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The Texas Alliance of Energy Producers, one of the largest oil and natural gas industry associations in the state, named Jason Modglin its new president on June 3.
Succeeding John Tintera, who retired last year, Modglin is stepping into his new role as the coronavirus pandemic and industry downturn have resulted in tens of thousands of layoffs over the past three months.
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Source: Houston Chronicle
In the United States, landowners have the ability to earn money from the resources below their property. If you own the subsurface below your land, then oil and gas companies may be interested in leasing or buying your mineral rights. Let us talk more about the oil and gas royalties by state.
Of course, not every plot in America is going to make you rich. The values of oil and gas royalties by state vary greatly. Above all, the size of your oil and gas royalty checks will depend on the size of your lot, your percentage share, and the amount of resources that are extracted and sold in a defined timeline.
Here is the list of oil and gas royalties by state, with the highest potential:
Everything is bigger in Texas, including its oil production. Texas produces, on average, over 2 billion more barrels of oil per day than any other U.S. State. And guess what, Texas also leads the country in natural gas production. All in all, the Lone Star State has the most opportunities to earn oil and gas royalties.
This may surprise some people, but the Keystone State is actually the 2nd largest producer of natural gas in the United States. Titusville, Pennsylvania is famous as the location for the first ever successful oil drilling on U.S. soil. However, since then, the state’s oil production has been overshadowed by many states to the West.
Besides Texas (and occasionally New Mexico), the only other state in the country that typically produces over a million barrels of oil per day is North Dakota. The Bakken formation in North Dakota’s western plains produces the majority of the state’s oil. In terms of natural gas production, North Dakota ranks 10th in the country.
If you were to look at each state’s total energy production (gas and oil combined), Wyoming ranks number three overall. This is impressive because Wyoming typically ranks between the fifth and tenth annual production of crude oil or natural gas alone. Overall, the state has a consistent amount of opportunities to earn oil or gas royalties.
Lastly, we must mention the Sooner State, Oklahoma. Oklahoma sits in the dead center of the country with ample oil and gas resources below the state’s surface. Consistently, Oklahoma ranks in both the top five for the annual production of oil and natural gas. The state is also investing heavily in wind power and is slowly becoming an electricity powerhouse.
It’s clear COVID-19 is having a profound impact on the cornerstone industries of our economy.
Regardless of the industry they operate in, all firms will need to plan to anticipate the shape of recovery and prepare for the next normal. This is particularly complex for the energy industry. With global lockdowns cutting demand and social distancing measures set to impact ways of working for the foreseeable future, how should oil companies adapt their operations to protect and create jobs for the future?
For several years, it’s been widely accepted that technology is the way forward for oil and gas. Due to the pandemic, it is likely social distancing will become standard practice for years, meaning firms should invest in automation technologies now, to allow for improved remote working in the future.
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Source: Energy Digital
There are only a few better feelings than getting your oil and gas royalty check in the mail. Whether you have decided to lease your mineral rights or you have aided in an operation’s production, the extraction and sale of oil or gas earn you a nice bit of money each month. Of course, all is fun and games until tax season. In this article, we will outline the most important things to know about oil and gas royalty deductions.
Mineral rights are very valuable, that is until the resources have all been depleted. The IRS recognizes this and permits a depletion allowance on oil and gas royalty payments. Depletion allowances let property owners deduct the loss of value in the property’s subsurface, as well as any incurred expenses associated with owning the royalties.
Here, taxpayers can write off a portion of their income. Most commonly, people choose the standard 15% depletion deduction from the gross income. In other cases, heavily invested individuals can calculate the approximate remaining oil reserve. From there, they base their deduction on the amount of extraction that tax year.
Once your royalty checks start coming in, you may notice something. Usually, it is that there are some taxes that are out of your payment. Although the amounts vary between states, most U.S. states take out a severance tax on oil or gas production. This amount can be a deduction from your gross income. This includes any other business taxes or fees that have an association with the production.
If you signed an oil and gas lease, then you may have received a nice upfront bonus payment. In the eyes of the IRS, this is considered ordinary income, in the rental property classification. There can be a deduction on your Schedule E on any bonus payment you receive. This includes any costs (like legal fees) in association with the lease negotiation.
If you have further questions about oil and gas royalty deductions, feel free to reach out to us here.
Oil supermajor Shell plans to announce by the end of the year a significant restructuring to reflect its net-zero emissions goal for 2050 and to align itself with a green recovery from the pandemic, a Shell source told Reuters on Tuesday.
Shell’s chief executive Ben van Beurden has told employees in an internal website video that there would be restructuring and job cuts, sources who saw the video told Reuters.
Shell’s official website has posted a video message from van Beurden, who says that “[S]ociety must remain focused on the longer-term challenge of climate change. Because it hasn’t gone away. It still needs urgent action. Shell has a big part to play.”
“Our current business plans will not get us to where we need to be, and we will have to change those plans over time. And, it won’t be easy, and of course there will be obstacles to overcome, but like many others, I believe that society now has a unique opportunity to accelerate towards a cleaner energy future,” the top executive said in the message.
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Source: Oil Price
Image Credit: frankieleon/Flickr/
It may sound far-fetched at a time when many are worrying if Brent could rise back to $50 a barrel, but at least one analyst believes the benchmark could not only recoup all that it lost in value since the start of the year but shoot up over $100 a barrel in the observable future. “The reality is the chances of oil going toward $100 at this point are higher than three months ago,” JP Morgan head of oil and gas research for EMEA, Christyan Malek, said as quoted by CNN.
The reason is simple: the cyclical nature of the oil industry. In March, before the coronavirus pandemic really hit, JP Morgan’s analysts issued a note saying the oil industry was entering a supercycle that could see the price of oil hit $190 a barrel by 2025. According to Malek, this is still a distinct possibility.
The forecast is not without a logical basis. The way cyclical industries work is that the industry produces a lot of the commodity when there is high demand for it. Eventually, supply begins to outpace demand for one reason or another. Prices then fall, the industry retreats and shrinks production to limit supply and stimulate higher prices. This brings a deficit in the commodity, which pushes prices up. This cycle repeats once every few years.
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Source: Oil Price
If you have further questions related to JP Morgan predictions, feel free to reach out to us here.
So you’ve just bought some property, congratulations. Under the sale of a fee simple estate, it is common for most landowners in the United States to own both the surface and subsurface rights of their property. In this article, we are going to define subsurface rights and cover everything you need to know about what you own below your property.
Surface rights are extremely easy to identify and understand. A property’s surface rights entitle the owner for use of everything above the ground within the property boundaries. This includes structures like buildings and fences, as well as trees and water access rights. Subsurface rights, as the name suggests, refer to the ownership of the land below a property’s surface.
Subsurface rights are considered a real property, just like any other real estate asset. Subsurface rights can be owned independently or divided and shared between several parties. Most commonly, subsurface rights constitute ownership of mineral rights.
If you own your property’s mineral rights, then there are a few ways that you can utilize your asset. Mineral rights can be sold or leased in a split estate. Here, you can either sell your mineral rights to an interested party or lease your mineral rights to an oil and gas company.
As suggested above, there may be many people interested in purchasing or leasing your subsurface and mineral rights. This is because they present an opportunity for you to sell your asset in one lump sum or receive a portion of resource sales.
In the United States, subsurface rights are considered valuable for the precious minerals that can be extracted and sold. Most commonly in the United States, oil and natural gas are the most sought after subterranean resources.
Here in the Lone Star State, we know what we have is valuable. Texas is a great place to live and also has some of the world’s largest producing oil and gas fields spread across the state. If you’ve got a special piece of this land that you’d like to sell for your financial gain, the property’s mineral rights can be very valuable. In this article, we will outline five simple steps to take when selling mineral rights in Texas.
In order to sell mineral rights in Texas and any other state, you will need to prove that you own them. Try to locate any documents that legally describe your mineral rights property like fees, leases, and stubs. This is important because mineral rights transactions are not required to be published, and occasionally mineral rights records are lost.
Next, seek out an industry expert to provide you with unbiased, honest information about your property. Get together any records of your property’s wells history in addition to GIS maps and data. This will give you a baseline for companies to bid upon.
When you’re ready, you can begin to contact oil and gas companies or property managers to help you sell your mineral rights. Mineral rights in Texas can be extremely valuable, so there are many people ready to help you earn the best possible deal on your sale.
After contacting enough potential partners, carefully analyze the contracts and the subsequent negotiations. There really is no standard contract for selling mineral rights, so the value of your sale is determined by your property’s value, your negotiations, as well as current market prices.
There are some search terms you can use on Google like “mineral rights texas search”.
Most importantly, you will want to try and receive a large lump sum for the sale of your mineral rights. Secondly, you may be able to later earn royalty interests on the land’s oil or gas production.
Once the documents are signed, the hard work is over. In oil and gas leases as well as mineral rights sales, the mineral rights owner rarely has to do much of anything at all. Instead, they are able to earn an income from selling valuable mineral rights.
If you have further questions on Selling Mineral Rights in Texas, feel free to reach out to Ranger Land and Minerals.
Texas as early as this fall could tighten some rules for the controversial practice of natural gas flaring, the head of the state’s regulatory commission said on Tuesday.
The practice of burning off unwanted natural gas produced alongside more profitable oil has become a top issue for both environmentalists and investors, who are focused on sustainability measures and are already frustrated by a decade of poor financial returns in oil and gas. Flaring has surged with U.S. oil output, but can worsen climate change by releasing carbon dioxide.
Recommendations from an industry panel, provided to state regulators at a meeting on Tuesday, included reducing to 90 from 180 the number of days producers can routinely burn unwanted gas without going to the Texas Railroad Commission, the state’s regulator, for a hearing.
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Source: Reuters
Oil futures gave up earlier losses to settle higher Monday, buoyed by declines in global crude production even as the potential for a fresh hit to energy demand climbed on the back of apparent global increases in new cases of coronavirus.
“Traders in general seem to see upside risk from lower production and downside risk from the virus impact on the economy, and high stocks of crude close to parity,” said James Williams, energy economist at WTRG Economics
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Source: MarketWatch
