“Never sell your mineral rights.”

You have probably heard this advice from your family time and time again. It’s often passed down from generation to generation to mineral heirs. 

But have you ever stopped to think about where the advice comes from in the first place? 

While the advice largely stems from the hope that oil and gas reserves will be worth more in the future than they are today, there’s a lot more to owning mineral rights—and leveraging them profitably—than your parents or grandparents may have ever shared. 

In this blog, we review three lesser-known considerations for mineral rights owners to inform stronger financial decisions as they pertain to your oil and gas interest. 

The Value of Your Mineral Rights Fluctuates Over Time

Your minerals are another asset on your balance sheet. Making any financial decisions pertaining to your mineral rights without thoroughly understanding their value puts you at a severe disadvantage. 

However, the value of mineral rights fluctuate due to a variety of factors: 

• Where your minerals are located
• Well productivity & the potential for future wells
• Acreage & parcel size
• Type of estate
• Lease history
• Current market conditions
• Commodity prices

This makes it difficult to determine the value of your mineral rights. 

And while the belief that minerals appreciate in value over time is founded in some truth, it’s never guaranteed that they will be worth more tomorrow than they are today. 

However, this doesn’t mean you should necessarily rush to sell your mineral rights. Being aware of the factors that influence mineral value is the first step to understanding their impact on your finances and help you make better financial decisions.  

Your Mineral Rights Inheritance Determines How They Are Taxed 

Whether you have already inherited mineral rights or you expect to inherit mineral rights in the future, how they come into your possession will influence how they are taxed. 

For instance, if mineral rights are inherited assets as part of a will or estate plan, then they will likely be subject to taxation, depending on the state in which you live and the corresponding estate tax requirements. Mineral ownership can also be passed down to heirs through a lease. 

Because lease terms and taxation laws vary greatly across companies and states, it’s worth consulting an estate planning attorney to consult on your individual inheritance. After all, understanding key ownership details and getting clear about ownership transfer details should be an early step when evaluating how mineral ownership factors into your financial situation.

Selling Isn’t The Only Ways to Tap into Your Minerals’ Value

Once you have a clear understanding of your mineral rights and how they factor into your financial picture, you can confidently decide what to do with them. 

But, selling your mineral interests aren’t your only options.

MLOC—or Mineral Line of Credit—bridges the gap between sitting on and selling mineral rights. Inspired by Home Equity Lines of Credit (HELOC), which allow property owners to tap into home equity to borrow funds, MLOC similarly unlocks equity tied up in your mineral interest without selling your rights. 

MLOC is not a loan. Rather, MLOC is a revolving line of credit secured by real assets and accessible via a card product. Interest rates typically fall somewhere in between that of a personal loan and a credit card, depending on a few factors including the amount of the line of credit. 

Because of the potentially lower interest rate than other, comparable line of credit products, MLOC could provide a means to consolidate debt and reduce interest. It also allows you to quickly turn historically illiquid assets into cash when you need to cover emergency costs, providing peace of mind that you have a financial safety net for whatever life throws at you. 

Apply for MLOC Today 

If you already collect monthly royalty checks for your minerals, then you could be eligible for MLOC.  There are no hidden monthly, annual, or origination fees, and no impact on your credit score when you apply. 

Learn more about MLOC and apply when you visit frontlands.com.