Investor Review: MINERAL RIGHTS OWNERSHIP
SPONSORED CONTENT What to Know About Mineral Rights Ownership MINERAL RIGHTS OWNERSHIP CAN OFFER GREATER RETURNS THAN JUST EQUITY APPRECIATION.
DERRECK LONG
O wning the rights to depletable natural resources such as oil, coal, and natural gas, allows you to earn royalties passively. With proper due diligence and careful consideration of market conditions, mineral rights can be an attractive asset to own. However, mineral rights ownership is not always as simple as it appears. Here’s what you should know about the many details involved in mineral rights ownership: ▷ MINERAL RIGHTS OWNERSHIP OPPORTUNITIES. ▷ THE ADVANTAGES AND POTENTIAL RISKS PRESENTED BY MINERAL RIGHTS OWNERSHIP. ▷ HOW MINERAL RIGHTS OWNERSHIP COMPARES TO OTHER ASSET CLASSES.
MINERAL RIGHTS CLASSIFICATION
however, the mineral rights do not include air and water rights. Many people assume that mineral rights naturally come with a real estate purchase, but it’s common for U.S. properties to have severed mineral rights. Sometimes, a property can have two separate owners because previous property owners sold their surface property while keeping the mineral rights. A sticky situation may occur when surface and mineral rights owners don’t know the other exists. MINERAL RIGHTS INDUSTRY BACKGROUND Although mineral rights ownership can be lucrative, you must learn its unique language, rules, classifications, and negotiation protocols. Also, mineral rights laws vary from state to state. Even the process of finding out whether a property has mineral rights and ascertaining its value requires a mineral rights consultant, attorney, or broker. Eckard Enterprises has more than 35 years of experience in the U.S. oil and gas industry. Eckard focuses on educating qualified individuals on direct ownership of energy assets in the oil and gas space.
Whether natural minerals are sedentary or fluid, the industry classifies them by characteristics and functions. Each mineral rights classification comes with a separate set of contracts, tax implications, and conditions. The official government mineral right classifications are: ▷ LOCATABLE. Metallic and non- metallic minerals like gold, silver, hard rock, and feldspar ▷ LEASABLE. Energy minerals like oil, gas, and coal ▷ SALABLE. Minerals (sand, gravel, and dirt) sold in bulk at low unit prices ▷ METEORITES/NEW MINERAL DISCOVERIES. Can be more valuable than precious metals Owners must acquire mineral rights according to these classifications. If you purchase mineral rights, make sure you understand all the tax and regulatory requirements of the minerals’ classifications. MINERAL RIGHT ROYALTIES The task of excavating and extracting minerals from the earth requires a
HOW DO MINERAL RIGHTS WORK?
In the United States, mineral rights owners have legal possession and control over the minerals underneath their property. These rights give the owners the authority to extract any of the minerals listed on the original deed. Some of these minerals include oil, natural gas, and coal;
22 | think realty magazine :: september - october 2024
Made with FlippingBook Online newsletter