When you talk about West Virginia mineral rights, it mostly refers to the oil and gas rights. Whether your area falls under the region covered by Huron Shale (which is located in West Virginia’s Appalachian Basin), or Marcellus Shale (which is spread over West Virginia’s north central and lower segment of the eastern panhandle), selling or leasing your mineral rights can bring several benefits your way. Before you decide in favor of selling or leasing your mineral rights, you should know that various factors like present oil and gas prices, gas vs. oil mix, and the number of competing operators in the region can influence how much you will get for your mineral rights. Once you have a clear idea of the amount you can expect to receive, take a closer look at the benefits of both selling and leasing before you take your pick.
Selling West Virginia mineral rights
- Lump sum cash: If you need a lump sum of cash right away, selling your mineral rights is your best bet. Usually, in most cases, it would take anywhere between 30 and 90 days for you to receive the amount.
- No endless wait: If you aren’t ready to wait almost endlessly (from 5 to 10 years, or at times, even more) after leasing your mineral rights to see the buyers start drilling, selling your mineral rights is a good thing to do. Unlike the uncertainty of payouts and the lengthy process of a lease, selling would ensure receiving a huge sum at one go and not worrying about a wait till eternity.
Leasing West Virginia mineral rights
- Retaining the rights’ ownership: Unlike selling which means giving up your mineral rights, leasing would let you retain the ownership. Thus, after a lease period ends (which could be anywhere from 3 to 5 years), you can lease your mineral rights again. Eventually, you may even decide to sell it provided you get a good offer.
- Receiving lease bonus and royalty: Leasing mineral rights would bring your way a reasonable lease bonus, which you can consider akin to rent when you rent out your property. When negotiating royalty, remember that the statutory minimum is 1/8 or 12.5% in West Virginia. But instead of settling for 1/8, you can get almost 15% (and even 18% in some cases) if you negotiate well. After all, if the company holding the lease drills and produces oil and/or gas, setting yourself up to receive some additional money for that production would surely be nice.
- Planning ahead to enjoy big gains in the future: If you have plans of selling your mineral rights in the future, leasing them today may help you fetch a good deal when you finally decide to sell your rights. In case your mineral rights were leased in the past, it would show that there is a demand for your mineral rights as someone was eager to lease it earlier. This would have a positive effect on the sale. In case your mineral rights are leased at present, it shows your minerals being in demand at present. This should help you ask for an increased sale price for your mineral rights.
However, to safeguard your interests while leasing your mineral rights in West Virginia, make sure to have:
- an indemnification clause in the contract that prevents you from being liable for bad things which may happen during the company’s drilling process.
- a lease with limited scope, where it’s restricted to just the production of oil and gas, and doesn’t include other things like the right of property use for a disposal well, or the right to change it to gas storage, or the right of producing coal bed methane.
So, weigh your options well before deciding whether you want to sell or lease your West Virginia mineral rights.