Wednesday, May 20, 2015
In oil and gas producing regions, I have observed an interesting thing about people and that is that they, invariably, will say "Oh, it'll be back," implying that oil prices will recover sooner than later. Oh, really? What about the collapse of 1986? By my account, it was about 17 years until the oil biz health improved dramatically. And 17 years is a very long time! Many a geologist, many an engineer, many a landman changed careers during that crash!
Oil fell a whopping 60% during the crash of 2014. What a disaster! Will it come back soon? Or do you find yourself asking "Should I sell mineral rights" now? I don't know! But take a look at this chart below.
The dark line is crude oil price, the blue line is an INVERSE U.S. Dollar. So, if the dollar strengthen, the line goes down. Notice the amazing correlation (inverse relationship) between crude oil and the dollar. Now, what is the dollar going to do over the next several years. At some point, many people will say that it will crash, that its value is not "real." I know one thing... it's almost impossible to predict! Some are saying that the rally during the spring of 2015 is over, that the dollar will now rise and oil will fall. Your guess is as good as mine regarding what crude oil prices will do long-term. And the relationship to the dollar is just one piece of the huge puzzle that is energy prices!
What does this inability to predict future prices mean to mineral owners? I get tons of inquiries about whether a mineral owner should sell mineral rights or not. Considering that often-asked question about selling mineral rights or not... it can be a very tough decision, with no easy answer, because we can't predict the future. But one thing is for sure -- cash money TODAY versus what might happen in the future can be a great move. If one needs or wants cash for whatever reason, and selling mineral rights can provide that cash, it can be a simple solution. I've sold before and I'm glad I did. I also have held mineral rights long-term. But, I might sell again. I am no spring chicken and cash money is tremendously appealing. We can't take it with us!
If you do have any interest in selling mineral rights or selling royalties, contact me. I have helped a LOT of people do that very thing, from small interests that sell for a few thousand dollars to large deals selling for over a million bucks. Good luck!
Wednesday, March 25, 2015
What Is Reasonable Term (Length) Of Oil & Gas Lease?
Mineral owners should be aware of how long some oil/gas companies will tie up your minerals via the terms of their lease. The lease primary term is the length of time the lease is in effect during which drilling operations must commence or one of three things will happen...
- The Lessee does commence drilling during the primary term and finishes the well. The Lessor would then collect royalties once production begins.
- The lease contract might have an option to renew for an additional period, extending the primary term.
- The lease will expire.
If your Lessee does drill and hits, the lease will be "held by production" -- "HBP." Hopefully, the Lessee will develop the remainder of your drilling unit in timely fashion. Unless you own minerals under a lot of land, you will not have any control over that. If you do own a lot of contiguous minerals (such as a farm or ranch), you might be able to negotiate continuous drilling operations provisions, which can ensure that additional wells are drilled within a certain time frame.
In most parts of the USA where there is active drilling, it is common to have the oil company offer to lease your land for a primary term of five years. Or maybe three years, plus an option for 2-3 years beyond that. So, the effect is a 5-6 year lease. You always prefer it to be as short a term as possible, but in most cases, five years is reasonable.
However, I have seen some leases where the Lessee is offering to lease for five years, plus a 5-year extension option. THIS IS TOO LONG -- DO NOT SIGN! Ten years is just too long to have your properties tied up.
If you ever get into a position to where you wish to sell mineral rights on your properties, an effective 10-year primary term is going to be very large negative. A mineral buyer is not going to like a 10-year term... that's a long time the Lessee can just sit there and do nothing. And if you never wish to sell mineral rights and just wait it out, ten years is a long time! If you sign that lease, the Lessee has the right to wait until over nine years has passed by before they even start planning to drill you a well. So, don't do it. Negotiate for a 5-year primary term only, with no option to extend.
Thursday, March 12, 2015
Sell Royalties In West Virginia (Sell Royalty Rights) / Sell Mineral Rights In West VirginiaIn West Virginia, like other states in the USA, mineral rights and royalty rights are not owned by the state under a landowner’s land (with a few exceptions); they are owned by the landowner or other individuals. In other countries, normally the sovereign state owns royalty rights, oil rights, gas rights and the right to enjoy mineral rights. Do you own mineral rights or royalty rights in West Virginia? Do you wish to sell mineral rights or sell royalties in West Virginia? We buy mineral rights, so, you can monetize these assets; we will pay a lump sum cash settlement to you. If you have been getting royalty checks from oil wells or gas wells, we can buy them regardless what West Virginia your mineral rights are in. We might choose to buy even if they are not producing royalties at this time. We also buy in other areas of West Virginia and other states but as far as West Virginia goes, we have a focus in the Marcellus shale play and the Utica shale play areas. If you wish to sell Marcellus shale mineral rights or wish to sell Utica shale mineral rights, the following is currently our focus area: - Sell Royalties Ohio County, West Virginia - Sell Royalty Rights Marshall County, West Virginia - Sell Hancock County, West Virginia Mineral Rights - Sell Gas Royalty Brooke County, West Virginia - Sell Ritchie County, West Virginia Mineral Rights - Sell Mineral Rights Doddridge County, West Virginia - Sell Gas Rights Harrison County, West Virginia - Sell Gas Royalties Wetzel County, West Virginia - Selling Gas Royalty Rights Tyler County, West Virginia Are you getting oil royalties or gas royalties from Wetzel County, WV? There are several oil companies or gas companies active, such as Statoil USA, EQT Production, Chesapeake Energy, Stone Energy, Trans Energy and Triad Hunter. For those wishing to sell mineral rights in Tyler County, WV, some of the above companies are active and we can add Antero Resources and Consol Gas. We buy royalties from those properties, too. In Harrison County, WV, it’s Antero, Statoil and Consol but also add Enervest, Dominion Transmission, XTO Energy, PDC Mountaineer and Hunt Marcellus to the mix. Active gas companies in Ritchie County, WV, Antero and EQT are the most active but also include Energy Corporation Of America. For Doddridge County, WV, gas companies include Jay-Bee Oil & Gas, Antero and EQT Production. In Marshall County, WV, sell mineral rights for properties operated by CNX Gas Company, Chesapeake Appalachia, Chevron Appalachia, Gastar Exploration, Noble Energy, Trans Energy and Stone Energy. If you wish to sell royalties from producing gas wells in Brooke County, West Virginia, we are interested; the primary operator is Chesapeake. For those looking for who buys mineral rights in Ohio County, WV, we do! The active operator is Chesapeake Appalachia. So, to recap, for those selling West Virginia mineral rights, we will buy properties operated by almost any oil company or gas company but the primary operators are: Chesapeake Appalachia, Statoil USA, EQT Production, Stone Energy, Trans Energy, Triad Hunter, Antero Resources, Consol Gas, Enervest, Dominion Transmission, XTO Energy, PDC Mountaineer, Hunt Marcellus, Energy Corporation Of America, Jay-Bee Oil & Gas, CNX Gas Company, Chevron Appalachia, Gastar Exploration and Noble Energy. There are other West Virginia counties where you can sell gas royalties, so, please contact us. Some parts of this region of West Virginia are in the Marcellus shale play and some have production from the Utica shale play. If you are interested in selling mineral rights or selling royalty rights (NPRI) in other West Virginia counties, please contact us. (If you wish to sell non-participating royalty rights – NPRI – we can buy most of the time.) In general, you can sell Marcellus mineral rights or sell Utica shale mineral rights to us. For those interested in selling Pennsylvania mineral rights (or selling Pennsylvania gas rights), please contact us. Same goes for selling Ohio mineral rights or selling Ohio royalty rights. It's not hard, we will show you how to sell mineral rights.
”Should I sell my mineral rights?”Mineral owners sell royalties for many reasons. It could be that they want to buy something or wish to retire. Or maybe their interest is small and they are tired of dealing with the paperwork. Perhaps the well that was drilled is not a good one and there isn’t enough income to make a difference in their life, but a sale would bring a lump sum. All gas wells decline perpetually – they deplete. There is nothing we can do about this! Your royalty check will continue to go down over time. So, don’t depend on it staying up where it was in the early days of production; those are the best months. Also, there is a lot of risk inherent to the oil and gas business. Whatever selling mineral rights or selling royalty rights will bring today… there is no assurance that tomorrow will be the same! Obviously, “should I sell my mineral rights” question does not have a cut and dried answer! Crashing oil/gas prices are no fun. Or the world could see a new technology that takes over a large part of our energy needs. This is a certainty at some point, we just don’t know when. But when this occurs, the value of mineral rights will go down a lot. We are a mineral rights buyer, but why do we buy? We buy lots of deals and make our company work by owning a lot of acreage -- thousands of acres crossing several states. This allows us to spread risk. Believe me, every deal we buy does not make money. Some are losers. We just hope to have more winners than losers over time. And we constantly monitor trends, so, we can only hope that we are able to sell out ourselves someday when the oil and gas era is coming to an end. But, who knows, it might be awhile, we just don’t know. Owning producing mineral rights (you are getting royalty checks), means you can sell. We buy mineral rights anywhere in the USA if it’s in an oil or gas producing region. Ritchie County, Tyler County, Wetzel County, Harrison County and other parts of West Virginia is just where we are focusing for awhile. We have bought and own mineral rights and royalties in Louisiana, Texas, Colorado, Wyoming, North Dakota, Mississippi, Arkansas, Utah, Pennsylvania, New Mexico, Kansas and other states. If you wish to sell mineral rights or sell royalties, contact us. Selling oil rights or selling gas rights is not hard because we do all of the work once you provide your oil and gas lease information. We are not just a mineral buyer in West Virginia and not just a royalty buyer in West Virginia, you can sell royalty rights in many part of the USA. And for a good explanation of how to sell mineral rights, visit here.
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