Should you Sell Mineral Rights?
Deciding whether to sell mineral rights or hold onto them can feel overwhelming.
You’ll find strong opinions on both sides of the argument. That’s because there’s no one-size-fits-all answer. The right decision depends entirely on your personal situation.
At US Mineral Exchange, we’ve helped thousands of mineral owners evaluate their options. This article lays out the pros and cons of each path so you can make an informed decision about what’s best for you and your family.
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Garrett Phelan
CEO of US Mineral Exchange with over 27 years of experience in the oil and gas industry. For nearly two decades, he has helped individuals, families, trusts, and non-profits navigate the complexities of mineral and royalty rights to achieve the highest sale prices.
Widely recognized as an industry expert, with an unwavering commitment to a client-first philosophy and extensive industry knowledge, he has been featured in Hart Energy, Yahoo Finance, and the Permian Basin Petroleum Association magazine.
The Case for Holding Onto Mineral Rights
If you don’t need immediate cash and are willing to wait 10 or more years, holding your mineral rights could be a good long-term strategy. Here’s why:
1. Leasing Opportunities
Mineral owners often receive lease bonus payments when leasing to oil and gas operators. Think of this like a rental fee. The operator doesn’t own your mineral rights—they just get the option to drill over a set time period (usually 3–5 years). If no drilling occurs, you can lease the property again and collect a new bonus.
2. Royalty Income
Once drilling begins and oil or gas is produced, you receive monthly royalty checks based on your share of the production. These checks can be a reliable source of income—at least initially. Over time, production usually declines and the checks shrink until they eventually stop altogether.
If you’re financially secure and can afford to wait, the potential for leasing income and royalties may justify holding onto your mineral rights.
The Case for Selling Mineral Rights
The common advice to “never sell mineral rights” is outdated and often misleading. While we may be biased as a mineral rights marketplace, these are legitimate reasons why many owners choose to sell:
1. Diversification
If your mineral rights make up more than 10% of your total net worth, you may be overexposed to risk. Mineral values can fluctuate wildly based on oil prices and regional demand. Selling allows you to diversify—investing in a total market ETF like VTSAX, for example, can reduce risk while earning steady dividends.
2. Lack of Control
Unlike other assets, mineral rights give you zero control. You can’t choose when or if they’ll be leased or drilled. The operator makes all those decisions. With real estate or stocks, you can act. With minerals, you wait—and sometimes that wait never pays off.
3. Tax Efficiency
Royalty income is taxed as ordinary income, which could mean a hefty tax bill. However, selling mineral rights—especially inherited ones—may qualify for long-term capital gains treatment. This can significantly lower your tax burden. This isn’t even taking into account the time value of money. Our tax article provides a more in depth explanation to determine your basis in inherited mineral rights. Always consult a tax professional to evaluate your specific situation.
4. Timing
The leasing and drilling process often takes many years. If you don’t want to wait that long—or you’d rather not deal with the uncertainty—selling now may be the better option.
5. Risk
Owning mineral rights is a gamble. Some owners hold for decades with little to no income. Even after leasing, drilling may never occur. And if it does, production could be far less than expected.
6. Retirement Planning
Selling mineral rights can simplify your finances in retirement. You avoid annual taxes on royalty income, and you gain liquid cash for expenses or estate planning.
7. Immediate Financial Need
Many owners sell to meet urgent needs—medical expenses, home repairs, or job loss. In these cases, holding out for potential royalties makes little sense. Selling can provide financial relief when you need it most.
The Long-Term Outlook for Oil and Gas
Setting politics aside, the long-term demand for oil and gas is uncertain.
Right now, oil and gas remain essential, but that could change. Renewable energy sources—solar, wind, nuclear—are growing. If an affordable alternative becomes widespread, demand for oil and gas may drop significantly. That would lower the value of mineral rights.
You don’t need to believe in climate policy to see the trend. The shift is already underway. Holding mineral rights for 20 years might leave you with an asset worth far less than it is today.
Mineral owners should closely monitor developments in energy technology and market trends.
Your Personal Decision
At the end of the day, whether to sell mineral rights is a personal decision.
You need to weigh your financial goals, risk tolerance, and life circumstances. Don’t let outdated advice make the decision for you. Take time to consider all options and choose what’s best for you and your family.
Contact US Mineral Exchange:
Have questions about your mineral rights? We’re here to help!
We speak with mineral owners every day and would be happy to walk you through your options. Fill out the form below and our friendly team will respond promptly.
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Common Questions
The more information you can provide about your property the better! We can give you a better idea about the value of selling mineral rights if you provide more information. The most important thing we need is for you to answer the questions and provide your state and county.
If you have the required documents to list, providing those is extremely helpful!
Absolutely not! When you inquire at US Mineral Exchange we will not be putting any pressure on you to sell. We will help answer any questions you have whether you are interested in selling or not.
At US Mineral Exchange, we take privacy very seriously. We will NEVER sell your information or use it without your consent. When you send us documentation or tell us about your property, that information does not go outside our company without your consent. Even when you list a property for sale on our website, we strictly control who has access to the information about your listing so that only legitimate buyers will be able to see property details.
Many mineral owners make the mistake of getting an offer and quickly selling. They then accept an offer far below market value because they felt pressure to sell. There is nearly always a better price available.
Imagine you were selling a home. Would you get the best price from a random person who walks up and makes you an offer? No way! Now imagine you list the home on the MLS where thousands of potential buyers know your house is for sale. The key to getting the best price is competition. Our guide to selling mineral rights explains everything.
The reason that so many mineral owners decide to sell mineral rights at US Mineral Exchange is access to our large network of mineral rights buyers. Our goal is to help you get top dollar for selling mineral rights by getting your property in front of a huge audience of buyers. This allows buyers to compete against one another which ensures you get fair market value for selling mineral rights.
There are absolutely no cost to list your property. When you locate a buyer by listing your property with us, we are paid a commission directly by the buyers closing agent. This means you never have any out of pocket expenses ever. We only get paid if we can get you a better price than the current offer you have in hand.
FREE GUIDE
Download our free mineral rights guide now! Learn more about your mineral rights.