The Special Assets Team at Cumberland Trust, consisting of Dayton Hale, April Drennan and Natalicia Hosseinzadeh brings together their collective expertise in all matters of unique, illiquid and hard-to-value assets held in trust. This installment of the Trusted Ideas blog, written by Dayton Hale, focuses on oil, gas and mineral interests held in trust.
In previous blog posts, certain special asset holdings were detailed along with a discussion of Cumberland Trust’s unique approach to managing these assets. In addition to residential properties and closely held business interests, oil, gas and mineral interests are an ever-relevant asset class. Due to technological advances like horizontal drilling and fracking, vast deposits of oil and gas across the country are now capable of being produced in commercial quantities. Whether it’s decades-old coal production in West Virginia or newly discovered oil horizons in the Permian of West Texas, Cumberland Trust’s directed trustee platform allows for a “best of breed” management structure in order to maximize the value of trust-held assets.
Oil, gas and mineral interests are a great example of legacy assets. The adage of “never sell your minerals” has endured throughout generations. Due to the trans-generational nature of these assets, many families have experience in the natural resources industry and/or the requisite expertise to manage these legacy holdings within their own family unit. As a directed trustee, Cumberland Trust empowers trust beneficiaries to name an individual or a professional mineral manager as the party responsible for the management of those assets. For families who prefer the assistance of a professional mineral management service, Cumberland Trust has worked extensively with multiple professional vendors and can facilitate introductions. By having a dedicated mineral or oil and gas manager in place, industry and local expertise is available for lease negotiations, division order analysis, royalty payment audit, ad valorem tax payments, etc. Cumberland Trust’s administration and special assets teams work in tandem with the designated property managers to ensure that mineral interests are administered efficiently.
As Cumberland Trust’s national footprint continues to grow, minerals have become a growing part of its book of trust-held special assets. The directed trustee platform allows for an effective approach to managing these types of holdings and gives trust beneficiaries an active role in the management of these assets.