how to find oil on your land

How to Find Oil on Your Land?

The United States of America is one of the few countries in the world that allows private citizens to claim valuable resources below their property. Whenever land is bought in a fee simple estate, the new owner is able to claim mineral rights.

For some, mineral rights, which are also known as subsurface rights, can be very valuable. That is, of course, if your land has valuable natural resources such as crude oil, natural gas, and more.

If you are so lucky to own a property that contains oil or natural gas below the surface, then it can be tough to know what to do or where to begin. To help answer some of the most common questions on the subject, we’ve put together this guide on how to find oil on your land and what to do afterward.

Hiring Professionals to Find Oil on Your Land

In some instances, investors will purchase land for the sole purpose of gaining ownership of a working or defunct oil well. Although mineral rights exchanges are not required to be made public, it is generally very easy to see a land parcel’s history if there have been previous oil or gas operations onsite.

If there is no oil or gas history on your property and you want to find oil on your land, then there are a few different actions you can take without sinking too much capital into the investigation. Most commonly, you will want to hire a professional, such as a geologist or geophysicist. Both experts will be able to use scientific methods to determine whether or not it is likely that there is oil or gas on your land.

Beyond this, if you are in a high-producing area, some oil and gas companies may be interested in performing the resource search for you and see if they can find oil on your land. If you enter into an oil or gas exploration lease, then you may not have to pay for a geologist, but rather let the extraction company handle it in exchange for overriding royalty interests.

What is a landman in oil and gas?

In the oil and gas industry, a landman is a person who acquires subsurface mineral rights in order to begin a drilling operation. A landman may not always be the direct owner of the land, but rather associated with a larger entity that works to explore, extract, and sell valuable minerals.

In the United States, a landman can be one of three certification levels. From most basic to most advanced, these are:

  • Registered Landman (RL)
  • Registered Professional Landman (RPL)
  • Certified Professional Landman (CPL)

Although a landman may specialize in one area of another, in general, duties are generally the same. A landman’s most common roles in mineral rights negotiations include:

  • Researching public and private records to determine ownership of mineral rights
  • Reducing title risks of mineral right ownership
  • Negotiating the sale or purchase of mineral rights
  • Determining ownership, managing, or combining mineral rights
  • Contracting surveyors and extraction teams for procurement

Learn more about what a landman is in oil and gas.

How does an Oil Well affect my Property Value?

An oil well can affect property value in many different ways. For example, let’s assume you already found oil on your land — an active oil well tied to the mineral rights of the property owner can lead to a steady stream of income each month in oil royalties. With this as part of the deal, active oil wells will increase a property value if the mineral rights are included.

Inversely, having an oil well may not always be a selling point for some buyers. Oil wells in close-knit or semi-residential areas can be seen as an eyesore, with neighbors not interested in watching the extraction process. Likewise, abandoned or “dried up” oil wells on a property may decrease the value of a property.

Of course, if there may be oil or gas on your property that has not yet been explored, then the value of the land may dramatically increase if natural resources are found in the subsurface. Selling the property, or simply the mineral rights can lead to a large payout for land with drilling potential.

Read more about how an oil well affects property value.

How Much Money Can You Make From an Oil Well?

As much as we would love to say that an oil well on your property is going to make you a millionaire, there are many contributing factors that determine how much money can be earned. For properties in the United States, oil well payouts are determined by:

  • Property Size
  • Property History
  • Estimated Number Size of Oil Reserves
  • Percentage of Mineral Rights Ownership
  • Royalty Percentage as Defined in the Lease Agreement
  • The Price of Oil
  • And the Volume of Oil Produced and Sold

So obviously, there is not going to be a “one-size-fits-all” solution to determine how much money you can make from an oil well. Instead, earnings are highly individualized, based on the property, well output, and nature of the contract.

In order to determine how much you can expect to make from your oil well, there are a few things that you can do. First, you can analyze the property history of your land or neighboring parcels that have records indicating well output and financial gain. Alternatively, you can work with an oil and gas broker to leverage your land with several companies. After all, you can only earn as much money from an oil well as your contract allows.

Learn more information about how to make money from an oil well.

How Long Does an Oil Well Last?

Of course, the expression “well runs dry,” means that an oil operation is not going to last forever. Instead, crude oil is a limited resource that can only be extracted until it is no longer available.

In the United States, most oil wells last between 20 and 40 years of significant production. Of course, this is an average lifespan of an oil well that is actively being tapped for the extraction and sale of crude oil. In reality, moderately rated extractions can allow an oil well to last much longer than a few decades.

After the operation has been deemed completed, the equipment of an oil well is removed and the surface land is restored back to its original form. Depending on the stage of its life, an oil well can be classified in one of five conditional categories. They are as follows:

  • Inactive
  • Suspended
  • Abandoned
  • Orphaned

For full definitions of each term, you can read more about how long an oil well lasts.

How Many Barrels of Oil Does a Well Produce?

Instead of asking how long an oil well lasts, determining how many barrels of oil it can produce is perhaps a better way to measure its lifespan. Unfortunately, like in many aspects of the industry, the number of barrels an oil well produces is highly individualized and largely dependent on the size and location of the reserve.

On average, most actively tapped oil wells will produce anywhere between 500 & 5,000 barrels of oil per day. Over a thirty-year lifespan, this has the implication of some oil well being able to produce millions of barrels of oil. This is largely unsurprising, as the state of Texas produces 3 billion barrels of oil per day among its estimated 150,000 oil wells.

Learn more about oil well production.

How Much Does an Average Natural Gas Well Produce?

Although crude oil is a bit easier to visualize, many people also wonder how much natural gas an average well can produce. Like oil wells, natural gas wells that are actively being drilled will typically last between 20 and 30 years.

Likewise, the production of a natural gas well is largely dependent on the reserve size and rate of extraction.

The largest natural gas wells in the country are known to produce nearly 3,000 billion cubic feet of natural gas. This is per year!

The exact numbers vary from year to year. Moreover, there are the top five natural gas-producing states in the US are largely consistent. They are as follows:

  1. Texas
  2. Pennsylvania
  3. Oklahoma
  4. Louisiana
  5. Ohio

Read more about average natural gas well production.

A Quick Guide to the Oil and Gas Laws of the United States

If there is oil or gas on your property, then it is a good idea to become familiar with it. This includes learning the basic oil and gas laws in the United States. There are many highly specific laws filled with painstaking industry jargon. Also, there are a few main laws that are critical to understanding. This includes:

  • Mineral rights can be claimed by private individuals, corporations, Indian tribes, or by local, state, or federal governments.
  • The mineral rights of a piece of land can be sold, bought, gifted, willed, or leased.  It is as if they are any other piece of property.
  • The General Mining Law in the United States allows individuals and companies to “locate” mining claims on public lands.

This is only scratching the surface of all of the mineral rights and oil and gas laws in the USA. For further information, you can learn more about oil and gas laws in the United States.