The White House has been speaking with U.S. oil and gas companies in recent days about helping to bring down rising fuel costs. Moreover, according to two sources familiar with the matter, this is due to the continuous oil price hike.

Energy costs are rising worldwide, in some cases leading to shortages in major economies like China and India. In the United States, the average retail cost of a gallon of gas is at a seven-year high. Moreover, winter fuel costs are expected to surge, according to the U.S. Energy Department. Oil-and-gas production remains below the nation’s peak reached in 2019.

The talks with energy companies touched on several issues, including prices, according to a third person familiar with the discussions. The administration has been in discussions with the oil industry over limiting methane emissions in recent months.

U.S. crude oil recently hit $80 a barrel for the first time in seven years, as the Organization of the Petroleum Exporting Countries and their allies known as OPEC+ restrict output. The White House has discussed rising prices with top OPEC producers in Saudi Arabia in recent weeks.

Click here to read the full article

Source: Reuters

If you have further questions about the topic of oil and gas companies updates, contact Ranger Land and Minerals here.

Oil and Gas Lease Provisions and Delay Rental payments

Are you a mineral rights owner? For sure, few moments are more exciting than the day that you sign a new oil and gas lease agreement. With the right operator, your mineral rights can earn long-term oil-gas royalties. This is from a successful exploration, drilling, and sales operation. So what happens when things don’t go as planned?

Thankfully, there are many oil & gas lease provisions that protect mineral rights owners and allow for them to plan for compensation, even in the event of an unsuccessful oil-gas lease. In this helpful guide, we will go into full detail about rentals and delay rental provisions to these leases. With this, we hope to help define these terms. We will showcase why they are important for mineral rights owners in the United States.

Oil and Gas Leasing

Before we begin, it is important to understand the basic structure of a mineral rights lease. This is in order to see the value of these lease provisions. Mineral rights entitle owners to the subsurface of a particular plot of land. This can be very valuable if holding property that contains crude oil, natural gas, coal, or other valuable resources.

In an oil and gas lease, a mineral rights operator (typically a large company) temporarily leases your mineral rights. With that that they can properly explore, extract, and sell the minerals. As compensation, you will then earn lease payments for oil and gas. This is as a direct percentage of the operations proceeds and profits.

Oil and Gas Lease Payments

Lease payments for oil and gas are made by operators to mineral rights owners. This will keep a lease valid. Take note though that this depends on how the provisions are laid out in the lease agreement. Rental payments may be made monthly, quarterly, biannually, or annually. It will keep the property owner compensated during periods in which production is absent or less than expected.

Lease Payments vs. Shut-in Royalties

Are you familiar with oil and gas glossary terms? Then you may be wondering if there is a difference between lease payments and shut-in royalties. The two are very similar and often paid at the same time. On the other hand, they actually do represent two entirely different lease provisions and transactions.

Here, the key difference to understand between rental payments and shut-in royalties is the terms of the lease. Shut-in wells often happen when unexpected problems or considerations arise. This is usually when there are still plans to operate the well in the future.

Lease payments, on the other hand, are paid when there is an indefinite shutdown of a well. Full shutdowns represent an end to profits and well production. However, lease payments help ensure that mineral rights owners receive payment for their participation in the oil and gas lease.

Delay Rental Payments For Oil and Gas

Delay rental payments are similar to ordinary oil and gas rental payments, only differing by definition, timeline, and compensation. These rental payments for oil and gas are typically made annually. Done with the date occurring on the same date each year after the validation of a mineral rights contract.

Paid from the lessee to a lessor, delay rental payments represent easy and just compensation for oil and gas owners who have entered into an unfortunately non-producing agreement. If dealy rentals are not paid, the contract is often considered abandoned, which opens the doors for the owners to explore new oil & gas leases terms with other operators.

Delay Rental Clause

The drilling-delay rental clause is added to oil & gas leases provisions to protect both the mineral rights owner as well as the oil and gas operator. Delays may happen for both expected and unexpected reasons. However, rental and delay rental payments are to ensure that the original lease agreement can be applicable.

Without rental payments, mineral rights owners would be more inclined to find a better oil and gas operator. Usually those with more favorable lease terms and production timelines. With the delay rental clause, oil and gas operators have no requirement to drill. Usually during the primary terms of a lease with permission to operate along with their own, reasonable timelines.

What is the “Unless Clause?”

Unless clauses are put into place in oil & gas lease provisions to allow for the automatic termination of a non-honored lease. What happens if operators fail to pay proper rental or delay rental compensation? Then oil and gas owners have the permission to use the terms outlined in the clause to automatically terminate the lease. This was usually effective immediately. Here, unless clauses are a critical part of any lease agreement.

If you have further inquiries or questions about the oil and gas leases, feel free to reach out to us here.

When exploring the subsurface of the earth, oil, and natural gas surveyors are to be very specific. Specifically about exactly where the operations are happening. But there is more to the simple basic geographical features of any mineral operating site. It is also important to consider the land’s history and potential for production. This relates to the remaining resources below the earth. This informative article will outline the definitions for general maps, plat maps, and other considerations. This includes locating mineral rights holdings and operations.

What are Plat Maps?

Plat maps are specific, cadastral maps that outline the definite borders of a property area. Always under drawing to scale, plat maps are used all over the United States. This is to help define residential areas, corners, borders, vegetation areas, and private property jurisdictions. How is it useful in mineral rights? Plat maps are typically only helpful if the property owner controls both the surface area and subsurface rights. The scope is the specific physical space.

How do I get a copy of my local plat map?

Do you want to receive a copy of your property’s plat map? You must contact the local county office or operator of the most recent land survey. Oftentimes, a plat map can be provided by a county recorder. It may require a small fee for materials and labor too. Plat maps may be provided at the time of sale, alongside the property deed.

Is a plat map the same as a survey?

Plat map can be both the product of and an integral part of a broad land survey. However, they are technically not the same thing. Plat maps tend to cover a lot of ground. They are generally useable to showcase divisions and help settle property disputes. On the other hand, surveys are typically useable to explore and display more complex information. Basically, more than simple property boundaries.

What are General Maps?

General maps can refer to a wide range of photographs and visualizations. This helps provides information about a mineral rights location. There are many different types of documents that fall under the general map category. This includes interpreted seismic maps, oil and gas basin or field maps. Moreover, aerial photos are shot from above the land, well logs, and any other helpful information. The United States Energy Information Administration hosts many public resources.  Basically for viewing various oil, gas, and other mineral maps across the United States.

What are Interpreted Seismic Maps?

A seismic map with full interpretation is a type of hazard map. This is often under review before exploring a new or old mineral exploration area. Seismic maps are a necessary part of any mineral investigation, so as to review past, present, and future seismic considerations. In general, most interspersed seismic maps include information about previous local faults and earthquakes as they relate to immediate and adjacent land areas.

Oil Formation Structure and Thickness (isopach) Maps

In large oil basins below the surface of the earth, multiple maps are a requirement. This is to help outline natural resource reserves’ complete characteristics. For instance, Page 4 of the Marcellus Shale Play survey showcases a structure map, with a thickness map providing more information on the same area on the following page.

Here, the structure map shows the oil well distribution of the site. A display alongside general elevation lines below a large area. This covers multiple states in the American northeast. Once they identify the areas in the structure map, the calculation of the approximate reserves is under process using the information on the thickness map.

Together, the two maps are able to provide oil and gas operators with the information necessary to determine the most strategic and profitable points of resource extraction. Once the specific site has been determined, oftentimes a complete geological cross-section map is added to the portfolio to showcase the drilling from another angle.

What is a well log?

In oil and gas exploration, a well log is not a piece of a tree that has fallen down a water hole. Instead, a well log is the detailed record of drilling and exploration at any particular mineral well. Well logging is also known as borehole logging is very important to the ongoing efficiency, success, and safety of any mineral operation.

Well logs are not technically a map in the traditional sense. Long and historic “wirelines” often illustrate the information on display like a graph, rather than a simple list of what has happened.

Final Thoughts

While many of us will never have the full comprehension to explore mineral maps beyond simple plat maps and aerial photographs, there are many different data visualization methods that are critical to the oil and gas industry overall.

mineral right offset production

We cannot see most oil and gas reserves from the surface of the earth. However, there are many ways in which people can make educated decisions about where to search for resources. There are the tools and technologies of today. One of the most telling ways to estimate a mineral claim’s potential is to fully analyze the land. This is in the immediate vicinity of the plot in question. This is what this expanded glossary guide is all about. We will answer the whos, whats, wheres, and hows regarding mineral rights offset production. This also includes the operation and permitting of oil and gas.

What is Neighboring Offset Production in Oil and Gas?

In the mineral rights industry, neighboring plots of land are “offset areas”. Offset areas have separation on their individual property dimensions. These are most commonly have designation on the surface of the earth, divided among surface rights owners.

Offset production is the exact measure of the performance of a neighboring parcel of land. Production may be quantified for recent months. Usually given as a figure representing the land’s total production value. Then Over its complete time in active mineral rights contracts and productions.

What is an Offset Well?

Offset wells are used to learn information about individual drilling points. Points that are both on the same parcel of land as well as neighboring tracts. High-quality data received from offset wells help operators determine whether or not a site is financially feasible. For this reason, offset well data may not be shared among rival operations. On the other hand, providing a wealth of knowledge internally for partnerships and large organizations.

Why is Offset Production Important?

Offset production is the most telling sign of whether or not active mineral exploration is necessary. Proper planning and execution based on offset production help operators benchmark their progress. From there, they can plan operations both immediately and down the line. Production numbers are often on pair with seismic data. Then to other real figures to help paint a greater picture of offset activity.

What is an Offset Operator?

An offset operator may refer to any current, past, or future known operator of an offset well. Operators in this context can refer to both individuals and entities, legally represented as members of a production team. Operators are responsible for both exploring and reporting their progress. They are very much held accountable for the estimated and actual production of any given resource extraction.

How do Offset Drilling Permits Work?

As necessary in all drilling processes, a permit is a requirement for offset mineral extraction. Oftentimes, a successful well will likely lead to area intelligence. Therefore neighboring wells may be next in line for extraction and production.

In cases like this, operators need to file special offset drilling permits with the necessary personnel. Offset drilling sites may be located in areas where mineral rights owners are separate from previous operations. In cases like this, new mineral leases may become a requirement for an operation to expand to offset territory.

Offset Obligations and Requirements

Offset obligations are common for all mineral rights owners. Especially those selling their property or entering into a mineral rights lease agreement. Moreover, obligations and requirements are put into place to protect mineral rights owners. Usually from third-party drilling and extraction from neighboring operators in neighboring wells.

New technologies have made it possible to laterally and diagonally drill into subsurface reserves. That’s why offset obligations prevent a subterranean trespasser from profiting off of stolen resources. If requirements are not observed, penalties and fines will vary depending on the location and severity of the offense.

Pooling and Unitization of Offset Areas

In some instances, all parties can benefit from the pooling or unitization of the offset area. What if an oil reserve is currently under extraction from one surface well? Then, it may not be necessary to drill another well. Instead, financially and environmentally, it may be best to combine the land into one designated reserve. It will be under division among owners. Pooling and unitization can help property owners earn further royalty payments. Or another option is a one-time lump sum after a mineral rights sale.

Summary on Mineral Rights Offset Production

Successful oil and gas operations typically invite all of those involved to further explore. This involves the possibility of more extraction in neighboring wells and landmasses. It is true that offset areas can be under protection by requirements and obligations. On the other hand, neighboring owners are typically able to sell or lease their mineral rights. This usually happen when working with offset operators. Truly, illegal fracking is still a problem in some areas of the country. On the brighter side, offset exploration has enormous potential for those who do it legally.

If you have more questions about mineral rights, reach out to us here.

 

mineral ownership

In the United States of America, private citizens, governmental bodies, and private entities can all own mineral rights. This is not the case everywhere around the world. Americans are lucky enough to both own and potentially profit from mineral ownership.

In this complete glossary guide, we will define mineral ownership in today’s modern context before expanding on some of the other key terms to understand mineral rights.

What is Mineral Ownership?

For oil and gas companies, mineral ownership does not refer to your engagement ring or rock collection. Instead, mineral ownership in the context of mineral rights is the legal right to extract, use, and sell minerals. These are minerals that are below the surface of the earth.

Here, minerals exist naturally in the earth. Basically, owners are free to either leave them be or extract them to the surface. Mineral ownership is most relevant in energy-producing resources such as oil, gas, and coal. Additionally, precious metals such as silver and gold can also be very valuable to mineral owners.

What is a clear title for mineral rights?

A clear title for mineral rights is a legal guarantee. A guarantee that a single person or entity has the entitlement to full mineral ownership. Clear titles are undeniable as they are completely free of liens, levies from creditors, and evidence of any third-party ownership.

Whenever multiple parties claim ownership of an individual mineral rights property, then a clear title is the best evidence possible. Titles or deeds with ongoing and past judgments are not under consideration as clear titles for mineral rights.

What is a mineral deed?

As a mineral rights owner, a person, government, or organization will physically possess a mineral deed. It is much like the deed to a house or the title of a car. A mineral deed is one that is filled with local agencies. It is used to showcase the clear ownership of mineral rights on the property.

Oftentimes, a mineral deed may not exist for a property that has not been split between multiple owners. In cases like this, a fee simple estate deed is going to cover complete ownership. This includes both the land and the mineral rights of a property.

What does it mean to own a mineral interest?

A mineral interest ownership is a term that is sometimes useable in place of mineral rights ownership. Anyone that owns any part of a resource extraction operation will have a mineral interest in the extract. It also includes the use or sale of the minerals. For this reason, mineral interests are often confused with royalty interests. These are earned by companies and individuals that aid in the extraction process for their cut of profits.

Who owns the mineral rights to the property?

It depends on n fee simple estates or total property ownership scenarios. For example, the surface rights and the mineral rights of a property will share the same owner. How about the large, desolate oil fields of some of the United States plains? Surface rights and mineral rights are now often due to division between multiple owners in a split estate.

Legally, surface rights owners must adhere to the reasonable demand of mineral rights owners. This is in order to explore and produce valuable subsurface resources. Surface-right owners can receive incentive to sell the portion of the property. They benefit from the process with ongoing mineral royalties.

What happens if you don’t own mineral rights to your property?

Typically, nothing will happen if you don’t own mineral rights to your property. Although the subsurface of your property may be being traded or sold among changing owners unbeknownst to you. It is very unlikely that a split estate will require the input of the landowner unless drilling were to begin.

In cities and suburbs across the country, most landowners should not be concerned about this. Whether or not they own mineral rights to their property is not an issue.

Can you own mineral rights but not the land?

Yes. That is if you would like to retain your mineral rights ownership after the sale of land. It’s just that your efforts must be reflected in the contract. Legally, it is best to work with a mineral rights broker in case of any issues. However, the process of retaining mineral rights is very simple.

How do you keep mineral rights when selling the property?

Essentially, all that needs to be included in your contract is a declaration of your mineral rights retainment. So long as both you and the new buyer have agreed on and signed with these terms, then your mineral rights will not transfer with the property and will legally remain in your possession.

Just an additional tip, why not get a mineral rights broker? A mineral rights broker. These brokers spent significant money building out platforms to provide you with an estimate of mineral rights value. The valuations they provide are based on the reserve value of your mineral rights.

Additionally, mineral rights management is also helpful in the long run. Are you evaluating development opportunities or divestitures? Managing existing production or planning to protect and transfer your mineral rights to future generations? There are experts who can provide the insight you need to navigate this evolving industry. This is how beneficial mineral rights management is.

Conclusion

In many ways, mineral rights owners never really experience true mineral ownership. As the resources either sit below the earth or are extracted and sold off-site. It is technically possible to drill for oil and gold for our own personal consumption. Moreover, most mineral rights owners will enter into mineral lease agreements. This is to best receive compensation for their subterranean assets.

If you have further questions about mineral rights ownership, reach out to us here.

The oil tanker industry faces brighter prospects in the coming months with more crude sets to arrive on the international markets, according to the Nordic American Tankers.

In its second-quarter update, tanker operator Nordic American Tankers said that “Demand for oil is going up. OPEC is raising its output.”

“Current high oil, gas, and electricity prices, even long before the winter has arrived, is a sign of an energy chain in need for more. With an abundance of spare capacity of oil in the world, we believe it is just a question of time before even more oil will hit the world markets, and our tankers,” Nordic American Tankers said today.

While tanker owners and operators enjoyed rather good tanker rates in the first half of last year, rates have been down so far this year, as the OPEC+ group continued to withhold a large amount of crude from the markets.

Although the second quarter of 2021 has been challenging, “All around the world we see evidence of a growing demand for oil,” the tanker operator said.

In the long term, oil demand will still be a key pillar of global economy. According to Nordic American Tankers, which said that “The world will continue to need oil”. Moreover, they said, “It has still not come up with a realistic alternative to this versatile and valuable raw material.”

Click here to read the full article.

Source: Oil Price

If you have further questions, feel free to reach out to us here.

Mineral Interest vs. Royalty Interest

When entering into a mineral rights agreement, it is very important to understand the complex definitions. This includes many industry terms. What could be the result without a proper background in mineral interest terminology? Investors run the risk of exchanging an asset or participating in a contract far less valuable than the property itself. In this quick guide, we will define and compare royalty interest vs mineral interest, mineral vs royalty acres, and several other commonly used terms to clear up confusion and provide guidance for mineral rights investors.

What is a Mineral Interest?

A mineral interest is the absolute ownership of all minerals below the subsurface of a property. With rights to mine, exploit, or produce any and all resources. Mineral interests are also mineral rights or subsurface rights.

With mineral interests, property owners have the permission to execute conveyances and enter into agreements. This includes with third parties to explore, extract, or sell the minerals. With this, mineral interest owners can earn mineral royalties. This is usually from the sale of valuable resources such as oil and natural gas.

Mineral Interest vs Royalty Interest

Mineral interests are the real assets that can be under the ownership of individuals and entities. Royalty interests do not represent physical properties. Unlike mineral interests, royalty interests are the lease terms that outline a mineral rights owner’s share of production profits.

Before entering into a mineral rights lease, it is critical to understand the terms of the royalty interest outline. This is to evaluate the quality of the contract. It is also possible to earn royalty interests without owning mineral interests. Unlike mineral interests, royalty interests can be claimed. This is if a person or business is involved with the exploration or production of any valuable resources.

What is a Mineral Acre?

A mineral acre is the square measurement of any landmass that has minerals beneath the surface. Mineral interests are quantified in mineral acres, which can be measured as roughly 640 acres of ordinary land. Within a mineral acre, the land is divided into both net mineral acres and gross mineral acres.

Net Mineral Acres vs Gross Mineral Acres

A net mineral acre is equal to the exact amount of subsurface land that a mineral interest owner or oil and gas operator can exploit for the extraction and sale of the resources. In large oil fields and plots of land with multiple mineral rights owners, it is very rare for net mineral acres to be equal to gross mineral acres.

Gross mineral acres are the total number of mineral acres in any subsurface property discussion. Looking over a division of land, gross mineral acres are only equal to net mineral acres if one individual or entity owns all of the mineral rights. Net mineral acres may also be less than gross mineral acres. This is if a portion of the land has been protected, reserved, or previously exploited.

Net Mineral Acres vs Net Royalty Acres

Much like in the cases of interests, there are a few key differences when we compare mineral acres vs royalty acres. Net mineral acres (or NMA for short) represent real property, whereas net royalty acres (NRA) are terms in a mineral rights lease that outline cash flow.

In mineral rights leases? the average mineral royalty rate is roughly ⅛ of the sale of oil, gas, or another resource. With this, for every net mineral acre, one can expect about ⅛ of the gross mineral production to be equal to their net royalty acre.

Net Royalty Acre Calculation

As an example, for net royalty acre calculation, let’s say that you own 500 net mineral acres. Then you have entered into an oil and gas lease agreement with a full-service provider. First, take a look at your royalty interest rate as expressed on your contract. Next is to multiply it by 1/8 (or 0.125). In this example, we will use 10% as your royalty rate. Which when multiplied by 0.125 will equal 0.8. This would be your royalty interest rate.

Finally, how to calculate your net royalty acres?

Take your royalty interest rate (0.8) and multiply it by your net mineral acres (500) to equal 400. With 500 net mineral acres at a royalty rate of 10%, your net royalty acres would be 400.

Final Thoughts

This is what new investors and seasoned property owners alike are well aware of. Mineral rights terminology can be confusing and occasionally intentionally deceiving when practiced by an unreputable company.

Do you need help to navigate the unique differences of net mineral acres vs net royalty acres? How about mineral interests vs royalty interest? Learn more about your mineral lease agreement today. We strongly recommend working with a mineral rights broker or an oil and gas industry legal specialist.

If you have more inquiries, reach out to us here.

wellhead price

What’s the price of oil today? Well, that strongly depends on both where you are. Also at what stage along the resource supply chain you are on. In the realm of mineral rights, there are many different ways in which natural resources are quantified and sold. This includes such as oil, natural gas, and coal. For those with a passive or direct business interest in oil or gas production, we’ve developed this resource as a guide to wellhead price and some of today’s most commonly sought-after definitions.

What is a wellhead price?

The wellhead price of oil or gas is the exact value of the resource at the point of extraction. The “well-head” refers to the pinpointed location in which a well produces oil ready for sale. The term wellhead price can be used in place of both “field price” and “realized price,”. It is also occasionally expressed as the “price of oil at the well-head.”

Here, the most important thing to understand about the wellhead price is that no costs have been levied against the value. Wellhead pricing is the absolute highest valued resource cost along the supply chain as transportation and handling costs are not accounted for in this figure.

Why is the oil price on my royalty payment different from the wellhead price?

The oil and gas price as expressed on a royalty statement is almost always going to be lower. This is compared to the wellhead price. This is largely due to the fact that oil must be refined after it has been extracted from the earth. Knowing this, transportation costs ensue, which bring down the net price of the oil that has been extracted and sold.

As a mineral rights owner, you are entitled to a fixed percentage of the gross profits. This is from a successful oil and gas lease. Although transportation costs are deducted from the wellhead price, these expenses are absolutely necessary. This is to bring the product to market and therefore netted from the wellhead price.

Price Differentials in Oil and Gas Wellhead Price

Besides transportation, there are a few other factors that make up the price differentials. This is between the wellhead price and the actual price of an oil or gas production. Depending on the quality of the raw materials, there are extensive costs for adjusting the quality and energy content. This also includes adhering to local regulations.

Here, we can expand the definition of a wellhead price. This transpires at “an arms-length agreement” in the sense that all parties are acting in their own best interests. Wellhead prices are meant to represent fair and balanced values of resources. On the other hand, the actual price of any given resource extraction may be heavily influenced by existing business and supply chain relationships that could not be classified at arm’s length.

The First Purchase Price (FPP) of Oil

After the price differentials have been applied to the wellhead price of an oil production, the first purchase price (often abbreviated as FPP) is released by the seller. The first purchase price is measured in price per barrel, typically expressed as price per bbl, and is valued at the exact price at which oil is sold to the first buyer after entering the market.

The first purchase price of oil must be reported by the purchaser after completing a fair and honest arms-length transaction. Sales are typically expressed on a run ticket or another form of purchasing receipt. Deductions and premiums may be added on or adjusted if there are many mineral rights owners or extenuating circumstances.

What is the commodity price of oil?

The commodity price of oil is the value at which the price of oil is traded in markets throughout the world. Much like gold, silver, natural gas, and now water, oil is a commodity that is taken from producers and sold on the open market. Expressed as a real dollar amount, the commodity price of crude oil is sometimes referred to as black gold thanks to its centuries as a valuable resource.

Many people believe that the commodity price of a barrel of oil is the most important commodity in the world, as the resource is used in nearly every country in the world to varying extents. The commodity price of oil rises up and falls down all as a result of global supply and demand. Like in 2020 the commodity price of oil dropped dramatically after global demand was reduced as a result of the coronavirus pandemic.

If you have further questions about gas, oil, royalty payment, and more, feel free to contact us here.

oil and gas minerals royalties

When it comes to owning mineral rights, for many, it’s all about the royalties. No, we are not referring to the King and Queen. Nor talking about the compensation an actor receives from an appearance on a program or advertisement.

Instead, mineral royalties in the context of mining are the monthly payments that mineral owners receive. This is when natural resources undergo extraction and selling. In this article, we will explain everything you need to know about oil and gas royalties.

What are mineral royalties?

Mineral royalties are received by mineral rights owners. This is when an active oil or gas lease produces and brings resources to the market. Payments are from the producer and seller. Mineral royalties are generally receivable after forty-five to sixty days. Usually, after the resource is sold to the mineral rights owner.

The United States is one of the few continues in the world. Individuals and businesses can earn mineral royalties for privately sourced oil and gas.

What is an oil royalty check?

An oil royalty check is the actual, physical receipt of a royalty payment. Many modern operations utilize digital payments through automatic deposits. Mostly, it is still commonplace for gas and oil owners to receive physical royalty checks via mail. With this, companies are able to package gas and oil royalty checks. This includes a detail of breakdowns of payment calculation.

How are oil and gas royalty payments calculated?

Oil and gas royalty payments have three main factors when it comes to calculations.

First is the amount of the resource produced, terms of the lease, and current market value. In a mineral lease, ownership is defined as full or partial mineral rights to a parcel of land. From there, a percentage of the total monthly sales is defined. This is to represent the mineral rights owner share and oil and gas royalty payment amount.

Here is an example in simple terms.

An operation produces $10,000 worth of oil in March (based on market price and quantity sold). Then a mineral rights owner will receive a 10% stake in profits. In computation, a $1,000 mineral royalty payment that month. Of course, this approximate calculation is for presentation before mineral royalties taxes.

Are mineral royalties payable on gross or net?

Oil and gas royalties are almost always payable on net mineral sales, rather than the gross profit of the production.

What if there are many shareholders, investors, and interests? With that, large oil and gas operations must dish out many mineral royalty payments. This is before claiming a project’s gross profit.

How is the oil and gas royalty income taxed?

The IRS taxes mineral royalties as ordinary income. This depends on the exact dollar amount of the oil and gas royalty payment. Annually, mineral rights owners have a requirement to report active oil and gas royalties on their tax returns as income. Take note that they may also pay tax for severance and other local considerations. This is before the mineral royalty payments reach an owner’s pocket.

How often are oil and gas royalties paid?

Almost always, mineral royalties are payable on a monthly basis. Oil and gas payments are made along the ordinary accounting cycle of the producers. Generally, in the mail two months after the resources are sold. Natural gas royalties are commonly paid 3 months out. The oil royalty payment standard of 2 months.

There may be a minimum mineral royalty amount that must be reached before a payment is made. This is depending on your lease and location. If a production produces less than the threshold, there will be an amount rollover of the outstanding oil and gas royalty. Usually into the next month’s payment.

What is the average oil royalty payment?

The nationwide average oil royalty payment rate is about ⅛ of the sales or 12.5 percent. This percentage can be applicable to oil fields large and small. This has a huge range of expected oil royalty payments across the country.

Oil royalty percentages are completely negotiable as all mineral rights transactions. With this, longstanding landowners may be able to increase their earnings with royalty payments of up to ¼ of the resources sales.

How long on average do mineral royalties last?

Oil and gas royalties will last as long as the well does. This is as long as a mineral rights lease stays active and producing,

The average high-producing mineral deposit will yield for 20 to 30 years. Draining some oil wells are applicable optimal rates for production.

Basically, large oil wells are likely to last even longer. Of course, not all wells are constantly being drained at the fastest rates possible.

Although the terms are completely negotiable, most mineral royalties have a duration of 3, 5, and 10 years. Leases are renewable with updates on agreements and terms. Usually, if both parties still have interest after the completion of the initial term.

If you have more questions about oil and gas minerals, know more about it here.

legal-location

If you are buying property, then your deed will likely list your new asset’s legal location. The term “legal location” is not always useable in property leases and sales. Still, it is entirely necessary if you are entering into a mineral rights agreement.

In this article, we will define the term “legal location” in the context of mineral rights. After that, we will be detailing the components that make up a mineral property’s legal description.

What is a legal location?

What is does it mean in the land law of the United States? The legal location of a property means the exact boundaries of the purchasable asset. This definition is sufficient for surface properties. Still, it is not enough to define the legal location of a subterranean asset.

What is the legal location of a mining claim?

In mining law, legal location is much more than a property’s land area. Mineral rights extend into the subsurface of the earth. Additionally, the natural resource reserves generally extend beyond the boundaries of the property above. With all of this in mind, the legal location of a mining claim must take into consideration a lot. It includes all of the geographical, historical, and legal elements of a property.

Legal Description of the Property

The legal description of a property is exactly how the legal location of a mineral claim means on a property deed. The legal location of a mineral rights property may be conveyable with a variety of details. This depends on the location of the property specifically from which state. Legal descriptions are generally a requirement to contain full descriptions of a few key points. Examples are in heavy mineral-producing states like Texas, Oklahoma, and North Dakota,

Below, we detail some of the most common elements of the legal description of a mineral rights claim. Failure to fully understand the legal location of an asset may be critical in determining whether or not a purchased mineral property is as advertised.

Latitude and Longitude

First and foremost, the best way to define the location of a property anywhere in the world is the latitude and longitude. Not only is this helpful in crowded city streets, but it is also equally as important when considering oil reserves loathed in remote, desolate areas of the United States.

Property Boundaries

Once you know your property’s longitude and latitude, what’s next? It will then be very easy to identify it. Usually with the registration location of the proper parcel of land. This may be most easily located by looking up the land’s parcel tax ID or parcel number. This is the most important registration number to legally bind you to your new property.

If you cannot find the parcel number on your property deed, check your property tax bill if you have owned your land long enough to have received one of them. If it is a new property in question, be sure to verify with your local land office.

County & Abstract Number

A property’s ID number is first defined by its abstract number, which is unique in each of a state’s counties. The abstract number is assigned by the state’s land office and helps quickly identify property locations.

Survey Name

The survey name of a mineral rights property’s legal location refers to either the location’s block section or county. Surveys are generally named for the organizations that conduct the first full measurement of the land. Independent surveys may also be referenced in the property’s survey name.

Block Section, Name, and Number

The block section of a legal location is a smaller division within land surveys to help define each boundary. Blocks are sectioned into distinct names and numbers, some of which are highly specific decimal designations. In some states, the block number and the survey number are the same figures.

Alternate Name

As mineral rights can change hands between individual owners and large corporate entities the names are occasionally changed through history. If a parcel of land has had its legal name changed, then past names may be listed on property deeds as “alternates.” These may be required in some states to protest new property owners from misleading parcel identification.

How to Find A Property’s Legal Location

The legal location of a mineral rights property should be included in all negotiations, contracts, and deeds. Within each state, local land offices can be contacted for any questions about a mineral rights survey, block, or ID number. In most cases, it is very easy to find your property’s location if you know its county, township, and approximate location.

If you have further questions, feel free to reach out here.