In the United States and in some parts of Canada, those who own mineral rights usually own the royalty rights to their proportionate share to the oil and gas production revenue from oil and gas wells. The owner of the executive right is the one who has the right to explore for oil and gas on the property or lease it to an oil company. In return, he will enjoy a royalty, a share of the production. The royalties are usually a minimum of one-eighth (1/8th) of the well's production, multiplied by his share of acreage within the production unit.
For as long as there has been oil and gas production in the USA and Canada, royalties have been bought and sold. One can readily sell royalties in any oil and gas producing region, it's just a matter of finding a willing and reputable buyer. The oil rights or gas rights value varies widely. If you wish to sell oil rights or sell gas rights, bear in mind that if the royalties are paying from a well that is a good producer, obviously, the royalties will be worth more than those from a poor producer. The value is calculated from the projected income stream from future production. The value is also dependent on whether or not the income is declining.
There are many reasons why owners choose to sell oil or gas royalties. Perhaps they wish to buy something or provide for children's education. Maybe the owner just wishes to enjoy life more or to enjoy retirement more with sure-thing cash settlement. If one keeps the royalties, it may take many years to achieve the same amount of cash income that a sale of royalties will produce. And, some owners sell because the royalty interest is small and the paperwork is burdensome. It just might not be worth the hassle of keeping it. A lot of owners find it complicated and just wish to simplify their life and leave it up to a buyer to monitor the production and revenue. Increasingly, older generations who own royalty rights are dying off and children and grandchildren inherit the royalties; the royalty interests are diluted by the number of heirs and many would just rather sell something they know nothing about.
The oil and gas business is daunting, complicated to the royalty owner, but selling royalty rights is not difficult with an experienced royalty buyer. A sale of royalty rights can be accomplished fairly quickly but it can't happen in a day or two. It does take a little bit of time but a good royalty buyer makes the process easy, as he will do most all of the work, making sure that the royalty interest is transferred properly with the county and also the oil and gas company which operates the oil or gas well. Whether you wish to sell oil rights or sell gas rights, you can enjoy a lump sum settlement payment for your royalties.
For more information about selling oil and gas rights, read this site about selling royalties or contact this blogger.
Sunday, June 16, 2013
Friday, June 7, 2013
What Is A Non-Participating Royalty Interest (NPRI)?
The oil and gas business is certainly a challenge! It's a very complex business. For mineral owners, it's quite daunting to understand mineral rights, especially, since many mineral rights owners inherited their rights and really do not know what they have. Daddy or Grandpa might have bought something 50 years ago, then passed and didn't really keep ideal records. This is quite common! So, say you found some papers and you know it has something to do with mineral rights. What, exactly, do you have?
Do you find a reference to a non-participating royalty interest? For short, it may be called NPRI. A non-participating royalty interest is the right to receive oil royalties or gas royalties, pure and simple. It does not include some rights that a mineral rights owner enjoys. Such as, the right to explore for oil and gas. (This is moot unless you are Bill Gates, as oil and gas wells cost a small fortune to drill.) More apropos, a mineral rights owner has the right to lease the lands to an oil and gas company (grant an oil & gas lease) and let the oil company (who has big bucks) drill and explore. And, if a mineral rights owner did, in fact, own the royalty rights, the oil or gas company will pay him royalty if a well hits. Lastly, a mineral owner enjoys the rights to a lease bonus (lease signing bonus) and annual rentals (rentals are uncommon these days). So, a non-participating royalty interest is just basically the right to receive oil checks or gas checks (royalties). Almost all sales of mineral rights these days are just that but in decades past, sometimes an NPRI was carved out of the mineral rights.
Perhaps you have discovered that you inherited an NPRI. Maybe some day you will be contacted by an oil company saying that they have drilled a well and they wish for you to ratify an oil & gas lease that the mineral rights owner has signed. The document is called just that -- ratification. This is quite common. Once you ratify and are put in "pay" status, you can then enjoy royalty checks when oil/gas production occurs. Hopefully, the oil or gas company will hit something good and you'll get regular checks. If for any reason you wish to sell these rights, it is possible to do so. Here is more info about the non-participating royalty interest (NPRI), or just contact me for help.
Do you find a reference to a non-participating royalty interest? For short, it may be called NPRI. A non-participating royalty interest is the right to receive oil royalties or gas royalties, pure and simple. It does not include some rights that a mineral rights owner enjoys. Such as, the right to explore for oil and gas. (This is moot unless you are Bill Gates, as oil and gas wells cost a small fortune to drill.) More apropos, a mineral rights owner has the right to lease the lands to an oil and gas company (grant an oil & gas lease) and let the oil company (who has big bucks) drill and explore. And, if a mineral rights owner did, in fact, own the royalty rights, the oil or gas company will pay him royalty if a well hits. Lastly, a mineral owner enjoys the rights to a lease bonus (lease signing bonus) and annual rentals (rentals are uncommon these days). So, a non-participating royalty interest is just basically the right to receive oil checks or gas checks (royalties). Almost all sales of mineral rights these days are just that but in decades past, sometimes an NPRI was carved out of the mineral rights.
Perhaps you have discovered that you inherited an NPRI. Maybe some day you will be contacted by an oil company saying that they have drilled a well and they wish for you to ratify an oil & gas lease that the mineral rights owner has signed. The document is called just that -- ratification. This is quite common. Once you ratify and are put in "pay" status, you can then enjoy royalty checks when oil/gas production occurs. Hopefully, the oil or gas company will hit something good and you'll get regular checks. If for any reason you wish to sell these rights, it is possible to do so. Here is more info about the non-participating royalty interest (NPRI), or just contact me for help.
Thursday, June 6, 2013
Oil & Gas Operators Deducting Too Many Fees
Oil and gas exploration entered a new era in 2008 with the announcement of the discovery of the Haynesville shale play in Louisiana (and later Texas). The Barnett shale, Fayetteville shale and other shale plays had seen some development before that but the Haynesville broke it wide open.
This post is about deductions from royalty checks to the mineral owners. Prior to 2008, in my opinion, all was pretty much well. Operators did not make many deductions to oil and gas royalty checks. We are primarily talking about deductions pertinent to natural gas, not crude oil or condensate. The problem for royalty owners has surfaced in the past few years. The two worst companies operating in the Haynesville shale which I have seen are Chesapeake and Samson. Wow, they are socking it to the royalty owners. Instead of a few percent, I've seen it as high as 33%. Say your check's gross amount due you is $1,000; they deduct up to $330 for fees. And often, exactly what these fees are is impossible to determine. This isn't right. Some operators don't even show deductions at all, they just pay the royalty owner a lower price for each unit of natural gas. Something should be done about this. And, in fact, something is being done about it in some cases, as numerous lawsuits have occurred. What a shame. The governing authorities should step in here and protect royalty owners. But, who knows if that will ever happen. And, in some states, a class action lawsuit, where a lot of mineral/royalty owners could band together in a class action, it just isn't possible due to the way the laws are in that state. I hope things will improve.
I have had people contact me wishing to sell their mineral and royalty rights because it's just not worth dealing with it due to excessive deductions and fees reducing their royalty check amount. These regular oil and gas checks sure come in handy for people but you sure hate to be "taken." I understand their thinking and regret that operators put people in this position. And as I said, this only started happening in the past few years. For anyone thinking along these lines (about selling royalties), here is more info: selling mineral rights.
This post is about deductions from royalty checks to the mineral owners. Prior to 2008, in my opinion, all was pretty much well. Operators did not make many deductions to oil and gas royalty checks. We are primarily talking about deductions pertinent to natural gas, not crude oil or condensate. The problem for royalty owners has surfaced in the past few years. The two worst companies operating in the Haynesville shale which I have seen are Chesapeake and Samson. Wow, they are socking it to the royalty owners. Instead of a few percent, I've seen it as high as 33%. Say your check's gross amount due you is $1,000; they deduct up to $330 for fees. And often, exactly what these fees are is impossible to determine. This isn't right. Some operators don't even show deductions at all, they just pay the royalty owner a lower price for each unit of natural gas. Something should be done about this. And, in fact, something is being done about it in some cases, as numerous lawsuits have occurred. What a shame. The governing authorities should step in here and protect royalty owners. But, who knows if that will ever happen. And, in some states, a class action lawsuit, where a lot of mineral/royalty owners could band together in a class action, it just isn't possible due to the way the laws are in that state. I hope things will improve.
I have had people contact me wishing to sell their mineral and royalty rights because it's just not worth dealing with it due to excessive deductions and fees reducing their royalty check amount. These regular oil and gas checks sure come in handy for people but you sure hate to be "taken." I understand their thinking and regret that operators put people in this position. And as I said, this only started happening in the past few years. For anyone thinking along these lines (about selling royalties), here is more info: selling mineral rights.
Friday, May 31, 2013
How much will my royalty check decline? (Oil royalty / gas royalty)
Mineral rights owners usually own the right to the royalty right -- royalties. There is a provision in an oil and gas lease for this. It's commonly a minimum of one-eighth of the well's production, multiplied times their share in the production unit. (In modern wells, they are usually pooled with neighboring parcels into a production unit. Average production unit size is 640 acres, but it can be larger, say 960 acres or 1,280 acres.
Let's take a hypothetical royalty owner who has sufficient acreage in a production unit such that when the well first comes in, it is paying him $1,000 per month. Nice! How long will it stay at $1,000/month? Impossible to say, it might be one month, three or four months, or more. Usually a month or two. (This also depends on how the operator is producing the well. They might keep the well production up for a few months using different choke sizes at the wellhead. Anyway, at some point, it will start to decline. In today's resource plays and shale plays such as the Bakken, Barnett, Haynesville, Eagle Ford, Tuscaloosa Marine Shale, Marceullus, Utica, Niobrara, Cline, etc., like the tight sands drilling of the past couple of decades, these reservoir rocks are very tight (dense) and they must be fracked to get the oil or gas out. The word "frack" is short for "hydraulic fracture" and this (along with horizontal drilling) is what makes modern oil and gas exploration tick. And since these shales or tight sands are not very permeable, the nature of the beast is that production drops off much more rapidly than in a conventional (say, permeable sandstone, limestone or dolomite) reservoir.
How fast? Generally these modern wells will drop 50-85% during the first year. Then, say, 35-50% the second year. It will flatten out some after that but it will always be decreasing over time. Bottom line is that 2-3 years later, one's royalty check is usually only about 5 to 10% of what it was in the beginning. So, plan accordingly and do not get used to the big checks for any oil or gas well, because they will NOT last! Enjoy it while you got it!
Here is a production chart from a well I looked at recently that is actually pretty good. Two years later, it's producing 20% of it's initial rate. That's good for these type wells! This is a Haynesville shale well.
WELL #1
This next Haynesville shale well exhibits a more normal production decline shape where it declines rapidly in year 1 and flattens out. Two years later, it is only producing a small fraction of its initial production rate.
WELL #2
We don't know how long these wells will produce because these new resource plays are pretty new. Operators say they'll produce for decades and I hope that's true but operators love to toot their horns because they are trying to please stockholders. We just don't know. I do know that I have looked at quite a few wells that dropped off like a rock and they will not last but a few years. There is no way they can continue much longer, as they are barely scraping a profit right now, and still declining. I am hoping that in the "sweet spots," where production is good, the wells will behave as operators predict and last for a long time once they start their flattened decline rate. Time will tell! Welcome to the oil patch, risk is everywhere! Including risks such as the reservoir rock fractures closing once the reservoir pressure is reduced to a certain point. If the fractures close, gas entry to the wellbore could largely shut down and it would be over. (They'd have to plug and abandon the well.) Scary! (Scary because we don't know!)
But, we also have the benefit of being in an amazing technological revolution, so, who knows what they will come up with twenty years from now!
As for one's particular royalty check income stream, if the income is sufficient, one can just hold what they got. But, if one ever gets to the point that he doesn't want to deal with the paperwork or deal with small checks and would just rather cash out and get a lump sum, or perhaps he needs money for whatever reason, an option is sell for a lump sum cash settlement. For info, here is a website for selling royalty rights.
Good luck, I hope they hit a gusher on your place and you get rich as Jed Clampett!
Let's take a hypothetical royalty owner who has sufficient acreage in a production unit such that when the well first comes in, it is paying him $1,000 per month. Nice! How long will it stay at $1,000/month? Impossible to say, it might be one month, three or four months, or more. Usually a month or two. (This also depends on how the operator is producing the well. They might keep the well production up for a few months using different choke sizes at the wellhead. Anyway, at some point, it will start to decline. In today's resource plays and shale plays such as the Bakken, Barnett, Haynesville, Eagle Ford, Tuscaloosa Marine Shale, Marceullus, Utica, Niobrara, Cline, etc., like the tight sands drilling of the past couple of decades, these reservoir rocks are very tight (dense) and they must be fracked to get the oil or gas out. The word "frack" is short for "hydraulic fracture" and this (along with horizontal drilling) is what makes modern oil and gas exploration tick. And since these shales or tight sands are not very permeable, the nature of the beast is that production drops off much more rapidly than in a conventional (say, permeable sandstone, limestone or dolomite) reservoir.
How fast? Generally these modern wells will drop 50-85% during the first year. Then, say, 35-50% the second year. It will flatten out some after that but it will always be decreasing over time. Bottom line is that 2-3 years later, one's royalty check is usually only about 5 to 10% of what it was in the beginning. So, plan accordingly and do not get used to the big checks for any oil or gas well, because they will NOT last! Enjoy it while you got it!
Here is a production chart from a well I looked at recently that is actually pretty good. Two years later, it's producing 20% of it's initial rate. That's good for these type wells! This is a Haynesville shale well.
WELL #1
This next Haynesville shale well exhibits a more normal production decline shape where it declines rapidly in year 1 and flattens out. Two years later, it is only producing a small fraction of its initial production rate.
WELL #2
We don't know how long these wells will produce because these new resource plays are pretty new. Operators say they'll produce for decades and I hope that's true but operators love to toot their horns because they are trying to please stockholders. We just don't know. I do know that I have looked at quite a few wells that dropped off like a rock and they will not last but a few years. There is no way they can continue much longer, as they are barely scraping a profit right now, and still declining. I am hoping that in the "sweet spots," where production is good, the wells will behave as operators predict and last for a long time once they start their flattened decline rate. Time will tell! Welcome to the oil patch, risk is everywhere! Including risks such as the reservoir rock fractures closing once the reservoir pressure is reduced to a certain point. If the fractures close, gas entry to the wellbore could largely shut down and it would be over. (They'd have to plug and abandon the well.) Scary! (Scary because we don't know!)
But, we also have the benefit of being in an amazing technological revolution, so, who knows what they will come up with twenty years from now!
As for one's particular royalty check income stream, if the income is sufficient, one can just hold what they got. But, if one ever gets to the point that he doesn't want to deal with the paperwork or deal with small checks and would just rather cash out and get a lump sum, or perhaps he needs money for whatever reason, an option is sell for a lump sum cash settlement. For info, here is a website for selling royalty rights.
Good luck, I hope they hit a gusher on your place and you get rich as Jed Clampett!
Saturday, May 25, 2013
Sell Royalty Or Sell Mineral Rights In Mississippi
Some mineral rights owners elect to sell their mineral rights or royalties and get a lump sum cash settlement. One can sell all or part of their minerals. For those interested in selling mineral rights in the Mississippi counties of Wilkinson County, Amite County or Pike County, and even minerals or royalties in West Feliciana Parish, East Feliciana Parish, St. Helena Parish or Tangipahoa Parish, Louisiana, see more info at this site. This area is part of the Tuscaloosa Marine Shale (TMS) oil and gas play. Some of the wells drilled have been poor, a couple show signs of being commercial, but it's too early to tell if this area will "dollar up" well for the oil companies. So, some owners choose to sell to pass along the risk and enjoy the cash. Only the owner can make the decision as to what is right for them at this time in their life. But, sure-thing cash money certainly has real value, the oil and gas business (and exploration) is fickle, indeed.
AREA OF INTEREST IN MISSISSIPPI: At this time, the focus area for a mineral rights sale is for lands in Wilkinson County, Amite County and Pike County, Mississippi. If you own minerals within a few miles of the Louisiana/Mississippi line, you may fall within the area. In Wilkinson County, near the towns of Pinckneyville, Donegal, Ashwood, Newtonia and Whitaker, Mississippi. In Amite County, near the towns of Capell, Olio or Gillsburg, Mississippi. In Pike County, near the town of Osyka, Mississippi. The area is not heavily populated, so, suffice say, within a handful of miles of the Louisiana border.
If you have producing mineral rights, meaning you are receiving TMS or other royalty checks, you can sell mineral rights for lands in Mississippi but also anywhere else in the USA. Visit the site mentioned above or go to Payday Minerals.
If you have land and minerals for sale in South Mississippi near the above areas, we might be interested. (Land and minerals near the Louisiana line in Wilkinson County, Amite County and Pike County.)
Visit the above site links or just call the number below.
AREA OF INTEREST IN MISSISSIPPI: At this time, the focus area for a mineral rights sale is for lands in Wilkinson County, Amite County and Pike County, Mississippi. If you own minerals within a few miles of the Louisiana/Mississippi line, you may fall within the area. In Wilkinson County, near the towns of Pinckneyville, Donegal, Ashwood, Newtonia and Whitaker, Mississippi. In Amite County, near the towns of Capell, Olio or Gillsburg, Mississippi. In Pike County, near the town of Osyka, Mississippi. The area is not heavily populated, so, suffice say, within a handful of miles of the Louisiana border.
If you have producing mineral rights, meaning you are receiving TMS or other royalty checks, you can sell mineral rights for lands in Mississippi but also anywhere else in the USA. Visit the site mentioned above or go to Payday Minerals.
If you have land and minerals for sale in South Mississippi near the above areas, we might be interested. (Land and minerals near the Louisiana line in Wilkinson County, Amite County and Pike County.)
Visit the above site links or just call the number below.
Saturday, October 13, 2012
Sell Mineral Rights In Tuscaloosa Shale Play
If you have any interest in selling all or part of your mineral rights and royalty rights, and own property in the following Louisiana parishes or Mississippi counties, contact this mineral rights buyer site -- Payday Minerals, LLC. They speculate in various parts of the USA, including Central Louisiana and South Mississippi.
Tuscaloosa shale play buy area:
Louisiana parishes -- West Feliciana parish, East Feliciana parish, St. Helena parish.
Mississippi counties -- Wilkinson county, Amite county.
The area may expand or contract at any time.
Tuesday, June 21, 2011
How to sell mineral rights in Red River Parish, Louisiana
Red River Parish, Louisiana is undergoing development of the Haynesville shale, an oil and gas formation from 11,000 to 13,000 feet subsurface. Many wells have been drilled over the past few years. There are some sweet spots in Red River Parish but there are also some bad spots. Roughly the eastern 25% has not turned out very well. But in other areas of the parish, decent to prolific production has been found. The production is dry natural gas; there is no oil produced. If oil were found in the Haynesville shale, it would help, as the price of crude oil relative to natural gas is much higher. Natural gas prices have been low for three years now.
By the way, persistent rumors that there is oil production below the Haynesville shale are just that. We have seen no verification of this. For now, that's all it is, a rumor. Rumors are common in the oilfield.
Those who own mineral rights and royalty rights in the Haynesville shale are likely subject to an oil and gas lease owned by Encana. There are some leases owned by Chesapeake, Petrohawk, Shell (SWEPI), Forest Oil and QEP Resources (Questar). Encana and Shell have a joint operating agreement in an area of mutual interest. Encana/Shell/SWEPI, by far, has more acreage in Red River parish than any other operator.
Some people want or need cash, for any number of reasons and selling mineral rights can bring a big cash payday. For many, it's the only asset they have that has a lot of value. And selling mineral rights (sell royalties) doesn't affect their land ownership, if they own the land. Plus, in Louisiana, a sale of mineral rights creates a servitude, and this servitude creates prescription. Which means that if drilling does not occur within ten years, the mineral rights revert to the person who owns the land, the landowner. So, if you sell mineral rights in Red River parish, they won't be gone forever. In other states, selling mineral rights means they are gone for good.
SELLING MINERAL RIGHTS IN RED RIVER PARISH LOUISIANA
Here are the steps to take if you are considering selling mineral rights in Red River Parish.
- Consider whether you should sell or not. (See Why Sell Mineral Rights.)
- If you decide to sell mineral rights or if you own only royalty rights, to sell royalty rights (sell royalties) in Red River parish, you need to gather some information. You'll need to know the section, township, range of your property, gross acres, net acres you own, which oil and gas company the mineral rights or royalty rights are leased to if an oil and gas lease exists, the date and term of the lease, the royalty percentage in the lease and also your property description, sometimes called the legal description.
- You need to make a deal with a mineral rights buyer in Red River parish who buys mineral rights and buys royalty rights. (Here is a mineral rights buyer.) Be prepared to furnish copies of documents if asked.
Sunday, June 19, 2011
New Shale Play: Tuscaloosa Shale
Louisiana has long been an oil and gas producing state, having had prolific production onshore for about 100 years. And offshore, Louisiana leads the nation in oil and gas production. All of these oil and gas reservoirs are what we call conventional reservoirs, meaning the oil and gas is produced from porous and permeable or fractured sandstone, limestone or dolomite.
In the past few years, a new type of reservoir has come to the forefront -- unconventional. Primarily, these are source rock shales that heretofore were thought to be that and only that, a source rock that fed the conventional sandstone, limestone and dolomite reservoirs. But around 1980, George Mitchell of Mitchell Energy became convinced that the Barnette shale around Fort Worth, Texas held potential. He began experimenting, drilling many wells, spending a fortune, and not having much success. But, over about 20 years, he finally was able to crack the code and the Barnette shale became the first large-scale shale play in the world. And production soared, due to two technological achievements -- horizontal drilling and hydraulic fracturing.
The Barnette shale became the largest producing field in the USA and held that title until 2011, when the Haynesville shale took over the top spot. This shale play covers much of northwest Louisiana and east Texas. Well over 1,000 wells have been drilled and completed in the Haynesville shale. (The Barnette shale has over 14,000 producing oil and gas wells as of January, 2011.) The Haynesville shale boundaries are still being defined to the south and southwest, and development drilling is in the early stages.
Louisiana mineral rights owners and royalty owners are fortunate in that there is a new shale play experiencing widespread oil and gas leasing. It's called the Tuscaloosa shale (Tuscaloosa Marine shale by some) and stretches all the way across Louisiana in the central part of the state. (See Tuscaloosa shale map.) The Tuscaloosa shale is only a theory at this point, as drilling over the years has proved to be non-commercial. Yes, oil and gas are in the Tuscaloosa shale rock but getting it out profitably has been a no-go thus far.
There are several companies active in the Tuscaloosa shale. Devon Energy, Goodrich Petroleum, Amelia Resources, Indigo Minerals and Denbury Energy all have lease positions in the play. At least four wells have been announced for 2011 drilling.
The Tuscaloosa shale is almost the same geological age as the Eagle Ford shale of south Texas. It is slightly younger, but close to being the same "stratigraphic equivalent." The Eagle Ford shale stretches over 400 miles eastward from the border with Mexico, across South Texas to perhaps Sabine county. Thus far, the best production ends at Gonzales and Dewitt counties, but there is more exploration going on the east, towards the Louisiana border.
From there, we cross into Louisiana at southern Sabine parish and this might be the beginning of the Tuscaloosa shale. (We don't know yet!) The potential play goes all the way to into Mississippi. So, if the Eagle Ford shale and Tuscaloosa shale turn out to be productive relatively continuously in this "fairway," it will be a huge field, dare say the largest in U.S. history.
The Eagle Ford shale contains both oil and gas. It is thought that the Tuscaloosa shale will provide the same. In the past 30 years, prolific natural gas production has been discovered downdip in south Louisiana. So, theory is, oil production can be had (with modern technology) updip from the natural gas. This modern technology includes horizontal drilling, coupled to hydraulic fracturing.
Hydraulic fracturing is undergoing attack by environmental groups, claiming that it pollutes fresh water acquifers, causes earthquakes, and all kinds of claims. Yet, over 1 million "fracs" have been performed over several decades, with not one documented case of these claims. So, don't believe everything you read. Yes, the process should be regulated (and already is) but the Feds should stay out of this. The individual states can perform oversight just fine.
If one is a mineral rights owner in the Tuscaloosa shale, it could be their lucky day. This won't be known for a few years, as it will take many wells to "prove it up." But, oil and gas lease bonuses can come in handy, and if they do drill a well in a unit containing the mineral owner's mineral rights and royalty rights, royalty checks can ensue. And, as it happens in every oil and gas play ever discovered, some choose to sell mineral rights. Very few people have assets that they can sell when they "get in a jam" or need cash for any number of reasons. Selling mineral rights can be a solution for some. Plus, if the play gets hot, mineral rights can bring a healthy sum, and some choose not to pass up a big "guaranteed" cash payday. (See why sell mineral rights for more info on selling royalty rights.)
The announced development of the Tuscaloosa shale will be exciting to watch in 2011 and beyond. Here's to success, for Louisiana mineral rights owners!
If you seek professional help with oil and gas leasing matters or a sale of mineral rights, here is a Tuscaloosa shale oil and gas consultant you can have represent you.
In the past few years, a new type of reservoir has come to the forefront -- unconventional. Primarily, these are source rock shales that heretofore were thought to be that and only that, a source rock that fed the conventional sandstone, limestone and dolomite reservoirs. But around 1980, George Mitchell of Mitchell Energy became convinced that the Barnette shale around Fort Worth, Texas held potential. He began experimenting, drilling many wells, spending a fortune, and not having much success. But, over about 20 years, he finally was able to crack the code and the Barnette shale became the first large-scale shale play in the world. And production soared, due to two technological achievements -- horizontal drilling and hydraulic fracturing.
The Barnette shale became the largest producing field in the USA and held that title until 2011, when the Haynesville shale took over the top spot. This shale play covers much of northwest Louisiana and east Texas. Well over 1,000 wells have been drilled and completed in the Haynesville shale. (The Barnette shale has over 14,000 producing oil and gas wells as of January, 2011.) The Haynesville shale boundaries are still being defined to the south and southwest, and development drilling is in the early stages.
Louisiana mineral rights owners and royalty owners are fortunate in that there is a new shale play experiencing widespread oil and gas leasing. It's called the Tuscaloosa shale (Tuscaloosa Marine shale by some) and stretches all the way across Louisiana in the central part of the state. (See Tuscaloosa shale map.) The Tuscaloosa shale is only a theory at this point, as drilling over the years has proved to be non-commercial. Yes, oil and gas are in the Tuscaloosa shale rock but getting it out profitably has been a no-go thus far.
There are several companies active in the Tuscaloosa shale. Devon Energy, Goodrich Petroleum, Amelia Resources, Indigo Minerals and Denbury Energy all have lease positions in the play. At least four wells have been announced for 2011 drilling.
The Tuscaloosa shale is almost the same geological age as the Eagle Ford shale of south Texas. It is slightly younger, but close to being the same "stratigraphic equivalent." The Eagle Ford shale stretches over 400 miles eastward from the border with Mexico, across South Texas to perhaps Sabine county. Thus far, the best production ends at Gonzales and Dewitt counties, but there is more exploration going on the east, towards the Louisiana border.
From there, we cross into Louisiana at southern Sabine parish and this might be the beginning of the Tuscaloosa shale. (We don't know yet!) The potential play goes all the way to into Mississippi. So, if the Eagle Ford shale and Tuscaloosa shale turn out to be productive relatively continuously in this "fairway," it will be a huge field, dare say the largest in U.S. history.
The Eagle Ford shale contains both oil and gas. It is thought that the Tuscaloosa shale will provide the same. In the past 30 years, prolific natural gas production has been discovered downdip in south Louisiana. So, theory is, oil production can be had (with modern technology) updip from the natural gas. This modern technology includes horizontal drilling, coupled to hydraulic fracturing.
Hydraulic fracturing is undergoing attack by environmental groups, claiming that it pollutes fresh water acquifers, causes earthquakes, and all kinds of claims. Yet, over 1 million "fracs" have been performed over several decades, with not one documented case of these claims. So, don't believe everything you read. Yes, the process should be regulated (and already is) but the Feds should stay out of this. The individual states can perform oversight just fine.
If one is a mineral rights owner in the Tuscaloosa shale, it could be their lucky day. This won't be known for a few years, as it will take many wells to "prove it up." But, oil and gas lease bonuses can come in handy, and if they do drill a well in a unit containing the mineral owner's mineral rights and royalty rights, royalty checks can ensue. And, as it happens in every oil and gas play ever discovered, some choose to sell mineral rights. Very few people have assets that they can sell when they "get in a jam" or need cash for any number of reasons. Selling mineral rights can be a solution for some. Plus, if the play gets hot, mineral rights can bring a healthy sum, and some choose not to pass up a big "guaranteed" cash payday. (See why sell mineral rights for more info on selling royalty rights.)
The announced development of the Tuscaloosa shale will be exciting to watch in 2011 and beyond. Here's to success, for Louisiana mineral rights owners!
If you seek professional help with oil and gas leasing matters or a sale of mineral rights, here is a Tuscaloosa shale oil and gas consultant you can have represent you.
Tuesday, June 7, 2011
Another view on selling mineral rights
Many people consider selling their mineral rights. It can be a hard decision for some. For others, it's easy if they can get enough for a sale of the mineral and royalty rights to do whatever it is they want the cash for. Might be a new car, a boat, the kid's education, retirement, lots of things.
The state of the oil and gas industry depends on what kind of production the oil company or individual has. Lately, the price of oil has been up but the price of natural gas continues to very poor. In some areas of the country, especially the various shale plays, such as the Eagle Ford shale of south Texas or the Haynesville shale of north Louisiana and east Texas, drilling has dropped by a lot! In others, especially if they contain oil or natural gas liquids, drilling has increased. Same for leasing. Some areas are hot and some have gone stone cold. In either instance, often, one can find a mineral rights buyer to buy their royalty rights.
Regarding a sale of mineral rights, I have sold some in the past and I'm glad I did. I could use the cash at the time and it sure was nice to get it. I didn't regret it a bit. I am considering selling my minerals again. It has to do with where I am in life and also to my perception of risk versus a sure thing -- CASH. I'm about ready to pull the trigger. So, I can identify with people who are considering it. I have mineral rights in both the Eagle Ford shale and the Haynesville shale.
As for whether one should cash out and sell mineral and royalty rights, here is another site to review... Is it wise to sell mineral rights.
Good luck!
The state of the oil and gas industry depends on what kind of production the oil company or individual has. Lately, the price of oil has been up but the price of natural gas continues to very poor. In some areas of the country, especially the various shale plays, such as the Eagle Ford shale of south Texas or the Haynesville shale of north Louisiana and east Texas, drilling has dropped by a lot! In others, especially if they contain oil or natural gas liquids, drilling has increased. Same for leasing. Some areas are hot and some have gone stone cold. In either instance, often, one can find a mineral rights buyer to buy their royalty rights.
Regarding a sale of mineral rights, I have sold some in the past and I'm glad I did. I could use the cash at the time and it sure was nice to get it. I didn't regret it a bit. I am considering selling my minerals again. It has to do with where I am in life and also to my perception of risk versus a sure thing -- CASH. I'm about ready to pull the trigger. So, I can identify with people who are considering it. I have mineral rights in both the Eagle Ford shale and the Haynesville shale.
As for whether one should cash out and sell mineral and royalty rights, here is another site to review... Is it wise to sell mineral rights.
Good luck!
Thursday, May 27, 2010
Why Sell Mineral Rights
Many mineral rights owners face the question: Why sell mineral rights? Should you? Or not? This question has come up a lot in the past couple of years with the announce of another shale play. Here are a couple of important shale plays:
The Eagle Ford shale is in south Texas, in a broad area from Gonzales county to Webb county. A couple of years ago, Petrohawk brought it to the newsfront with announcement that drilling had paid off there and they were enthused about it. Since then, much oil and gas leasing activity has occurred and more drilling, as well. It appears that production is not as strong as in the Haynesville shale, but, it's still good. Here is more info: Eagle Ford shale.
And that means that mineral rights owners now face the first question listed above. Because any time an oil play or gas play is announced, mineral rights sales can bring big money.
There are many reasons one might want to sell all or part. But the main reason it's prudent to consider it is that cash money is a sure thing. And oil and gas exploration is anything but that. Over my 32 years in the oil and gas business, countless times, I have seen people reject an offer to sell that would have done them good, even made some wealthy, and then something went wrong and the offer went away. And they couldn't get much at all after that. Sometimes, zero. And that's pretty sad! I have seen people turn down million dollar paydays and a week later, they couldn't get a penny for the same property. Oil and gas is a fickle business and things change rapidly!
The Haynesville shale play (see Haynesville shale map) is one such play. Wow, a lot of good stories and sad stories, too! Some people got fortunes and some people lost them!
So, if you own mineral rights (which include royalty rights), it's wise to consider it. Follow the links on this page for more info.
The Eagle Ford shale is in south Texas, in a broad area from Gonzales county to Webb county. A couple of years ago, Petrohawk brought it to the newsfront with announcement that drilling had paid off there and they were enthused about it. Since then, much oil and gas leasing activity has occurred and more drilling, as well. It appears that production is not as strong as in the Haynesville shale, but, it's still good. Here is more info: Eagle Ford shale.
And that means that mineral rights owners now face the first question listed above. Because any time an oil play or gas play is announced, mineral rights sales can bring big money.
There are many reasons one might want to sell all or part. But the main reason it's prudent to consider it is that cash money is a sure thing. And oil and gas exploration is anything but that. Over my 32 years in the oil and gas business, countless times, I have seen people reject an offer to sell that would have done them good, even made some wealthy, and then something went wrong and the offer went away. And they couldn't get much at all after that. Sometimes, zero. And that's pretty sad! I have seen people turn down million dollar paydays and a week later, they couldn't get a penny for the same property. Oil and gas is a fickle business and things change rapidly!
The Haynesville shale play (see Haynesville shale map) is one such play. Wow, a lot of good stories and sad stories, too! Some people got fortunes and some people lost them!
So, if you own mineral rights (which include royalty rights), it's wise to consider it. Follow the links on this page for more info.
Sunday, May 2, 2010
Value Of Mineral Rights
There are many factors in a mineral rights valuation. There is no simple answer. For purposes of this blog, we will deal only with the value of oil and gas. If you have coal in your area, that's a another subject.
As for oil and gas, are your mineral rights in a region where oil and gas production has been found? If not, the value of your minerals is not very much at all. If you're minerals are in an oil or gas producing region, it could be substantial. In some areas where there is a shale play going on, you could reap a large payday, indeed. Mineral rights buyers such as Payday Minerals have paid out millions of dollars to some lucky mineral owners.
Another factor is whether you have an existing oil and gas lease on your property. And, if you are already receiving a royalty production check, that can affect value, in either direction. It's quite a complicated formula but the good news is that mineral owner doesn't have to figure it out. Here is one explanation of how to sell minerals.
Mineral rights buyers are gamblers. Oil and gas exploration is a very risky business and it's quite a roller coaster ride. If the price of crude oil and/or natural gas goes down, the income or potential income from mineral rights will go down, as well. So, other than cash, nothing is a sure thing. Companies who assemble a mineral rights or a royalties portfolio spread their risk by buying thousands of acres across many tracts. This way, if one goes bad, it doesn't hurt them so much.
And again, if your mineral rights are in one of the shale plays, such as the Haynesville shale, Eagle Ford shale, Colony Granite Wash, Niobrara shale, Marcellus shale, Fayetteville shale or Bakken shale, your minerals could be worth a small fortune, or a large fortune, depending on how many acres you have.
In future posts, other aspects will be covered. There is quite a lot to it!
As for oil and gas, are your mineral rights in a region where oil and gas production has been found? If not, the value of your minerals is not very much at all. If you're minerals are in an oil or gas producing region, it could be substantial. In some areas where there is a shale play going on, you could reap a large payday, indeed. Mineral rights buyers such as Payday Minerals have paid out millions of dollars to some lucky mineral owners.
Another factor is whether you have an existing oil and gas lease on your property. And, if you are already receiving a royalty production check, that can affect value, in either direction. It's quite a complicated formula but the good news is that mineral owner doesn't have to figure it out. Here is one explanation of how to sell minerals.
Mineral rights buyers are gamblers. Oil and gas exploration is a very risky business and it's quite a roller coaster ride. If the price of crude oil and/or natural gas goes down, the income or potential income from mineral rights will go down, as well. So, other than cash, nothing is a sure thing. Companies who assemble a mineral rights or a royalties portfolio spread their risk by buying thousands of acres across many tracts. This way, if one goes bad, it doesn't hurt them so much.
And again, if your mineral rights are in one of the shale plays, such as the Haynesville shale, Eagle Ford shale, Colony Granite Wash, Niobrara shale, Marcellus shale, Fayetteville shale or Bakken shale, your minerals could be worth a small fortune, or a large fortune, depending on how many acres you have.
In future posts, other aspects will be covered. There is quite a lot to it!
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