Owning rights to minerals, oil or natural gas assets provides the opportunity to generate income—possibly significant income for years to come. Because of the complexity of this asset class, protecting and maximizing its value and potential can be a full time job.
“Many individuals, families and institutions simply may not have the time or expertise to effectively manage mineral, oil and gas assets and be certain that they are following best practices,” says Sheri Anderson, Senior Vice President of Mineral Management for BOK Financial Corporation, the parent company of Bank of Albuquerque. For that reason, mineral asset owners often choose to work with a professional mineral manager who oversees key tasks on their behalf.
What does a mineral manager do?
Mineral managers work closely with owners to ensure that their assets are properly managed and their specific goals are met. The manager’s exact role is tailored to the unique needs of each owner and asset, but duties often include:
- Negotiating and evaluating potential leasing opportunities
- Reviewing existing agreements for term compliance
- Identifying opportunities to increase income
- Verifying, analyzing and updating ownership and property title(s)
- Complying with regulatory and reporting requirements
- Analyzing current and historic production trends
- Auditing the mineral property’s year-over-year and long-term performance
- Processing and tracking revenue and providing owners with a consolidated income stream and statements
- Administering property taxes
- Researching and recovering escheated and suspended funds
- Updating client on current industry activity
- Evaluating and overseeing drilling participation.
“On a high level, we’re here to help maximize the return on the client’s assets while helping mitigate any risks associated with it,” Anderson says.
Why hire a professional?
Some individuals, families, nonprofits and institutions may try to manage their own mineral assets, but that could carry some risk. Many mineral owners don’t feel comfortable negotiating with energy companies because of the legal and complex aspects and ramifications of the agreements. Moreover, owners may not have access to market research that allows them to negotiate competitive terms, whereas professional managers have databases allowing them to research comparative offers. Also, owners can hold interest in multiple wells paid by multiple companies. A mineral manager can greatly simplify the revenue-remittance process by providing a single income statement with detailed reports on well performance.
“It’s a very unique asset class with a lot of moving parts,” Anderson adds. “So having the expertise of a professional manager can prove to be invaluable.”
How do you find the right one?
Anderson recommends mineral owners do some research to look for a manager with experience managing the type of mineral assets they have. Questions may include:
- What is the scope of your assets under management?
- What is your geographic coverage?
- Can you provide a full list of services you offer?
- What are your asset and income reporting capabilities?
- What is your fee structure?
- How will we communicate and how often?
BOK Financial has one of the largest mineral management client bases in North America, serving more than 100,000 mineral properties and assets across the United States and Canada. The company’s long history of working with asset owners in the oil and gas industry means clients can be certain they are getting the vast knowledge of an experienced mineral manager.
“You want to be certain that you have a management provider in place who you enjoy working with and who is going to help you safeguard your assets,” Anderson says. “At Bank of Albuquerque, we have an experienced mineral management team whose sole focus is to provide our clients with a comprehensive, personalized experience.”