# Sell Alabama Mineral Rights | 8% Privilege Tax, Nonresident Withholding | Berlin Royalties > Sell Alabama mineral rights and royalties. The 8 percent privilege tax, nonresident withholding under Ala. Code 40-18-86, the 3/16 protected royalty in forced integration, Smackover and Black Warrior coalbed methane. Source: https://www.berlinroyalties.com/alabama/ Publisher: Berlin Royalties, a veteran-owned oil and gas mineral and royalty buyer in Tulsa, Oklahoma, buying for its own account since 2014. Call or text 918-984-1645. License: free to quote and cite with attribution to Berlin Royalties and a link to the source URL. Where We Buy · Alabama ## Sell your Alabama mineral rights and royalties. Alabama levies the highest headline oil and gas production tax rate in the country, and it withholds income tax from a nonresident's sale proceeds at closing. The state takes a bite from the income and a bite on the way out, and both are worth understanding before you price anything. [Get a Free Valuation](https://www.berlinroyalties.com/free-valuation/) or call or text [918-984-1645](tel:9189841645) Alabama is a heavier tax state than most owners expect and a lighter forced-pooling state than most owners fear. It also has one of the cleanest county records systems in the country, which offsets a good deal of the friction. Berlin buys Alabama minerals and royalties, from Smackover oil in the southwest to Black Warrior coalbed methane in the west central counties, including the small gas interests other buyers will not look at. ## The tax picture, which is the heaviest in this group Alabama stacks **two** production taxes. **Oil and Gas Privilege Tax**, under Title 40, Chapter 20, Articles 1 and 1a, §§ 2 and 21: | Rate | Applies to | | **8%** | All other taxable production, the default || **6%** | Wells permitted July 1, 1988 or later; offshore wells over 200 Mcf or 25 bbl per day at depths under 8,000 feet || **4%** | Oil wells at or under 25 bbl/day; gas wells at or under 200 Mcf/day; offshore wells at or under 200 Mcf or 25 bbl/day at under 8,000 feet; incremental production from Board-approved enhanced and supplemental enhanced recovery projects || **3.65%** | Offshore production more than 8,000 feet below mean sea level | Reduced privilege rates of 3 and 2 percent exist under § 40-20-2(a)(8) for wells permitted between July 1, 1996 and July 1, 2002, for five years from first production, where the well would otherwise sit at 6 or 4 percent. **Oil and Gas Production Tax**, under Title 9, Chapter 17, §§ 25 to 35: **2 percent** of value at the point of production as the default, 1.66 percent for offshore beyond 8,000 feet, and 1 percent for wells permitted between July 1, 1996 and June 30, 2002 for five years from first production. Returns and payments are due on or before the 15th day of the second month following the month of production. **The 8 percent headline is the highest state production tax rate in the country.** Most Alabama production does not sit at 8 percent, because the rate steps down sharply for wells permitted after mid-1988 and for marginal wells, and a great deal of Alabama's producing inventory qualifies. But it is a real burden and it comes off before your royalty is calculated, which is why an Alabama interest and a Texas interest producing identical volumes do not pay identically. **Income tax** is graduated with a **top rate of 5.00 percent**, and some Alabama jurisdictions add local income taxes. ## The withholding at closing **Ala. Code § 40-18-86** applies to any sale or transfer of real property on or after August 1, 2008: - **3 percent** of the purchase price where the **seller is an individual** - **4 percent** where the seller is an **entity**, meaning a trust, partnership, corporation, LLC, LLP, or unincorporated organization - Alternatively, 3 or 4 percent **of the gain**, if the seller furnishes **Form NR-AF2**, the Affidavit of Seller's Gain. The buyer may rely on it absent knowledge that it is false - If the computed withholding exceeds net proceeds, **only net proceeds** need be withheld - It reaches **installment sales**, prorated across payments - Exemptions exist under § 40-18-86(d), including certain limited interests such as easements, rights of way, mortgages, and non-capital leases The forms are NR-AF1 for the Affidavit of Seller's Residence, NR-AF2 for Seller's Gain, NR-AF3 for a Certificate of Exemption, plus WNR and WNR-V. They were updated in September 2025. **One honest caveat.** The Department of Revenue's published guidance does not address a **pure mineral or royalty deed** expressly. It does reach standing timber, which is real property in Alabama, and by the same logic a mineral conveyance is a conveyance of Alabama real property. We plan for the withholding on every Alabama transaction and confirm treatment with the Department rather than assuming. Using **Form NR-AF2** to withhold on gain rather than on gross price is frequently the difference between a manageable holdback and a large one, particularly on an inherited interest with a stepped up basis. See [taxes when you sell mineral rights](https://www.berlinroyalties.com/mineral-rights-capital-gains-tax/). ## Post-production costs: Alabama has not decided We would rather tell you this plainly than fill the space with a rule that does not exist. **There is no reported Alabama appellate decision squarely allocating post production costs between lessor and lessee.** Alabama does not appear in the standard state-by-state alignments, in either the at-the-well column or the marketable-product column. What follows from that: - **Your lease language controls**, and it controls more completely here than in a state with a settled default - If you are negotiating a new Alabama lease, insist on an **express no deductions clause**. Do not rely on background law - If your check already shows deductions, the argument is a contract argument about your specific words, not a fight about which national rule Alabama follows Our [royalty statement decoder](https://www.berlinroyalties.com/royalty-statement-decoder/) explains the lines, and [royalty payment laws by state](https://www.berlinroyalties.com/royalty-payment-laws/) covers the payment deadlines. If your Alabama deductions are large enough to matter, that is a question for an Alabama oil and gas lawyer, and we will say so rather than pretending otherwise. ## Forced integration, and the deadline that runs off the spud Alabama pools under **Ala. Code § 9-17-13**, "Integration of interests," implemented through State Oil and Gas Board Rules **400-7-2-.01** and 400-1-13-.01. | | | | **Election period** | **30 days after commencement of actual drilling operations, or prior to reaching total depth, whichever is earlier** || **How you elect** | Pay your proportionate share of drilling and completion costs, or deliver a **notarized statement agreeing to pay** them || **Risk compensation fee** | **150%** of the tract's or interest's share of actual drilling and completion costs || **Protected royalty for unleased owners** | A **3/16ths part**, or the actual landowner royalty if less, treated as royalty and distributed **free of** development costs, operating costs, and any risk compensation fee lien || **If the operator cannot locate you** | Where the operator makes good faith efforts and cannot find a nonconsenting owner, **the risk compensation fee shall not be imposed** against that owner's interest | Two things stand out. **The trigger is the spud, not the order.** In Oklahoma, Kentucky, and Mississippi the clock starts when the order issues. In Alabama it starts when drilling begins, which can be months later and arrives without a second notice. Owners who file the order away after reading it are the ones who get caught. **The 3/16 floor is generous.** Arkansas and Kentucky protect an unleased nonconsenting owner at 1/8. Alabama protects at 3/16, free of costs and free of the risk fee lien. Combined with a 150 percent risk fee rather than 250 or 300 percent, Alabama is meaningfully gentler on a nonconsenting owner than most producing states. See the [rule of capture](https://www.berlinroyalties.com/rule-of-capture/) for why integration exists at all. ## Dormancy and unclaimed money We could not locate an Alabama dormant mineral act, and Alabama does not appear on multi-state dormant mineral survey tables. A corroborating signal: **Ala. Code § 24-9-8(e)**, the Land Bank Authority quiet title provision, expressly excepts from extinguishment "prior reservation or severance of all mineral, mining, oil, and gas rights within and underlying the property," along with severed rights, mineral leases, and agreements. That is Alabama's legislature carving minerals **out** of an extinguishment mechanism, which is consistent with there being no lapse statute, though it is not proof of one. If your Alabama interest has sat unused for decades, get an Alabama title attorney to confirm rather than relying on this page. Separately, Alabama's **unclaimed property law** has a detailed **mineral proceeds** regime covering bonuses, royalties, compensatory royalties, shut in royalties, minimum royalties, delay rentals, overriding royalties, extraction payments, and production payments. That specificity is good news for an heir, because suspended money was categorized rather than lost. See [unclaimed royalties](https://www.berlinroyalties.com/unclaimed-royalties/) and [small mineral interests](https://www.berlinroyalties.com/small-mineral-interests/). ## Records, and two Alabama quirks The regulator is the **State Oil and Gas Board of Alabama**, administered through the **Geological Survey of Alabama**. Free public tools include a well database, production lookup, an online map, and full text document search. Alabama also feeds the free **GWPC WellFinder** app. **Two quirks worth naming before you go looking:** - **Alabama keys its records on permit number, not API number.** Owners arriving from Texas or Oklahoma with an API number in hand routinely conclude the well does not exist. - **The production lookup is batch oriented.** You feed it permit numbers and it returns a spreadsheet. You cannot search it by owner or by lease name the way you can in Oklahoma. Land records are county by county, recorded with the **Judge of Probate** in each of 67 counties, and there is no statewide portal. See [well records by state](https://www.berlinroyalties.com/well-records/). ## Probate, and the one thing Alabama makes easy Alabama probate runs through the **Probate Court** of each county, and unusually the **same office, the Judge of Probate, holds both the probate records and the land records**. A mineral title chain and the estate file behind it sit in one building. After working Kentucky's 120 county clerks and Mississippi's chancery proceedings, that is a genuine convenience. Alabama has **no dower**, which was abolished, and **no state estate or inheritance tax**. Ancillary administration is available for a nonresident decedent who owned Alabama minerals. We cure title at our own cost as part of a purchase. See [inherited mineral rights](https://www.berlinroyalties.com/inherited-mineral-rights/) and [selling inherited minerals before probate is done](https://www.berlinroyalties.com/sell-inherited-minerals-probate/). ## What we do with an Alabama interest Black Warrior coalbed methane royalties are exactly the interests the industry has abandoned: small monthly checks from shallow gas wells drilled in the 1980s and 1990s, split across several generations. Most buyers have a minimum transaction size and simply do not respond. We run our own title, we have no minimum, and we pay all closing costs. Send a check stub, a deed, an integration order, or just the county and operator name. We will identify what you own, work out your withholding exposure before you commit to anything, tell you where your integration deadline actually falls, and value the interest with the reasoning shown. Free, and if keeping it is the right answer we will say so. ## Statutes and primary sources - Ala. Code § 40-18-86 (nonresident withholding); Forms NR-AF1, NR-AF2, NR-AF3, WNR, WNR-V - Ala. Code Title 40, Ch. 20, Arts. 1 and 1a, §§ 2 and 21, including § 40-20-2(a)(8) (privilege tax) - Ala. Code Title 9, Ch. 17, §§ 25 to 35 (production tax) - Ala. Code § 9-17-13; State Oil and Gas Board Rules 400-7-2-.01 and 400-1-13-.01 (forced integration) - Ala. Code § 24-9-8(e) (Land Bank quiet title, mineral carve-out) Last reviewed August 2026. Rates and forms change. Berlin Royalties is a mineral buyer and a landman shop in Tulsa, not a law firm or a tax advisor, and this page is general information rather than advice about your interest. Where Alabama law is unsettled, as it is on post production costs and as it may be on dormancy, we have said so rather than filling the gap. Formations & Plays ## What produces here ### Smackover Formation Upper Jurassic oil across the southwest counties, the same formation now driving the lithium brine story in south Arkansas. Long-lived conventional production and deep family ownership. ### Black Warrior Basin coalbed methane The coalbed gas fields of west central Alabama, among the first commercial CBM development in the country. Thousands of small, durable gas royalties, most of them ignored by every large buyer. ### Norphlet and deep Jurassic The deeper section beneath the Smackover, including the offshore and Mobile Bay gas that made Alabama a serious gas state. ### Chattanooga and Floyd shale Periodic unconventional interest across north Alabama, with acreage positions that come and go. Counties ## Where we're most active Choctaw Clarke Monroe Escambia Conecuh Tuscaloosa Jefferson Walker Fayette Pickens Baldwin Mobile Smackover oil runs through the southwest counties; Black Warrior coalbed methane runs through Tuscaloosa, Jefferson, Walker, and Fayette. We buy in all 67 counties. ### The Alabama mineral owner's guide Everything a Alabama owner needs in one place: who owns what under state law, how royalties must be paid and by when, what a buyer can and cannot deduct, the tax treatment of a sale, and the deadlines that quietly cost people their minerals. Free, and no sign-up. [Read the Alabama guide](https://www.berlinroyalties.com/guide/alabama/) Questions ## Straight answers for Alabama owners Will Alabama withhold money from my sale if I live out of state? Yes, for real property sales. Ala. Code 40-18-86, applicable to sales on or after August 1, 2008, requires withholding of 3 percent of the purchase price where the seller is an individual and 4 percent where the seller is an entity such as a trust, partnership, corporation, LLC, or LLP. As an alternative, the buyer may withhold 3 or 4 percent of the gain instead if the seller furnishes Form NR-AF2, the Affidavit of Seller's Gain, and the buyer may rely on it absent knowledge it is false. If the computed withholding exceeds net proceeds, only net proceeds need be withheld, and the rule applies to installment sales prorated across payments. One honest caveat: the Department of Revenue's guidance does not address a pure mineral or royalty deed expressly, though it does reach standing timber as real property. We plan for the withholding and confirm treatment with the Department on each transaction rather than guessing. Can post-production costs be deducted from my Alabama royalty? Alabama has not answered this, and we would rather say so than pick a side. There is no reported Alabama appellate decision squarely allocating post production costs between lessor and lessee, and Alabama does not appear in any of the standard state by state alignments of at the well versus marketable product states. What that means practically: your lease language controls, and it controls more completely in Alabama than in a state with settled default rules. An Alabama owner negotiating a new lease should insist on an express no deductions clause rather than relying on background law, because there is not much background law to rely on. How long do I have to respond to an Alabama forced integration order? This is the unusual one. Under Ala. Code 9-17-13 and State Oil and Gas Board Rule 400-7-2-.01, the election runs 30 days after commencement of actual drilling operations, or prior to reaching total depth, whichever is earlier. Note the trigger: it runs off the spud, not off the date of the order. That is different from Oklahoma, Kentucky, and Mississippi, where the clock starts with the order, and it means an Alabama owner can receive an order and then have the real deadline arrive months later without further notice. To elect, you either pay your proportionate share of drilling and completion costs or deliver a notarized statement agreeing to pay them. What happens if I do not elect? The risk compensation fee is 150 percent of the tract's or interest's share of actual drilling and completion costs, which is materially milder than Mississippi's 300 percent or Kentucky's 200 percent. And Alabama protects unleased owners better than most states: a 3/16ths part, or the actual landowner royalty if less, is treated as royalty and distributed free of development costs, operating costs, and any risk compensation fee lien. That 3/16 floor is notably more generous than the 1/8 floors used in Arkansas and Kentucky. There is also a fairness provision: if the operator makes good faith efforts and cannot locate a nonconsenting owner, the risk compensation fee shall not be imposed against that owner's interest. Does Alabama have a dormant mineral act? We could not find one, and we want to be precise about how confident that is. Alabama does not appear on multi-state dormant mineral survey tables and we located no Alabama lapse or abandonment statute for severed minerals. A corroborating signal from primary law: Ala. Code 24-9-8(e), the Land Bank Authority quiet title provision, expressly excepts from extinguishment any prior reservation or severance of mineral, mining, oil and gas rights, along with severed rights, mineral leases and agreements. That is the legislature carving minerals out of an extinguishment mechanism, which is consistent with there being no dormant mineral act, though it is not proof of one. If your Alabama interest has sat unused for decades, that is worth an Alabama title attorney's confirmation rather than our word. My Alabama royalty stopped years ago. Where did the money go? Very likely to Alabama unclaimed property. The state's unclaimed property law has an unusually detailed mineral proceeds regime covering bonuses, royalties, compensatory royalties, shut in royalties, minimum royalties, delay rentals, overriding royalties, extraction payments, and production payments. That specificity is good news for heirs, because it means the money was categorized rather than lost. We will tell you how to claim it and you keep it, whether or not you ever sell anything to us. ## Before you sign anything in Alabama The things owners here most often wish they had read first. All free, none of it gated. - [How mineral rights are valued](https://www.berlinroyalties.com/mineral-rights-value/), including the rule of thumb people quote and why it is usually wrong - [Selling mineral rights](https://www.berlinroyalties.com/sell-mineral-rights/) and [selling oil and gas royalties](https://www.berlinroyalties.com/sell-oil-and-gas-royalties/), with the real process and timeline - [The Pugh clause](https://www.berlinroyalties.com/pugh-clause/), the single most valuable sentence you can negotiate into a lease - [What a farm out is](https://www.berlinroyalties.com/farmout-agreements/), and why your operator suddenly changed - [The rule of capture](https://www.berlinroyalties.com/rule-of-capture/), and why a neighbor's well can legally drain your minerals - [Non-participating royalty interests](https://www.berlinroyalties.com/non-participating-royalty-interest/), if your deed carved one out - [Executive rights](https://www.berlinroyalties.com/executive-rights/), if somebody else signs the lease that binds your minerals - [Surface owner rights](https://www.berlinroyalties.com/surface-owner-rights/), if you own the ground and someone else owns what is under it - [Questions to ask a buyer](https://www.berlinroyalties.com/questions-to-ask/) and [what happens if you want out after signing](https://www.berlinroyalties.com/can-i-back-out-of-a-mineral-rights-sale/) Free Valuation ## Find out what your Alabama minerals are worth. Free, no obligation, and no pressure. We reply within one business day, usually faster. Prefer the phone? Call or text [918-984-1645](tel:9189841645) and you will get Stephen, the owner, not a call center. If we miss you, we text back the same day. Your Name Phone Number Email Address Where are your minerals located? OklahomaTexasNew MexicoLouisiana ArkansasKansasNorth DakotaMontana WyomingColoradoUtahCalifornia West VirginiaOhioPennsylvaniaKentucky MichiganMississippiAlabamaAlaska Sand/Gravel/AggregateOther / Not sure County (if known) Interest type Select an option Minerals and Royalties Working Interest Overriding Royalty Interest An Entity (LLC, Partnership, Trust) Not Sure Are you currently receiving royalty checks? Select an option Yes No I Used To But They Stopped Not Sure Have you received offers for your minerals before? Select an option Yes No What best describes your situation? Select an option I'm ready to sell now I'm exploring my options I'm just curious what they're worth Anything else? (optional) Get My Free Valuation No cost, no obligation, and we never share your information.