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Should I auction my mineral rights?

According to Forbes, private landowners own most of the undeveloped minerals in the country. To get access to these minerals in Ohio, these companies must frequently bargain with landowners. This makes them highly efficient and effective at getting what they want, while landowners do not have this experience. This tips the scales in the companies’ favor.

In contrast, when it comes to publicly owned lands, there is no duping Uncle Sam out of his money. So instead, oil and gas companies often compete via auctions for the mineral rights. Auctions are an open and transparent process, which makes it more difficult for shady and underhanded tactics to thrive. It may also help to command a higher price for the value of the land.

Experts now recommend that landowners like you should consider the same route. While auctions rarely happen in private negotiations, it is not impossible. To justify this point of view, researchers studied auctions between 2005 and 2016 that took place in Texas. They found that there were many benefits available for private landowners. Perhaps chief among them was the fact that owners received 67% higher upfront payments for the rights to drill.

It is important to note, however, that landowners in Texas have special protections from the Lone Star State that Ohio residents may not. Even so, you may be able to trigger an auction by reaching out to other oil and gas companies about the natural resources on your land. While it may not work out to be an actual open and public auction, the multiple offers may be as good as an auction in the end.

This article provides information on using auctions to get higher income from selling mineral rights on your land. It should not be used as legal or commercial real estate advice.

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