treatments. There are exceptions to every rule.