BY: DAVID SMITH
Business Development Officer, Argent Mineral Management
For families who own land in oil-producing areas like Texas, Oklahoma and Louisiana, leasing the rights to their mineral assets can produce a long-lasting financial windfall. With a check reliably arriving every month for years or even decades, some mineral asset owners gradually become accustomed to the increased income without stopping to question who’s paying them or whether they’re getting all the money they’re entitled to.
This situation is especially common for mineral rights contracts established by a family member who worked in the oil industry or took a hands-on role with their mineral assets. It’s not until that knowledgeable person passes away that their spouse or descendants might begin to realize how little they understand about the mineral assets they own.
My own family is just one example. My father worked as a landman for an oil company for 40 years and along the way accumulated various working interests in different wells — meaning that, unlike mineral rights owners with a passive royalty role, he took on additional financial risk in exchange for a potentially higher reward. When he passed away last year, my mother, a former schoolteacher, suddenly found herself receiving a paycheck some months and an invoice on others when operating costs exceeded profits. My own experience in the oil and gas industry made it easy for me to understand the situation and assist her, though many others aren’t as fortunate.
For anyone who has suddenly inherited mineral assets, determining how to properly manage them often requires the help of a trusted advisor or an attorney. Here at Argent, our mineral management group works with mineral rights owners to help them understand what their assets are worth and maximize their value.
Here are several ways in which we can help:
Resolving mineral assets ownership confusion.
After the death of a family member who took a hands-on role with mineral assets, families might continue to receive monthly royalty checks from unknown sources. Although they might be aware that the family owns mineral assets, they don’t know where those assets are located or even how to find out more information. We can track down these details on their behalf and ensure that the contract terms are clear and fair for all parties. In other cases, unpaid money might be accruing in an account waiting for the next of kin to contact the operator. We can also help facilitate the verification process so that the owner’s money eventually makes it to the right place.
Auditing royalty payments.
Most mineral asset owners are simply happy to be receiving a check every month, but those without an accounting background often just have to trust that the amount is accurate. We help ensure that our clients are receiving the full amount to which they’re entitled by doing a full audit of their mineral assets. For some clients with particularly valuable assets, we’ve resolved royalty issues through the audit process that earned them hundreds of thousands of dollars in additional income.
Because mineral rights lease contracts are normally written by oil and gas companies, the terms are often more beneficial to them than to individual mineral asset owners. Sometimes, the lease terms are especially onerous, though an uninformed mineral asset owner may not realize it. We can look at lease terms with a critical eye, helping our clients make informed decisions on what to do. Having this additional level of protection can be hugely beneficial over the long run.
Selling property and protecting against unscrupulous buyers.
To be clear, we don’t usually advise clients to sell property that generates mineral rights income — even if it’s not currently making a large amount of money — because once you sell it, it’s gone. There are countless stories of people selling their mineral interests for a fraction of what they could have earned by holding on to their property a few years longer. And, unfortunately, there are buyers out there trying to take advantage of mineral owners who don’t fully understand the value of what they have by offering them an amount that initially seems generous. Argent can assist clients in responding to a potential offer. We’ll do things like check for permits in the surrounding area to see if there’s been a recent rise in activity, which could indicate a breakthrough of some kind. However, if it does make sense to sell one’s property, we can help the owner market it to get the best value.
Transitioning oil and gas profits to other investments.
As a full-service wealth management firm, Argent does a lot more than mineral management. For many clients, having a diversified portfolio of investments can be the key to building wealth over the long term, and we can recommend other varieties of investments to our mineral rights clients that can increase their returns and provide added security. We always look out for our clients’ best interests, applying our attitude of humble confidence to every single investment decision.
We understand that not every client will have the same level of interest or engagement in the specifics of their mineral assets — some want to work with us actively, while others are happy to have a knowledgeable advisor take the headache off their plate. We work to establish a foundation of trust with each of our clients, working toward a goal of financial security and peace of mind.
If you have questions or concerns about your mineral assets, Argent’s mineral management team is here to assist you. Give us a call at (800) 375-4646 to learn more.