Leasing Your Mineral Rights

If a landman comes knocking at your door, it’s wise to know a few things before signing an oil and gas lease. Here are two articles that will help you negotiate your oil and gas lease. The first, Oil and Gas Leases: Top Ten Things Not to Do describes some of the mistakes owners make and how you can avoid them. The second article, Oil and Gas Leasing: Top Ten Things to Do illustrates how you can pursue the best deal for your mineral rights regarding your lease bonus payment, royalty percentage, and other important lease provisions. Learn more about the process of oil and gas production in the article Oil and Gas Production in Nontechnical Language.

Mineral Rights Taxes

As with other assets, royalty rights come with a tax liability. These tax burdens vary depending on whether the minerals are being produced or not. Minerals can be taxed both at the state and county level, in addition to your Federal tax obligation. The County Ad Valorem Tax is generally levied only on producing minerals. There are several ways to mitigate tax impact, including the Depletion Allowance and 1031 Exchanges. The article Royalty Tax provides answers and links to common questions oil and gas royalty owners have about mineral right taxes.