Mineral Rights Buyers

If you own oil and gas royalties, you may have considered selling them at some point.

Oil and gas royalty buyers are companies or individuals interested in purchasing your royalty interests in exchange for a lump sum payment. These buyers can range from small investors to large corporations, each with different reasons for buying.

In this post, we’ll take a look at oil and gas royalty buyers, what they do, and how they operate. Whether you’re just curious or seriously considering selling, understanding oil and gas royalty buyers is key to making the right decision.

When selling your mineral rights, understanding the different types of mineral rights buyers is essential. Each buyer operates with distinct goals and motivations, which can affect the price and terms they offer.

Below, we’ll break down the four main types of buyers you’ll encounter.

Individuals

Individual mineral buyers are often private investors looking to add mineral rights or oil and gas royalties to their portfolios. These buyers tend to have limited capital compared to larger companies, which can mean they are more selective in their purchases. Individuals may offer competitive pricing if they see long-term value in your mineral assets. However, some individuals may have less experience than institutional buyers, which could result in less favorable terms or incomplete due diligence on their part.  If your mineral rights are valued under $100,000, you are much more likely to run into individual investors.  You also run the risk of running into buyers who are still trying to figure out the best way to buy mineral rights.  They don’t really know what they are doing yet, and are likely to waste your time.

Private Equity Backed Companies

Private equity-backed companies combine investor funding with industry expertise to buy mineral rights. These oil and gas royalty buyers often seek large portfolios of mineral assets, allowing them to generate returns for their investors over time. With strong financial backing, private equity buyers can make competitive offers and close deals quickly. They are often focused on long-term investments, which can make them ideal buyers if you’re looking to sell a large portion of your mineral rights.

Private equity backed companies are the preferred buyer for mineral rights.  The reason is that they know how to handle the transaction and pay fair prices for mineral rights.

Flippers

Flippers are “mineral buyers” who purchase mineral rights with the intention of quickly reselling them for a profit. Unlike other buyers who may hold onto the rights for years, flippers aim to turn around assets fast. While they may offer quick cash, they are generally looking for a low price, often undervaluing the long-term potential of your minerals. If you choose to sell to a flipper, you may sacrifice future gains for immediate payment, so it’s essential to understand what your assets are worth before agreeing to a deal.

Important Note:  Flippers do not tell you they are flippers.  A flipper will appear like any other mineral buyer.  They will make offers to buy mineral rights that seem legitimate.  However, they will include terms in their offer that make it obvious they are flipping.   Working with a reputable mineral rights broker will help you avoid falling into trap flippers set.

Publicly Traded Companies

While rare, publicly traded companies will sometimes purchase mineral rights.  Typically a publicly traded company will purchase mineral rights from a very large mineral owner.  If your mineral rights are valued at $5MM+, you will see interest from both private equity backed mineral buyers and a select few publicly traded mineral buyers.

By understanding these different types of mineral rights buyers, you can better navigate the market and make informed decisions about selling your assets. Each buyer type has its own pros and cons, so it’s important to assess your priorities before moving forward.

Once you have figured whether to sell mineral rights, one of the biggest challenges is avoiding shady buyers who may try to take advantage of you. Shady oil and gas royalty buyers often make offers that seem appealing but include hidden traps that can reduce the value you receive or delay payment.

One of the best ways to protect yourself from dishonest buyers is by working with a trusted mineral rights broker. A good broker will act as your advocate, helping you evaluate offers, verify buyers, and navigate the complexities of the transaction.

Using a Trusted Mineral Rights Broker

A mineral rights broker can be your most valuable resource when selling your mineral rights or oil and gas royalties. Brokers specialize in connecting mineral owners with reputable oil and gas royalty buyers.  A quality mineral rights broker will have the expertise to ensure that all parties act fairly. They often have a network of vetted mineral buyers, along with a process to qualify mineral buyers, so they can help you avoid shady buyers while ensuring you get a competitive offer. By using a broker, you will avoid predatory buyers who aim to exploit mineral owners with confusing contracts or unfair deals.

In addition to helping you avoid shady buyers, it is well known that a mineral rights broker will also help you get a better price when selling mineral rights.  When you consider that you will avoid shady buyers, sell for a higher price, and avoid a ton of work, a mineral rights broker is clearly the best choice for mineral owners.

Signs of a Shady Mineral Buyer

While working with a broker is the best option, it’s also important to recognize the warning signs of a shady mineral buyer on your own. Here are some red flags to watch for:

Long Closing Periods

Legitimate mineral rights buyers typically aim to close deals quickly, especially when they’re serious about the purchase.   A 30 days close is typical.

Dishonest buyers may drag out the closing process for several months while they try and flip the mineral rights. A long closing period also allows buyers to hedge their bets, watching the market for shifts or looking for better deals elsewhere. This delay can leave you in limbo and may result in a lower final offer than initially promised. Be cautious if a buyer insists on a closing period that extends beyond a reasonable time frame, as they may be stalling to benefit themselves.

Option to Assign the Contract

Another red flag is if the mineral buyer asks for the right to assign the contract. This means they can pass the deal to another buyer without your approval. Shady buyers often use this tactic to “flip” your mineral rights, securing a lower price from you and then selling the rights to a third party for a higher amount. If a buyer includes an assignment option in the contract, it’s a sign that they may not intend to follow through on the deal themselves. Always ensure that the buyer you’re dealing with is the one who will finalize the purchase.

Lowball Offers and Pressure Tactics

If a buyer is offering significantly less than market value or is pushing you to make a quick decision, take it as a warning. Oil and gas royalty buyers who are acting in bad faith often use high-pressure tactics to force a fast sale, hoping you won’t have time to do your own research. A legitimate mineral buyer will give you time to consider your options and will base their offer on the true value of your mineral rights.

Tip:  If the mineral buyer gives you a very short deadline of 24 to 48 hours to decide, you are walking into a bad deal.

Lack of Transparency

Honest mineral rights buyers are upfront about their intentions and the process. If a buyer is vague about the details of the transaction or is unwilling to explain key details, it’s best to walk away. Transparency is key in these deals, and any reluctance to provide clarity should raise suspicions.  One key piece of information you want to know is the price per acre a mineral buyer is offering.  If the buyer is giving you a “total price” but does not break down the price per acre, this is a red flag.

By using a trusted broker and being mindful of these warning signs, you can protect yourself from shady buyers and ensure you get the best possible deal for your mineral rights. Selling your mineral rights is a big decision, and the right buyer will offer a fair and straightforward process without any hidden agendas.

When it comes to selling your mineral rights, you might be wondering, who buys mineral rights?

The truth is, there are thousands of companies that buy mineral rights.  These companies specialize in purchasing mineral interests, including oil and gas royalties.

Trying to reach out to these companies individually is not only time-consuming but nearly impossible. With so many companies that buy mineral rights and each one operating under different business models, finding the right one can feel overwhelming. On top of that, many companies work privately and don’t send offer letters or even have a website, making it even harder to find high quality mineral buyers on your own.

This is exactly why we recommend using a mineral rights broker. A broker has access to a network of mineral buyers and knows who buys mineral rights. Instead of you trying to sift through countless potential buyers, a broker will connect you with trusted companies that are actively seeking to purchase mineral rights. Brokers streamline the process, ensuring you not only find legitimate companies that buy mineral rights but also receive competitive offers. This helps you secure the best possible deal without the stress of trying to navigate the market on your own.

Selling your mineral rights is a big decision, and finding the right buyer can make all the difference in getting a fair deal. Whether you’re dealing with individual investors, companies, or private equity-backed firms, it’s crucial to know what to look for and how to avoid shady offers.

If you have any questions or need guidance on finding the right mineral rights buyers, we’re here to help. Reach out to us using the contact form below for a free consultation. Our team is ready to assist you in navigating the process and ensuring you get the most value for your mineral rights.