Mineral Management
Active mineral management helps you maximize
the value of your oil and gas mineral rights.
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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 your mineral rights value.
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.
Want to maximize your mineral rights? Mineral management software can give you tools and resources you otherwise wouldn't have access to.
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.
Want to maximize your mineral rights? Mineral management software can give you tools and resources you otherwise wouldn't have access to.
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.
Confused by your royalty statement? Learn how to read an oil & gas royalty statement.
Confused by your royalty statement? Learn how to read an oil & gas royalty statement.
Mineral Management Software
Mineral owners who manage multiple wells across many tracts of land may find it easier and more effective to utilize a mineral management software solution.
There are several mineral management software packages, most of which are cloud-based and accessible from the web browser. A demo with each company 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 system, where each document can be associated with a specific tract of land or lease. Just make sure the software you choose has a way to export your data in the future.
Tracts & Leases
Mineral management software can help you visualize the tracts of land and leases lines in which you own an interest. This allows you to see which wells lie inside your lease or property lines, making it easier to make sure you are in pay status for well. Most software has the ability to alert you when you are not being paid on an oil or gas that resides within a specific tract of land or lease.
Income
Mineral management software can also help verify the accuracy of royalty payments. Some programs automatically import royalty data from EnergyLink or Oildex while allowing you to import or manually enter checks from smaller operators. Most mineral management software solutions have advanced reporting that would be difficult for you to replicate without their software.
Each month, you should verify decimal interest, production volume, and deductions on each royalty check. Manually auditing checks can be a tedious process, and it is easy to overlook small anomalies, new deductions, or when you fall out of pay status. Mineral management software can automate this process and save you money by catching small problems as they occur.
Reconnaissance
Mineral Management software can also help you keep track of new activity on your property as well as any offset activity nearby. You can usually set up an alert so that you are automatically notified when a new well is permitted within a specific radius of your property. Knowing about the nearby drilling activity can help you negotiate better lease terms, and allow you to follow up on any outstanding division orders.
There are several mineral management software packages, most of which are cloud-based and accessible from the web browser. A demo with each company 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 system, where each document can be associated with a specific tract of land or lease. Just make sure the software you choose has a way to export your data in the future.
Tracts & Leases
Mineral management software can help you visualize the tracts of land and leases lines in which you own an interest. This allows you to see which wells lie inside your lease or property lines, making it easier to make sure you are in pay status for well. Most software has the ability to alert you when you are not being paid on an oil or gas that resides within a specific tract of land or lease.
Income
Mineral management software can also help verify the accuracy of royalty payments. Some programs automatically import royalty data from EnergyLink or Oildex while allowing you to import or manually enter checks from smaller operators. Most mineral management software solutions have advanced reporting that would be difficult for you to replicate without their software.
Each month, you should verify decimal interest, production volume, and deductions on each royalty check. Manually auditing checks can be a tedious process, and it is easy to overlook small anomalies, new deductions, or when you fall out of pay status. Mineral management software can automate this process and save you money by catching small problems as they occur.
Reconnaissance
Mineral Management software can also help you keep track of new activity on your property as well as any offset activity nearby. You can usually set up an alert so that you are automatically notified when a new well is permitted within a specific radius of your property. Knowing about the nearby drilling activity can help you negotiate better lease terms, and allow you to follow up on any outstanding division orders.
Mineral Management Services
Managing a large portfolio of mineral rights 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, while others use one or more of the top top mineral management software solutions.
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. Many people sell because 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 putting my affairs in order. I don't want to burden my kids with the hassle of transferring ownership and managing small mineral rights. When my sister passed away and my niece and nephew had to hire an attorney to help them with the minerals. I don't want my kids to go through that.
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.
I lost my job and because of the COVID-19 lockdown, I needed the money. I'm so grateful to have been able to sell my minerals to get me through this rough time.