The most common reason that mineral owners decide to sell is to receive a lump sum payment today instead of waiting for an oil well to pay out royalties over many years. Selling mineral rights today allows interest owners to collect proceeds immediately to:
You may want to sell a portion of your mineral interests in order to diversify your assets. This strategy allows you to reap the benefits of future royalties payments while also reinvesting proceeds of a partial sale into another type of investment, such as stocks, bonds, or real estate.
Eliminate accounting hassles and burdensome paperwork by selling your mineral rights. You no longer have to keep up with tax regulations and bookkeeping expenses for estates, partnerships, and trusts.
There may be significant tax advantages to consider when selling your mineral interests, as proceeds from the sale of minerals interests are treated differently than proceeds that are paid in monthly royalty checks. You should consult your financial advisor to fully understand the tax implications of selling all or a portion of your mineral interests.
Fluctuations in commodity prices can have a large effect on your monthly royalty checks. When the price of oil drops, so does your payout. Oil and gas drillers are also effected by shifting commodity prices, as they are forced to drill less wells when the price falls.
Oil and gas wells are depleting assets. As a mineral owner, this means that the majority of the royalty payout you receive will come early in the life of the well and payout will diminish over time.