Selling your Minerals
Written by Eric Johnson about Leases + Ownership and Transfers on June 22, 2011
What Companies Are Buying Minerals?
There seem to be several companies now in Ohio that are attempting to buy mineral rights. Of course more mineral buying companies will spring up from time to time.
What are they after?
These companies want to purchase your oil and gas mineral rights.
How are mineral rights different than oil and gas leases?
When you sign an oil and gas lease, you give a company the right to drill for oil and gas within a fixed period of time (say 5 years). If no well is drilled within that time frame, the lease will expire. If a well is drilled, the lease will continue only so long as there is oil or gas produced. A lease will normally contain specific terms about what the gas company can and cannot do on your property and where it can do it. Alternatively, when you sell your mineral rights, you are giving the company the right to access oil and gas under your property for an unlimited period of time. Moreover, a mineral assignment often has no limitations about what the company can do on your property.
What happens to my royalty income if I sell my minerals?
If you have previously signed an oil and gas lease, and there is a well on or near your property that provides you with periodic income, that income will cease if you sell your mineral rights.
How much time do I have to make a decision?
Sometimes, letters sent by mineral buyers give a landowner a date within which they must accept an offer. While companies are free to set whatever conditions they want on their offers and while they may hold firm to such conditions, experience has shown that they will often extend such deadlines where a landowner wants to take some time to make a careful decision.
Is there a problem with me signing and returning the letter they sent me?
You need to carefully review the terms of any letter agreement you would sign. Some of these letters going out to landowners commit a landowner to selling his or her mineral rights within a very indefinite time frame – it’s not at all clear when the landowner is to receive payment according to the letter agreement.
What can Johnson & Johnson do for me?
Johnson & Johnson’ oil and gas attorneys have decades of oil and gas experience and have represented thousands of landowners during that time in oil and gas matters. Our oil and gas lawyers have been heavily involved with oil and gas companies in an effort obtain more favorable terms for landowners. It has been our experience that, by organizing landowners into groups, companies may be willing to offer better terms to the group than they would to an individual.
In late 2011 Johnson and Johnson negotiated a transaction for a large group of landowners who sold minerals, mostly located in Mahoning County. It is believed that very favorable terms were obtained for the group. New groups are being organized for 2012.
About Eric Johnson
ERIC C. JOHNSON attended Ohio State University, earning a degree in economics and then graduated from the University of Cincinnati Law School in 1983. His areas of practice are personal injury law, real estate, oil and gas, contracts, litigation and appeals.