Mineral Rights owners love receiving the monthly checks on their royalties, but many don’t understand that they may be paying twice as much in taxes and losing out on higher-yield investment opportunities.

To help you save money by paying less to the IRS and giving you more control and freedom of what you can do with your money we’ve put together a simple, straightforward 3-part guide to for you.

There’s never been a more active time for mineral buying and selling. The industry is flush with private equity and investment capital looking to gamble on future production, and that competition has driven per-acre prices to historic levels. It’s certainly a “seller’s market”.

Common sense would tell you that selling minerals and royalties is like selling real estate. That’s not a crazy assumption -- after all, mineral rights are essentially just subsurface real estate. However, there are some significant differences you should be aware of.

“Warranty” seems like a scary word, but it doesn’t have to be. When mineral and royalty owners decide to sell their interests, they often run across warranty language when reading through a Purchase Sale Agreement (PSA) or a Mineral/Royalty Deed. There are usually two different kinds of warranties referenced in these documents: a “General warranty” and a “Special warranty”. Let’s first explore the difference between the two warranties, then discuss how you may want to handle this topic in your negotiations with buyers.

Your natural reaction when you hear the word “taxes” might be to either a) immediately fall asleep out of sheer boredom or b) throw up your fist and curse Uncle Sam for being so greedy. However, understanding the different ways your mineral rights can be taxed is a relatively simple concept, and it can save you a boatload of money in the long run.

One of the most common pitfalls for mineral owners when evaluating purchase offers is that the offers presented are not “apples-to-apples”. A lot of times, one mineral buyer may be offering on a “per NMA basis” while another is offering on a “per NRA basis”. Other times, a buyer may be offering under the assumption that you’re leased at 1/4th royalty, when you’re really leased at 3/16th royalty -- which will result in their offer being drastically inflated. Let’s dive into what your “lease royalty” really means, and how to ensure you and any prospective buyers are talking apples-to-apples.

One of the most common misunderstandings for mineral owners is their understanding of the actual amount of mineral acreage that they own. The lack of transparency in the industry combined with confusing deed language oftentimes compounds this misunderstanding. Let’s briefly discuss the three most common “units of measurement” for mineral acreage.