Just like with any valuable asset, it’s import to organize and track your key documents. We are fortunate to live in an era where we can safely store important documents online and even share these documents when appropriate. MineralAnswers Vault provides members with secure online storage and organization of key documents. This can not only help you stay organized, but greatly assist future generations of owners.
First, let’s review 5 key documents a mineral owner should understand, organize, and securely store online.
- Deed: A deed is a signed legal instrument that confirms ownership of a property. This is commonly associated with transferring property from one owner to another. Deeds should be filed with the county in which the property is located to make sure oil companies know you own the mineral rights.
- Lease: An oil and gas lease is a legal contract that grants the right for an entity, usually an oil company, access to extract oil and gas from the subsurface. The mineral owner, or lessor, usually receives a lease bonus payment and a percentage of the future production value extracted by the operator, or lessee. The terms of the lease are very important for understanding how much you should be paid on wells and for determining if deductions can be applied by the oil company for things like gathering and marketing the oil and gas prior to selling them.
- Division Order: A division order is a document defining the proportional ownership for produced oil and gas. Usually a well will have multiple owners and the division order states the exact percentage that the oil company thinks you’re entitled to. It’s important to understand what this means and to do your best to confirm that the interest they think you own is what you actually own.
- Revenue Checks: Also known in the industry as check stubs. These are settlement statements provided by the producer (usually the operator or oil company) that details the revenue and expense components used to calculate the payment to parties with interest in a well or asset. These are usually sent monthly. Check stubs tend to follow the same pattern but the layout and terms can differ between operators. Many operators detail out the components of their check stubs online. Keeping your revenue checks organized can help you if you want to sell all or some of your minerals or if you want to do an audit.
- Will: A will provides instructions for the distribution of certain property owned by you at the time of your death. Having a will can help make sure the generational value of your mineral rights lives to benefit those you care about.
Organizing these essential documents is important for a lot of things. Here are a few examples:
Audit: If you ever wanted to get an audit to make sure you’re getting paid properly the auditor would need your lease terms and copies of your division order at the very least.
Estate Planning: For estate planning you’ll need all of these documents. The wills and deeds can help prove ownership for your heirs. Then having copies of the lease and check stubs would help them understand who to contact when they need to update their ownership information to continue receiving payments.
Taxes: If you’ve inherited or bought mineral rights, it’s important to save your revenue checks through the years. If you sell your minerals, establishing the value of minerals at the time of inheritance or purchase can save a lot of money.
Selling All or a Portion of Your Minerals: If your minerals are producing, usually a potential buyer will ask for copies of your last few check stubs to prove you have ownership, understand how much ownership, and to project future revenue. If you’re minerals are not producing then copies of your deed or lease can help verify your ownership.
Now it’s time to store your key documents in the MineralAnswers Vault. It’s highly recommended that you take advantage of this free feature. Your heirs will appreciate it in the future!