oil-and-gas-royalties

American States that Earn the Most Oil and Gas Royalties

In the United States, landowners have the ability to earn money from the resources below their property. If you own the subsurface below your land, then oil and gas companies may be interested in leasing or buying your mineral rights.

Of course, not every plot in America is going to make you rich. The values of oil and gas royalties vary greatly across the country. Above all, the size of your oil and gas royalty checks will depend on the size of your lot, your percentage share, and the amount of resources that are extracted and sold in a defined timeline.

Here are the American states with the highest potential to earn oil and gas royalties:

Texas

Everything is bigger in Texas, including their oil production. Texas produces, on average, over 2 billion more barrels of oil per day than any other U.S. State. And guess what, Texas also leads the country in natural gas production. All in all, the Lone Star State has the most opportunities to earn oil and gas royalties.

Pennsylvania

This may surprise some people, but the Keystone State is actually the 2nd largest producer of natural gas in the United States. Titusville, Pennsylvania is famous as the location for the first ever successful oil drilling on U.S. soil. However, since then, the state’s oil production has been overshadowed by many states to the West.

North Dakota

Besides Texas (and occasionally New Mexico), the only other state in the country that typically produces over a million barrels of oil per day is North Dakota. The Bakken formation in North Dakota’s western plains produces the majority of the state’s oil. In terms of natural gas production, North Dakota ranks 10th in the country.

Wyoming

If you were to look at each state’s total energy production (gas and oil combined), Wyoming ranks number three overall. This is impressive because Wyoming typically ranks between the fifth and tenth annual production of crude oil or natural gas alone. Overall, the state has a consistent amount of opportunities to earn oil or gas royalties.

Oklahoma

Lastly, we must mention the Sooner State, Oklahoma. Oklahoma sits in the dead center of the country with ample oil and gas resources below the state’s surface. Consistently, Oklahoma ranks in both the top five for annual production of oil and natural gas. The state is also investing heavily in wind power and is slowly becoming an electricity powerhouse.

new-oil-world

Preparing for New Oil World

It’s clear COVID-19 is having a profound impact on the cornerstone industries of our economy.

Regardless of the industry they operate in, all firms will need to plan to anticipate the shape of recovery and prepare for the next normal. This is particularly complex for the energy industry. With global lockdowns cutting demand and social distancing measures set to impact ways of working for the foreseeable future, how should oil companies adapt their operations to protect and create jobs for the future?

For several years, it’s been widely accepted that technology is the way forward for oil and gas. Due to the pandemic, it is likely social distancing will become standard practice for years, meaning firms should invest in automation technologies now, to allow for improved remote working in the future.

Click here to read the full article.

Source: Energy Digital

oil and gas royalty deductions

Oil and Gas Royalty Deductions Guide for Tax Season

There are only a few better feelings than getting your oil and gas royalty check in the mail. Whether you have decided to lease your mineral rights or you have aided in an operation’s production, the extraction and sale of oil or gas earns you a nice bit of money each month.

Of course, all is fun and games until tax season. In this article, we will outline the most important things to know about oil and gas royalty deductions.

Depletion Allowances for Oil and Gas Royalties

Mineral rights are very valuable, that is until the resources have all been depleted. The IRS recognizes this and permits a depletion allowance on oil and gas royalty payments. Depletion allowances let property owners deduct the loss of value in the property’s subsurface, as well as any incurred expenses associated with owning the royalties.

Here, taxpayers can write off a portion of their income. Most commonly, people choose the standard 15% depletion deduction from the gross income. In other cases, heavily invested individuals can calculate the approximate remaining oil reserve and base their deduction on the amount extracted that tax year.

Royalty Deductions

Once your royalty checks start coming in, you may notice that there are some taxes that have been taken out of your payment. Although the amounts vary between states, most U.S. states take out a severance tax on the oil or gas production. This amount, as well as any other business taxes or fees associated with the production, can be deducted from your gross income.

Bonus Deductions

If you signed an oil and gas lease, then you may have received a nice upfront bonus payment. In the eyes of the IRS, this is considered ordinary income, in the rental property classification. Any bonus payment you receive, or any costs (like legal fees) associated with the lease negotiation, can be deducted on your Schedule E.

Shell

Shell Joins Other Oil Majors In Energy Transition Push

Oil supermajor Shell plans to announce by the end of the year a significant restructuring to reflect its net-zero emissions goal for 2050 and to align itself with a green recovery from the pandemic, a Shell source told Reuters on Tuesday.

Shell’s chief executive Ben van Beurden has told employees in an internal website video that there would be restructuring and job cuts, sources who saw the video told Reuters.

Shell’s official website has posted a video message from van Beurden, who says that “[S]ociety must remain focused on the longer-term challenge of climate change. Because it hasn’t gone away. It still needs urgent action. Shell has a big part to play.”

“Our current business plans will not get us to where we need to be, and we will have to change those plans over time. And, it won’t be easy, and of course there will be obstacles to overcome, but like many others, I believe that society now has a unique opportunity to accelerate towards a cleaner energy future,” the top executive said in the message.

Click here to read the full article.

Source: Oil Price

Image Credit: frankieleon/Flickr/

jpmorgan-oil-price

JP Morgan Predicts $100 Oil

It may sound far-fetched at a time when many are worrying if Brent could rise back to $50 a barrel, but at least one analyst believes the benchmark could not only recoup all that it lost in value since the start of the year but shoot up over $100 a barrel in the observable future.

“The reality is the chances of oil going toward $100 at this point are higher than three months ago,” JP Morgan’s head of oil and gas research for EMEA, Christyan Malek, said as quoted by CNN.

Click here to read the full article.

Source: Oil Price

oil gas pump for subsurface extraction

Subsurface Rights: What Exactly Do I Own?

So you’ve just bought some property, congratulations. Under the sale of a fee simple estate, it is common for most landowners in the United States to own both the surface and subsurface rights of their property. In this article, we are going to define subsurface rights and cover everything you need to know about what you own below your property.

Surface Rights vs. Subsurface Rights

Surface rights are extremely easy to identify and understand. A property’s surface rights entitle the owner for use of everything above the ground within the property boundaries. This includes structures like buildings and fences, as well as trees and water access rights. Subsurface rights, as the name suggests, refer to the ownership of the land below a property’s surface.

Are Subsurface Rights Real Property?

Subsurface rights are considered a real property, just like any other real estate asset. Subsurface rights can be owned independently or divided and shared between several parties. Most commonly, subsurface rights constitute ownership of mineral rights.

Mineral Rights

If you own your property’s mineral rights, then there are a few ways that you can utilize your asset. Mineral rights can be sold or leased in a split estate. Here, you can either sell your mineral rights to an interested party or lease your mineral rights to an oil and gas company.

Why are they Valuable?

As suggested above, there may be many people interested in purchasing or leasing your subsurface and mineral rights. This is because they present an opportunity for you to sell your asset in one lump sum or receive a portion of resource sales.

In the United States, subsurface rights are considered valuable for the precious minerals that can be extracted and sold. Most commonly in the United States, oil and natural gas are the most sought after subterranean resources.

selling mineral rights in Texas

Selling Mineral Rights in Texas: 5 Simple Steps to Take

Here in the Lone Star State, we know what we have is valuable. Texas is a great place to live and also has some of the world’s largest producing oil and gas fields spread across the state.

If you’ve got a special piece of this land that you’d like to sell for your financial gain, the property’s mineral rights can be very valuable. In this article, we will outline five simple steps to take when selling mineral rights in Texas.

1. Get Your Paperwork Ready

In order to sell mineral rights in Texas and any other state, you will need to prove that you own them. Try to locate any documents that legally describe your mineral rights property like fees, leases, and stubs. This is important because mineral rights transactions are not required to be published, and occasionally mineral rights records are lost.

2. Evaluate the Value of Your Mineral Rights

Next, seek out an industry expert to provide you with unbiased, honest information about your property. Get together any records of your property’s wells history in addition to GIS maps and data. This will give you a baseline for companies to bid upon.

3. Let the Offers Flood In

When you’re ready, you can begin to contact oil and gas companies or property managers to help you sell your mineral rights. Mineral rights in Texas can be extremely valuable, so there are many people ready to help you earn the best possible deal on your sale.

4. Determine the Best Deal

After contacting enough potential partners, carefully analyze the contracts and the subsequent negotiations. There really is no standard contract for selling mineral rights, so the value of your sale is determined by your property’s value, your negotiations, as well as current market prices.

Most importantly, you will want to try and receive a large lump sum for the sale of your mineral rights. Secondly, you may be able to later earn royalty interests on the land’s oil or gas production.

5. Sign the Paperwork and Celebrate

Once the documents are signed, the hard work is over. In oil and gas leases as well as mineral rights sales, the mineral rights owner rarely has to do much of anything at all. Instead, they are able to earn an income from selling valuable mineral rights.

gas flaring

Texas could tighten some natural gas flaring rules by fall

Texas as early as this fall could tighten some rules for the controversial practice of natural gas flaring, the head of the state’s regulatory commission said on Tuesday.

The practice of burning off unwanted natural gas produced alongside more profitable oil has become a top issue for both environmentalists and investors, who are focused on sustainability measures and are already frustrated by a decade of poor financial returns in oil and gas. Flaring has surged with U.S. oil output, but can worsen climate change by releasing carbon dioxide.

Recommendations from an industry panel, provided to state regulators at a meeting on Tuesday, included reducing to 90 from 180 the number of days producers can routinely burn unwanted gas without going to the Texas Railroad Commission, the state’s regulator, for a hearing.

Click here to read the full article.

Source: Reuters

oil-production

Oil settles higher as global production declines outweigh pandemic-related demand concerns

Oil futures gave up earlier losses to settle higher Monday, buoyed by declines in global crude production even as the potential for a fresh hit to energy demand climbed on the back of apparent global increases in new cases of coronavirus.

“Traders in general seem to see upside risk from lower production and downside risk from the virus impact on the economy, and high stocks of crude close to parity,” said James Williams, energy economist at WTRG Economics

Click here to read the full article.

Source: MarketWatch

mineral rights valuation

Are Mineral Rights Valuable?

Are mineral rights valuable? Well, yes and no. Below, we will answer this question by exploring the different kinds of mineral rights and mineral rights valuation.

The Short Answer

Yes. Mineral rights are valuable.

Owning mineral rights is just like owning land or any other property. Of course, mineral rights entitle you to all of the valuable resources that can be found within the plot’s subsurface. Because of this, mineral rights are both valuable as an asset, as well as a potential source of income from the extraction and sale of oil, gas, or other minerals.

The Long Answer

As outlined above, mineral rights valuation has two distinct ways of measuring. The first comes in the form of non-producing mineral rights. The second comes into play when an oil or gas company is able to buy or lease your mineral rights. Below, we will outline the key differences between producing mineral rights vs. non producing mineral rights.

Non-Producing Mineral Rights

You own non-producing mineral rights if there are currently no oil or gas companies extracting minerals from your property’s subsurface. For homeowners, mineral rights are common in deeds as a part of a fee simple estate.

In a fee simple estate, a person owns both the surface and subsurface (mineral) rights. Conversely, in a split estate, you may only own your surface rights while another individual or entity retains the mineral rights.

Non-producing mineral rights valuation can be really high. Then again, they can also not hold much value at all. Obviously, there is a huge difference in the mineral rights valuation of a 50 square foot yard in Dallas vs. 16 acres near existing oil fields.

Producing Mineral Rights

Producing mineral rights are inherently valuable because they produce a stream of income. If an oil company produces and sells resources from your land, then you are entitled to a percentage of the income.

The amount of money you earn will be based on your percentage mineral rights ownership share as well as the terms agreed between both parties. Typically, mineral rights leases for oil and gas companies agree to pay landowners monthly for the sale of the extracted minerals.