Many estate planning professionals have had clients with oil, gas, and mineral interests, and despite the frequency with which they may appear in the client’s portfolio, the professional and the client alike struggle to figure out what to do next with these unique and challenging assets. The client may have inherited it from a parent, a check arrives a few times a year, and no one has reviewed any deeds, looked into any of the details, division orders, or lease offers, etc. in decades. Oil & gas exists as real property, many times in a county the client has never visited, governed by contracts signed before the client was born, producing income that starts and stops for reasons no one explains, and it has the potential to create more headaches and lack of understanding than anything else in the estate.

None of that is a reason to avoid these assets and frankly, these assets need to be treated with as much respect as investable assets, residential/commercial real estate, or other types of specialty assets. The oil & gas interests held in a portfolio may be among the most valuable assets a client owns, and among the most difficult to steward. What follows are some of the major red lights a client may encounter when administering these assets. These items are commonly seen but quite often, their importance is miscalculated and they are “brushed under the rug,” when really, they should be tackled professionally prior to the issue compounding into something more difficult to deal with.

Red Light 1: The Decedent is still the owner of record.

Oil and gas interests pass by deed, not by beneficiary designation. When a mineral owner dies, the operator paying the royalties needs a recorded instrument in the county where the minerals are located before it will change the payee’s name on the check. In practice that means a recorded probate order, an affidavit of heirship, a trustee’s deed, or a personal representative’s deed, and it must be recorded in every county in which the interest lies. A deed covering six counties that was recorded in only one has cleared title in one county and none of the other five.

What is the result of a lack of decedent conveyance? The operator, uninformed of the death or conveyance keeps paying the deceased owner, the checks either go uncashed or they get deposited into an estate account that is later closed, and the payments eventually stop. Operators suspend revenue and eventually escheat funds to the state where the asset is located. Ownership itself has not changed, but generations later a grandchild is left proving title with minimal documentation, understanding, or facts. When you review a client’s holdings, make sure to properly convey the interests in every county, double-checking against your inventory of properties to ensure the interests are owned by the proper people or entity.

Red Light 2: Royalty Income is Suspended.

When an operator cannot confirm who to pay or where to send payment, it places the royalties in suspense. Revenue does not stop accruing; it stops being paid. Funds are suspended for a multitude of reasons, primarily including: an unrecorded conveyance, an address change, a division order that was never signed and returned, or a title defect found by the operator.

After a state-specific period of time, typically three to five years, the operator will escheat the funds to the state as unclaimed property where they can be recovered but only if someone knows how to look and goes through what can sometimes be a challenging process. For a trust department, executor, or legal counsel, allowing funds to go to suspense or escheatment through the estate settlement process can lead to fiduciary liability.

Red Light 3: Division Orders – did you verify the decimal interest?

Every royalty payment is calculated from a decimal interest that the operator derived from its own title work. That decimal is calculated by taking the net mineral acres owned, divided by the total size of the drilling unit, multiplied by the royalty rate agreed to in the lease. Any of the three can be wrong, and when the operator is wrong, it is rarely in the owner’s favor. A division order is the one and only way for the royalty owner to confirm that decimal. Either signing a division order without verification or simply not signing one at all is one of the biggest mistakes a royalty owner can make.

Red Light 4: Working Interests

Although most inherited interests are royalties or minerals, which carry income and limited liability, if any, there are also interests called working interests, which are quite different. The owner shares in the cost of drilling, operating, and eventually plugging the well, is subject to a legally binding joint operating agreement, and is billed for its share of expenses that can exceed the revenue. A working interest inside a trust or an estate is a liability that needs to be reviewed, and it should be identified, evaluated, and treated appropriately before it becomes a problem for beneficiaries. Working interests carry some tax benefits that can be quite significant and can have a place in one’s oil & gas portfolio but should be reviewed in detail with the appropriate professionals.

Red light 5: Be aware of the oil and gas clocks.

Ad Valorem Taxes. Several states, Texas among them, assess ad valorem taxes on producing mineral interests, and unpaid tax bills mailed to a decedent’s old address can end up in a tax sale. For example, I have been involved in attempting to salvage assets on behalf of clients after the fact when a West Virginia Sheriff’s office sells minerals due to unpaid taxes. have occurred. Conversely, some have enjoyed the success of acquiring minerals via tax sale at a discounted rate. Timely ad valorem payments will be lower and will not incur late fees. An annual review of assessments vs. production should occur.

Dormant Minerals. More than a dozen states have dormant mineral statutes. In those states, a severed mineral interest, meaning ownership of the minerals, is separate from that of the surface, which goes unused for a period of years, with no production, no lease, no recorded claim, can lapse to the surface owner. Being aware of the state of mineral ownership and filing a statement of claim in lieu of any oil & gas activity will reset the clock, not knowing the clock exists, or not acknowledging its presence, is the risk.

Red Light 6: Unsolicited offers to buy minerals and royalties.

The market to acquire minerals and royalties across the various oil & gas basins in the United States is substantial and expanding every day. Buyer types include individuals, family offices, college & university endowments, and funds backed by massive private equity commitments. Many of those buyers are very legitimate and fair entities. On many occasions, mineral owners will receive a barrage of unsolicited offers letters, phone calls, and automated voicemails offering to purchase the minerals for a certain amount of money, sometimes even with a check enclosed. Although some of the offers are fair, most initial offers are not. Moreover, most of those solicitations are by a group that is going to “flip” the asset for a profit.

Many of those solicitations are priced at a fraction of value, and nearly all are built on information the buyer has and the owner does not: permits filed on or near the acreage, a rig scheduled to move in, or a new horizontal well planned through the tract of ownership. If there is interest in selling, be aware and do the research. Engage a professional that has easy access to the same industry data to which the buyers have access so that you properly understand the pros and cons of making a sale.

Red Light 7: Valuations

Federal estate tax returns, gift tax returns, and step-up in cost basis all require a defensible value. The common approach is a multiple of trailing income, and although it may be the best route, there are additional variables that might be necessary to consider. A brand new well on the acreage that is in the midst of its steep initial decline cannot be assigned the same multiple as an older producing well whose production has flattened. An unleased tract in an active play may produce nothing today yet have significant future value based on its reserves.

A supportable valuation considers the producing wells and their decline, the undeveloped acreage and its likelihood of development, the lease terms, current commodity pricing and forecasted future pricing. Significant working interest ownership may warrant the engagement of a reservoir/petroleum engineer who would measure future reserves and create economic modeling.

Current Market Conditions

Since the onset of the conflict in Iran and the reduction in oil supply from Iran, oil prices have been markedly higher. West Texas Intermediate (WTI) oil prices spiked over $100/barrel and has since weakened back to the low $80s. Many would say that the commodity markets are not acting rationally and should be pricing oil much higher than in the low $80s. Prior to the conflict and closing of the Strait of Hormuz, oil prices were consistently soft in the low to mid $60s/barrel.[1]

The Energy Information Administration’s August outlook assumes those disruptions persist and forecasts WTI averaging in the low $80s for 2026 before falling to $65 in 2027 as inventories rebuild.[2] Of further note, on August 28^th, President Trump announced a deal giving the U.S. majority control of more than 65 billion barrels of Venezuelan oil reserves and, two days later, said the oil will be used to re-fill the Strategic Petroleum Reserve, which is of vital importance to long-term U.S. security.[3]

U.S. crude production is forecast at a record 13.8 million barrels per day this year and 14.2 million next year. The U.S. rig count stands at 588, up about fifty active rigs from a year ago, with the Permian Basin in West Texas and Eastern New Mexico being the prized oil basin in the United States.[4]

Natural gas achieved record production of near 111 billion cubic feet per day and a glut of storage heading into winter. This has Henry Hub price contracts trading under $3 per MMBtu, and the EIA has cut its 2026 average to $3.44. LNG exports are running 23% ahead of last year’s pace through the first half of 2026 and are the primary support for gas production in the Haynesville and Appalachia. Increasing demand from AI data centers is also attempting to alleviate the glut of natural gas here in the United States.[5]

Mineral and royalty transactions ran close to $12 billion in 2025, with private equity-backed institutional royalty funds leading the way and family offices emerging as a new class of buyers seeking yield and diversification without capital exposure. Clearly the professional market is active, disciplined, and well informed, hence understanding those unsolicited offers to acquire minerals is imperative.

Oil and gas interests demand significant attention on a frequent basis so that their benefits can be achieved and the risks mitigated. These assets were never designed to be understood by the people who inherit them. The seven red lights above are all identifiable from basic oil & gas documents: deeds, leases, division orders, and revenue statements. Industry professionals are available to assist with avoiding or managing through the red lights. They can assist with documentation, technology, valuations, industry activity, and ongoing management. The practical implication for planners and administrators is straightforward. Higher prices increase the value of oil & gas interests in every estate administered, which raises the importance of being cognizant of the red lights above.

Wes Turiano is a Partner and co-founder of CW Mineral Group, a full-service mineral asset management and acquisition firm based in Tulsa, Oklahoma. He can be reached at wes@cwmineralgroup.com.

[1] U.S. Energy Information Administration, Short-Term Energy Outlook, August 2026, Table 2 (WTI spot price averaged $65.40 per barrel in 2025 and $59.64 per barrel in the fourth quarter of 2025), https://www.eia.gov/outlooks/steo/archives/aug26.pdf. For daily prices, see U.S. Energy Information Administration, Cushing, OK WTI Spot Price FOB, https://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm.

[2] U.S. Energy Information Administration, Short-Term Energy Outlook, August 11, 2026, Table 2 (WTI spot price forecast to average $80.88 per barrel in 2026 and $65.39 per barrel in 2027), https://www.eia.gov/outlooks/steo/archives/aug26.pdf.

[3] Alex Harring, “Trump Announces Deal with Venezuela to Secure More than 65 Billion Barrels of Oil Reserves,” CNBC, August 28, 2026, https://www.cnbc.com/2026/08/28/trump-announces-deal-with-venezuela-to-secure-more-than-65-billion-barrels-of-oil-reserves.html; Ari Natter, “Trump Says Venezuelan Oil Will Be Used to Refill U.S. Strategic Petroleum Reserve,” Bloomberg, reprinted in World Oil, August 30, 2026, https://www.worldoil.com/news/2026/8/30/trump-says-venezuelan-oil-will-be-used-to-refill-u-s-strategic-petroleum-reserve/.

[4] U.S. Energy Information Administration, Short-Term Energy Outlook, August 2026, Tables 1 and 4a (U.S. crude oil production of 13.80 million barrels per day in 2026 and 14.15 million in 2027; Permian region production of 6.78 million barrels per day in 2026); Baker Hughes, North America Rotary Rig Count, week ending August 21, 2026 (588 rigs, up 50 from the prior year), https://rigcount.bakerhughes.com/.

[5] U.S. Energy Information Administration, Short-Term Energy Outlook, August 2026 (dry natural gas production of 111.2 Bcf/d in 2026; end-of-October storage forecast at a record 3,985 Bcf; 2026 Henry Hub forecast lowered to $3.44/MMBtu from $3.67; data centers driving electricity demand growth); U.S. Energy Information Administration, Natural Gas Monthly, as reported in “U.S. LNG Exports Rose 23% in the First Half of 2026 Because of Higher Capacity,” Hydrocarbon Processing, September 2026, https://hydrocarbonprocessing.com/news/2026/09/us-lng-exports-rose-23-in-the-first-half-of-2026-because-of-higher-capacity/; U.S. Energy Information Administration, Today in Energy, https://www.eia.gov/todayinenergy/detail.php?id=67166 (Haynesville production growth and proximity to Gulf Coast LNG export terminals).