Educational

Reason’s not to sell:

The timing is not right

If you or your family do not need the money or do not have a way to invest the money in other avenues to create/build your family legacy then you should consider retaining your rights.

The price is not right

If the price point is not ideal and you have time, then you should retain your minerals.

“Jeb Clampett” syndrome

You believe that your land is one and billion and will eventually change the trajectory of your families lives forever.

Reason’s to sell:

Hedge your bet

There are a lot of factors that go into getting paid on well production:

1.) A successful well:

The Oil and Gas Industry is a risky business: Owning minerals does not mean that the operator will drill a successful well.

2.) Commodity prices:

Royalty checks are a direct reflection of volatile commodity prices: If a well is drilled, it doesn’t mean that commodity prices are high.

3.) Depreciation:

As soon as a well is drilled, it begins depreciating which means that the production decreases over time. In a shale formation, This decline is accelerated after 36-48 months and then levels out at a fraction of the original production for a long period of time.

4.) Receive cash upfront!

A lot of people may prefer this option to achieve personal goals faster, rather than waiting on smaller royalty payments.

Manage your own investments

Minerals are a great investment if you have plenty of time to wait and are in the business to invest in them. However, as a mineral owner, you have no control over when your minerals are developed (turn into cash).

You cannot force a company to drill a well on your land, so you are at the mercy of the company that owns your lease.
Some people would prefer to take cash to invest in things they understand or can control (see, feel, and touch).

Taxes.

There are significant tax advantages to selling your minerals as opposed to collecting royalty checks over time.

A changing world.

It is easy to see that the world we live in is changing rapidly.

There is a push for green initiatives.

Elections can affect Oil and Gas Companies ability to drill for natural resources.

There are financial incentives for companies to find alternative solutions for energy.

Volatility in the market is pushing smaller drilling companies out, which can result in a slower development (fewer wells being drilled) by bigger companies that are not driven by local markets.