Author: Valor

Leaving mineral rights to your beneficiaries can be incredibly complicated. The right mineral management partner can make all the difference.

Generational Rights to Minerals: How to Set Your Beneficiaries Up for Success

When thinking about estate transition, questions may come to mind about how to create a detailed descent and distribution plan for your mineral assets. You may be wondering how to ensure the mineral rights transfer is successful, what some of the pitfalls are to avoid, and how you can protect your assets.

At Valor, we understand the importance of thorough estate planning to ensure you have secured your mineral rights for your beneficiaries. Addressing these questions head-on — with knowledge and clarity — can help set you on the path to a successful mineral estate transfer.

How do mineral rights get passed from one generation to the next?

Mineral rights are the ownership of the subsurface real property. When hydrocarbons are produced, the mineral owners are entitled to a royalty percentage of the production proceeds. When you pass away, your beneficiaries inherit your mineral interests. If you have a will, it is up to the executor to probate your will and make sure the assets are passed on in accordance with your will. Since mineral rights are considered real estate, this will require a conveyance to be filed in your respective county courthouse. The executor will need to prepare, execute and record the conveyances. If you pass on without a will (intestate), the mineral ownership will pass in accordance to the inheritance laws of the state in which the property is located — this usually requires an Affidavit of Heirship to be filed in lieu of a deed.

In either case, it is important to know what exactly is owned so that the property descriptions on the conveyance are accurate. 

First, in order to verify ownership, a landman, title company or attorney are usually hired to research the ownership records of the property(ies) in question. It is the norm for the deed to have the gross property description, not necessarily each individual owner’s net ownership. So even if you have copies of deeds, it will likely require further research to verify net ownership. It is also common for the surface owner(s) and the mineral owner(s) to differ. Just because you own a house does not necessarily mean you own the minerals as well. It’s also common for there to be multiple owners of a property, especially after a generation or two. Sometimes an owner sells to someone outside of the family, or gets divorced, and you can have a range of related and unrelated owners of the same mineral property.

Once the conveyances are filed of record, the next steps are to make sure the county tax authorities update the records to match. They should also make sure any oil and gas companies that have an active lease on the properties are notified. In an intestate case, oil and gas companies may require additional documentation to prove ownership.

This can be quite a tedious and expensive process if there is not a plan in place along with the correct people designated to handle it. Too often individuals did not know about the mineral rights until they’ve been inherited and they have to start from scratch. Do your beneficiaries a favor and keep good records, have the right people to help, and have your estate plan in order.

What are the biggest challenges in mineral estate planning?

1. 1. Family Matters: Inheriting and keeping track of mineral rights is becoming increasingly complicated. For example, let’s say your grandfather divided mineral rights ownership among your family members, with each owning a specific percentage. While you may want to exclusively split your portion with your own children, others may hold a different view. Some may opt to sell their rights to outsiders, further fragmenting mineral rights.

• 2. Documenting what you own: Owning a real estate’s surface rights doesn’t automatically mean owning the mineral rights. This can be most challenging for your beneficiaries if they don’t know where to start. An important piece of the puzzle to prevent confusion for them would be outlining the plans for the mineral rights in your will in as much detail as can be provided. The more you’re able to explain and translate for their understanding, the more responsibly they can make decisions on ownership and the future of the rights and property.
• 3. Educating inheritors: When the mineral rights are transferred to your inheritors, some oil and gas companies will reach out and ask them to sign leases. Unfortunately, some of these enterprises can capitalize on your beneficiaries’ naivety or lack of regular valuation knowledge and offer exploitative rates.
• 4. Being taken advantage of: There is also the threat of predatory mineral buyers taking advantage of your mineral rights inheritors if they are unaware of their inheritance. Mineral buyers usually work with probate firms to research and target potential heirs of wealth who did not file a last will. Hunters sometimes demand that the beneficiaries agree to share a significant portion of the inheritance with them before disclosing the source of the inheritance.

How can you set up inheritors to avoid challenges?

Though the aforementioned are all major hurdles, you have a couple proven ways to mitigate these issues and set your inheritors up for lasting success:

1. Provide Clear Documentation for All Parties

Inheriting rights to minerals, oil or natural gas could produce a financial windfall for your beneficiaries. But maintaining this complex asset class can be a daunting task, especially for those unaccustomed to maximizing the value of mineral rights. Set up your inheritors now with clear, well-thought-out direction for them when the time comes to take on the mineral rights. Having your rights audited before inheriting them will prevent confusion and complicated decisions (and fees involved with auditing after inheriting) for beneficiaries and any legal and insurance teams involved down the road.

2. Utilize a Mineral Management Company 

You simply may not have the time or expertise to effectively manage mineral, oil and gas assets — nevermind being certain that you’re following best practices. A number of beneficiaries don’t even know the details of everything they inherit. If they do, they aren’t equipped with an accurate picture, or they’re not getting the true pay for it. For that reason, mineral asset owners often choose to work with a professional mineral management company who can oversee key tasks on their behalf, including conducting regular valuations to fill in the gap in the value of the rights versus the market price at any given moment. These regular appraisals will keep your inheritors up to date on any changes in value of the mineral rights as well as be crucial in making any decisions about them or the land the minerals are on. Utilizing a mineral manager provides your inheritors with a knowledgeable source of trustworthy guidance and information on a regular basis.

When mineral assets are part of an estate or trust, you need an experienced partner who understands more than just the market value. And that’s what we do. Valor understands the day-to-day operational challenges, the long-term investment environment, and the ins and outs of complex agreements and transactions. We safekeep your records with our proprietary mineral tech software (mineral.tech®, equipped with up-to-date security and revenue-optimization technology) to ensure that your rights are protected — and effectively managed and reported — making for a seamless, profitable transition to your inheritors.

Allowing an expert to work as your partner on your estate or trust takes the work and worry off of your and your inheritor’s hands while still safeguarding your asset rights. For your peace of mind in managing and securing your mineral rights, get in touch with one of our experts today.

Some people don’t live in the same place as their mineral assets. Here are best practices and tips for managing your minerals from a different location.

There are approximately 8-12 million mineral owners across the United States. Many of them not only live a distance from their assets, but have never even seen or set foot on the land where their minerals reside. So how exactly can they engage in confident, competent mineral asset management? For many, the answer lies in understanding what it means to own minerals from afar, as well as working with mineral management companies that can simplify the experience.

First, though, let’s examine some of the reasons people may not reside anywhere near their minerals. The most obvious way this can happen is through relocation. People move all the time for different reasons. They may therefore sever, or split, their surface property rights with the next buyer, but retain rights to whatever minerals exist within the land they sell.

Inheritance is another way that people become mineral owners. For example, you might live in California and inherit minerals in Texas. This happens frequently and can prompt a lot of stress on the part of the beneficiary who doesn’t know what to do next.

Finally, it’s important to note that some mineral buyers and investors actively seek out minerals regardless of location. They know that minerals are a worthy investment and care more about the geology and where drilling is hot at the moment.

Challenges When You’re Not Living Near Your Mineral Assets

It’s worth mentioning that even if you live in the same area as your minerals or are a surface owner of a property teeming with minerals, you can still have challenges. However, managing your minerals can get a bit stickier if you’re not close by. Perhaps one of the biggest concerns is staying up-to-date and compliant with local, state, and federal mineral rights laws and regulations.

Mineral rights laws and regulations can differ wildly from state to state. You could own the same type and amount of mineral in two states but wind up having vastly different considerations. For example, one jurisdiction may limit how many extraction operations are allowed in a particular region during a given timeframe. Another jurisdiction may have conservation-related statutes like Colorado, which establishes mine and well land-use rules.

All these legal guardrails can become confounding. However, they’re essential to know and follow. No mineral owner wants to run afoul of non-ownership or ownership-in-place theory interests. Still, it can be hard to know exactly what moves are allowable (and when they’re permissible, in some circumstances).

Another hindrance to being physically removed from your minerals is that you may misunderstand which land or assets you own. It’s hard to have a good feel for your minerals in the Permian Basin when you live in Chicago. This can be doubly confusing if you’re an inheritor since many places have complicated inheritor laws. Add this possibility to all the tax differences and you have a lot of room for error and frustration.

Valor’s Solution to Remote Minerals Management

The question remains: How can you effectively manage mineral assets and live elsewhere? At Valor, we’ve included several features and benefits into our service offerings that give remote mineral owners peace of mind.

1. Our team helps with everything, including leasing mineral rights.

The Valor team is composed of experts ready to handle all aspects of remote mineral ownership. These include in-house landmen, accounting professionals, land professionals, a Juris Doctor, and certified mineral managers. You can also tap into our collective knowledge to assist with common decisions, like leasing mineral rights.

When you lease to oil and gas companies, you want to get the best contract possible. We bring the expertise to advise you on obtaining strong terms; Valor maintains properties for years and currently manages minerals in 32 states. The better your lease, the more money you may make. And if you make money, we have developed automated processing for your 1099s to ensure their accuracy, too.

2. We offer a proprietary software tool. 

One of the biggest advantages Valor brings to the table is mineral.tech®, our proprietary mineral asset management software. This data-rich platform integrates accounting, land management, data analytics, and reporting for all of our clients. 

Mineral.tech® provides digital document management and includes a GIS mapping platform, full integration with public oil and gas data, and customized reporting that analyzes revenue and well data for your accounting and decision-making needs. You can see all of your assets mapped out and any activity on bordering land, including nearby production, drilling, and permitting activity. You no longer miss things that are happening on your non-producing assets. 

With mineral.tech, you have 24/7 portfolio visibility from all angles, with access from anywhere in the world to everything you need to manage your minerals no matter where they’re located. 

3. We handle the regulations associated with mineral management and ownership.

One of the most common issues that mineral owners run into is dormant mineral filings. We’ve worked hard to recover more than half a million dollars in suspended funds for clients with our most requested option — helping owners navigate dormant laws and regulations.

The laws surrounding mineral rights, mineral leasing, and everything in between are different from state to state. While it’s possible to go to court if necessary, most mineral owners want to do everything they can to not pay avoidable legal fees. Our up-to-date understanding of mineral ownership rights and responsibilities provides reliable protection for the more than 8.4 million gross acres and 450,000 net royalty acres we manage on behalf of our clients.

Whether you’re living close to your mineral investments or you’ve never even seen the property, you can trust Valor. Get in touch with us to get started on managing your mineral assets more effectively today.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Have you heard the phrase “Dresser Drawer Deed?”

Are you constantly having to dig through old boxes of paper to find your deeds?
Are you certain everything in your family history has been filed? One common mistake of mineral rights ownership is unfiled deeds, or “dresser drawer deeds.”

A dresser drawer deed is one that is established by the rightful property owner. However, rather than ensuring the deed is legitimate in the eyes of the law, the prepared deed is simply put away in a dresser drawer.

At Valor, we can digitize and properly store your deeds to prevent this from ever happening again.
Technically, the deed is not valid
A dresser drawer deed does not meet all the criteria to allow for an estate transfer. The minimum elements of an official deed are:

• ∙ The deed must be in writing.
• ∙ The grantor and grantee must be identified.
• ∙ The grantor must have “legal capacity” (of legal age, competent, etc.).
• ∙ The grantee must have the capacity to accept the transfer of the property.
• ∙ The property must be adequately described.
• ∙ There must be words of conveyance or transfer.
• ∙ The deed must be signed by the grantor.
• ∙ The deed must be delivered to the grantee or his agent.
• ∙ The deed must be accepted by the grantee.
• ∙ All of the elements must be met to have a valid deed. A dresser drawer deed oftentimes misses one key element- delivery. Retrieving a deed is not the same as delivering a deed.

By missing this step, family members can waste time and incur legal fees to rectify the situation.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

At Valor, our mission is to bring peace of mind to our current and prospective clients. 

Therefore, we want to share the most common ways we see people losing money on their mineral rights and some simple steps you can take to prevent this from happening. 

1. Know your mineral rights.

Ensure you are well versed on your mineral rights, data, well production and drilling activity. Oil and gas companies, landmen and mineral rights buyers can have a distinct advantage over you because they have more information and are experts in the industry. 

2. Watch out for common scams. 

People who want to cash in on the fact that you’re new to the world of mineral rights can “take a little off the top” left, right and sideways. 

Here are a few of the common ways we’ve seen mineral rights owners get taken advantage of or miss out on what they are owed: 

• Not knowing what people in the surrounding area are being paid for their oil leases.
• Having wells drilled on or across their land without knowing. 
• Not understanding what they are signing.
• Not being paid the correct amount for their share of the production.

3. Empower yourself with data

Data will set you free. Knowing what you have, how much you have, how it works, and having the most information possible (plus, understanding it all) is the best way to avoid getting scammed or missing out. 

We recommend finding a trusted advisor, such as Valor, whose entire business model is to help mineral and royalty owners.

4. Don’t be scared; be prepared.

If you’ve inherited or recently purchased mineral rights, that’s a reason to rejoice. However, if you feel you could fall victim to any of these pitfalls we have shared – seek expert guidance.

At Valor, we understand that managing mineral rights and associated royalties can be complex and fraught with potential pitfalls. Our team of experts specializes in navigating these complexities to help mineral owners avoid common mistakes that can significantly hinder the value of their assets. From ensuring accurate and comprehensive title searches to providing strategic guidance on oil and gas leasing and negotiations, Valor acts as a guardian for your assets. We meticulously monitor regulatory changes and market conditions to ensure compliance and capitalize on opportunities, enhancing both the security and profitability of your assets.

By partnering with Valor, mineral owners gain peace of mind and a proactive ally dedicated to maximizing their returns and protecting their interests.

Contact Valor Today

Contact us today if you need managing minerals support.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

It’s important to understand the history and current value of your mineral rights and ensure you are maximizing your opportunities as the rightful owner. Valor’s expert mineral managers are here to help.

Understanding Texas mineral rights value fluctuation?

Texas is the king of oil and gas in the United States. It produces more oil and gas historically than any other state, and it has done so for a very long time. For generations, mineral rights have been divided among heirs of oil-holding families in Texas. These owners now want to know what their rights are worth.

Location matters

There are differences in the value of Texas mineral rights depending on where they are located. Owning in the heart of the Midland Basin might be more valuable than owning mineral rights in Llano, Texas. It’s important to learn more about where your rights are located and how close they are to oil and gas development.

Not every operator is equal

Oil and gas operators vary, each one is different. Some operate better than others and provide more value to the owners of the minerals. Knowing who operates your property and how they work is beneficial in knowing the value of your minerals

Find a Trusted Professional

Finding a professional mineral management company is the best route to learning more about what you own and what it might be worth. A Certified Mineral Manager at Valor can help you better discover the value of what you own and provide revenue optimization for your mineral rights.

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Division Orders are arguably one of the most pertinent legal records for mineral royalty owners. In most cases, a single well will have multiple owners. Therefore, it is imperative to have an accurate and updated division of interest for producing wells.  

What is a Division Order?

A Division Order will include the owner’s decimal interest (net revenue interest (NRI)), type of interest  (ex: royalty, mineral or working interest), the producing property’s name (legal description and/or well name and number) and the owner’s name.  

Who Prepares & Distributes Division Orders?

The Division Order is sent from the operating company to the owners of an interest in the producing well. They are created once the title has been confirmed, a well has been drilled and production has begun. However, a Division Order is generally received by a mineral royalty owner through the mail,  often months after well completion. Therefore, you should not be expecting a Division Order on a well that is not yet complete.  

What Do I Do When I Receive My Division Order?

Once a mineral owner receives a Division Order, they must review it, sign it, and send it back to the operating company. It is vital that the mineral royalty owner review it closely and ensure all information is accurate. Do not sign and return the Division Order unless you are confident it is accurate, and you are satisfied with all information outlined. If information is not accurate, you must contact the company that issued the Division Order. We recommend making a copy of all Division Orders you receive for your records and have a good digital document management system. It is also important to know that in most cases owners will not receive royalty payment until they have signed and returned a Division Order.  

What if I Haven’t Received My Division Order?

If you know you should have received a Division Order but have not, there are a few things you can do to help expedite and rectify the issue.  

• Contact your Operator (this information can often be found online) 

• Contact the Purchaser of the oil and natural gas  

• Contact a Mineral Management company or other professional 

When you contact the Operator, ask to speak to a division order analyst. Division Order Analysts are responsible for maintaining the company’s pay decks and ensuring that the ownership information is correctly maintained in the operator’s system. Most operators have an email on their website for owner relations, start by sending an email to this email address and including your name, address, and owner number. Provide them any recorded documentation that you have from the appropriate county clerk where the properties are located. If you recently inherited the mineral rights, then provide them with the former owner’s name, address, and social security number along with any estate documents (probated will, letters testamentary, affidavit of heirship). Making sure that you provide the correct and full data to the operators will make the process easier and more efficient for them to transfer the royalty interests. If for some reason you are unable to reach the division order analyst after trying to contact them via phone and email, consider composing a letter and including all the information above and mailing it to them certified with the USPS.  

If you find yourself not able to keep up with your Division Orders or want to add another set of eyes to review all information, Valor is here to help.