Industry Guides & How-To Resources with specific types of property or business. Check our valuable guides on this page today at Ranger Land & Minerals.

oil well lifespan

How Long Does an Oil Well Last?

,

Oil wells come in all shapes and sizes. All across the United States, there are oil wells being built, used, and torn down, and thanks to over 100 years of drilling history, the public now knows a lot about the ins and outs of a typical drilling operation. In this article, we are going to explore the average lifespan of an oil well (and gas well also).

The Average Lifespan of an Oil Well

In general, it is commonly accepted that an oil or gas well can expect to last between 20 and 40 years of significant production. With that said, new technologies are constantly being developed to make oil operations longer and more efficient. If a well is not being tapped at the maximum rate, it may last way longer than average. In fact, there is an active oil well in Pennsylvania that was first drilled over a century ago!

The Different Classifications of an Oil Well (or Gas Well)

When people ask, “How long does an oil well last?” they are typically referring to a well that is actively being drilled to extract and sell precious minerals. That is what the industry refers to as an “Active Well.” There are several other stages an oil or gas well may go through in its lifetime. They are as follows:

  • Inactive – A well that has ceased production for 1 year but is expected to produce again.
  • Suspended – A well that has been inactive for a long period of time, and requires special effort to reactivate, but is expected to produce in the future.
  • Abandoned – A permanently shutdown well in which all of the equipment has been safely removed.
  • Orphaned – Abandoned wells with no owner claiming the rights

What Happens When an Oil Well is Dry?

An oil well “dries up” when it has been drilled sufficiently enough so that it no longer produces a profitable amount of oil. When a company decides to end a drilling operation, the land is often sold to another owner. The extraction equipment is removed and the land is reclaimed or restored. In areas close to residential homes, significant landscaping is performed and evidence of an oil well is generally completely erased.

average price per acre for mineral rights

What is the Average Price Per Acre for Mineral Rights?

,

Mineral rights can be an extremely valuable asset. If you suspect there may be oil, gas, or any other kind of precious metal sitting beneath the subsurface of your property, then you have the opportunity to earn an income through resource extraction.

As in any transaction, with a mineral rights lease, you will want a good deal. If you are exploring potential buyers, or if an oil and gas company has reached out to you directly, then your negotiation skills will determine how profitable your mineral rights can be.

Factors that Influence the Average Price Per Acre for Mineral Rights

  • Location
  • Size of Plot (Often Higher Prices for Larger Pieces of Land)
  • Existing or Past Operations
  • Producing vs. Non-Producing
  • Estimated Mineral Amount

Mineral Leases Average Price Per Acre

Of course, a good baseline to understand when leasing your mineral rights is the average price per acre for mineral rights leases. Unfortunately, mineral rights transactions are not always made public knowledge. For this reason, there is a limited amount of data available to calculate the average price per acre of mineral leases.

Plus, the cost, opportunities, and average prices of mineral rights transactions are highly variable across different states. With all of this in mind, there are still many local resources that may you understand some of the averages for modern mineral rights leases in your area.

Nationally, mineral rights owners can expect anywhere from $100 to $5,000 per acre for their mineral rights lease. The most valuable mineral rights leases are on producing parcels of land that are still expected to hold many more precious minerals.

States with Highest Average Price Per Acre For Mineral Rights Leases

Although the states vary from year to year, generally, some of the most valuable states for leasing mineral rights are:

  • Nevada
  • Arizona
  • Texas
  • California
  • Minnesota
  • Alaska
oil royalty buyers

Who are Oil Royalty Buyers?

, ,

If you own mineral rights, then you can potentially earn a large amount of money by finding the right oil royalty buyers. Frequently, those buyers may actually find you. We put together this article to help you along your journey to sell your oil royalties or mineral rights.

Individuals vs. Companies – Oil and Gas Royalty Buyers

There are thousands of individuals and companies that are actively looking to buy mineral rights and oil royalties. Although the best deal should always prevail, there are a few general trends when selling oil or gas royalties to oil royalty buyers.

Person to Person Oil Royalty Purchases

Although these transactions are more common as gifts or in a will, oil royalties and mineral rights often do change hands between individuals. Here, there is not going to be as many oil royalty buyers as a commercial transaction. You will want to make sure that the person buying your mineral rights is someone you can trust. As a bonus, person to person transactions generally have a better chance to include personalized clauses to best suit your needs.

Person to Company Oil Royalty Purchases

Most commonly, a landman representing a larger oil or gas company will have an interest in buying your mineral rights. Whereas negotiations like these typically fall under strict company guidelines, there is a chance that the added resources of a firm will result in a better overall deal on the seller’s end. Because every individual case is different, it is advisable to explore individual and corporate sales opportunities.

How to Value Your Oil Royalties for Sale

Because oil and gas royalty sales are not always made public, the only way to truly value your oil royalties is by collecting multiple offers. Investors will do their due diligence in order to find the best possible price for your oil royalties, while still making it a profitable venture for themselves. By analyzing local historic data, inspecting the property, and factoring in current market prices, your potential buyers will quickly make the value of your oil royalties apparent.

Speaking to An Expert

Before you sell your oil royalties, it is a good idea to speak to an expert, like Ranger Land & Minerals. No matter how inciting an offer may be, it is crucial to communicate with someone who knows the ins and outs of oil and gas royalty transactions in order to point out red flags and ensure the best possible deal is being made.

oil-and-gas-royalty-payments

When are Oil and Gas Royalty Payments Made?

,

Whenever you sign an oil and gas lease, you may be getting a signing bonus. As one of the most important parts of your negotiation, a one time upfront payment from the oil and gas company may be the quickest way to earn money with your mineral rights.

What happens when the company strikes oil? Then, you begin to receive oil and gas royalties for your percentage share of the minerals produced and sold. Although no two mineral leases are the same, in this article, we will cover some of the expected timelines for oil and gas royalty payments.

Oil Royalties after Signing a Mineral Lease

By law, oil and gas royalties payments are required due 120 days after the end of the month of the first sale of production from the well. So let’s say that you own mineral rights and sign a lease agreement in March. The oil company sources the financing, equipment, and labor and strikes its first barrel of oil in mid-April. The company sells 100 barrels in April. The company is then required to report its oil and gas royalties 120 days after April 30, approximately 4 months later in August.

Oil and Gas Royalty Payments Period

After the royalty is due, the oil and gas company has a certain window to pay the shareholder, as defined in the lease agreement. In general, most companies will pay oil royalties within 60 days of due payment and gas royalties within 90 days. This means that after signing a mineral rights lease, the latest you will receive your first royalty payment is about 180 days after the first productive month. Subsequently, later payments for oil production is paid 2 months in arrears, while gas production is generally paid 3 months in arrears.

Delayed Oil and Gas Royalties and Unproductive Leases

An important thing to understand is that sometimes, oil and gas royalty payments may never come. Although most oil and gas companies sign leases with the intention to explore and extract precious minerals, there are many factors that may prevent that from happening.

In addition to the loss of funding and delayed timelines, there is also a possibility that your land may not have any oil and gas at all. With that said, modern technology and over a century of exploration now allow for the oil and gas industry to make very educated decisions in exploring for underground resources.

The Rights of an Oil Royalty Owner

The Rights of an Oil Royalty Owner

,

If you own an interest share in the mineral rights of oil production, then you are probably enjoying a steady stream of oil royalties in your portfolio. With high stakes values, a large number of players, and hundreds of pages of legal contracts, sometimes it can be difficult to fully understand your role in the process of oil production. In this article, we are going to outline how to identify the rights that you have, as an oil royalty owner.

Your Rights as Mineral Rights Owner – The Paperwork

Oil and gas agreements are not required to be made public, and the highly individualized nature of mineral rights agreements make it difficult to identify a “standard” handbook of mineral rights owners’ rights.

With this in mind, there are a few very critical pieces of paperwork that you should always have available. It is also advisable to seek expert advice in order to review the following documents.

A Copy of The Deed

The deed which defines your ownership rights of the property’s subsurface is crucial in defining your asset. If you own a fee simple estate, then your surface rights and mineral rights are usually defined in the same deed. If it is a split estate, then the mineral deed is no different than a surface rights deed, just separate. Mineral deeds are public records and can be obtained either online or with a local courthouse.

A Copy of the Lease

Once the lease is signed, it becomes the most important document in a mineral rights agreement. Here, the rights of the surface and mineral owners are clearly defined as they affect an oil company’s pursuit in exploring and extracting minerals. It is crucial to understand the time periods and compensation associated with an oil company’s permission to enter the property. Although oil and gas leases are not public records, a copy must be filed with the local courthouse and the records can be obtained at a later date.

A Division Order

Oftentimes, oil wells are divided between multiple mineral rights owners. This makes it a requirement for oil companies to send out a division order, or a division of interest, to lay out the percentage ownership and rights for each mineral owner. Division orders must be signed and returned to the oil company, but mineral rights owners should absolutely keep a copy for their records.

Any Communication with Oil Companies

Lastly, it is always a good idea to print or save any copies of communications with an oil company. As a mineral rights owner, you want to be up to date (and know the history of) all of the happenings of the operations in which you have a stake in. For the worst-case scenario, copies of all oil company communications can help in the court of law if you feel as if your rights have been violated as an oil royalty owner.

What to do if an Oil and Gas Company Violates your Lease Agreement

What to do if a Company Violates your Oil and Gas Lease Agreement

,

Mineral rights leases with oil and gas companies can be a highly profitable venture for earning oil and gas royalties. Unfortunately, the high stakes industry has a lot of players, some of which do not like to play by the rules.
If you feel as if a company has violated your oil and gas lease agreement, you may be entitled to compensation in the court of law. In this article, we are going to cover some of the most common oil and gas lease violations and what to do if you find yourself in an agreement that has not been upheld.

Improper Royalty Calculations

One of the most common disputes between oil companies and mineral rights owners are over incorrect royalty payments. Cases like this are vigorously defended in court and are only awarded to lessors who can provide sufficient evidence that their royalty payments were miscalculated. In order to prove this, mineral rights owners should have copies of their lease and the company’s division of interest in order to outline their fair share of royalty sales.

Failure to Reasonably Develop the Land

In most oil and gas agreements, there are “implied covenants” such as a lessee’s requirement to reasonably develop the land for mineral extraction. For example, let’s say a mineral rights owner agrees to have an oil and gas company explore and extract oil on 400 acres of land. The lessee then drills one well that drains 50 acres of land and ceases production for the next 5 years.

In this case, the oil company has failed to reasonably attempt to develop all of the predetermined land in the agreement. As the mineral rights owners, this allows you to claim the oil and gas company acted unreasonably, which may lead to compensation if taken to trial.

Missing or Wrongly Assigned Royalties

Whereas most mineral rights owners work well with oil and gas company agreements, what happens when the lessor passes away? Some of the most common disputes in mineral rights leases actually come from supposed heirs of oil royalties.

If you have inherited or have been gifted active mineral rights, then you may need to get in contact with the lessee to confirm you are receiving the appropriate mineral royalties. Failure for an oil company to correctly reassign royalty shares can result in a lawsuit, if it is outlined in the lease agreement.

Ways to Connect With Other Mineral Rights Owners

How to Find or Search Mineral Rights Owners and Connect With Them

,

In the United States, there are hundreds of thousands of mineral rights owners. Of course, some individuals may be more actively aware of their mineral rights if their property is earning them monthly oil and gas royalties. If you own mineral rights or are looking to purchase mineral rights in the future, then there are plenty of resources available on how to find mineral rights owners and get into contact with them in order to learn, converse, and exchange information.
In this article, we will outline a few great resources. Resources on how to find mineral rights owners and connect with them both online and locally.

Online Mineral Rights Forums

Most notably, the popular Mineral Rights Forum (www.mineralrightsforum.com) is a great online conversation space for mineral rights owners in the United States. The website was formed in 2009 and is an amazing resource to ask specific questions about your individual situation. You can also browse through the hundreds of questions already answered over the past decade. The forum is free of solicitation, so users can find information without anything in return.

Minearlrightsforum.com is probably the largest and most credible source for digital answers. However, there is also more information scattered around the web. Websites like reddit.com, Quora, and Yahoo Answers. They all have large backlogs of helpful information on how to find mineral rights owners across the country.

Reaching Out to Speak with Mineral Rights Owners Directly

Are you struggling to find the answers you need? Would you simply prefer to have a conversation with a real person? Then online mineral rights forums may not be the best course of action. There is no requirement for mineral rights transactions to be public. With that, it may still be possible for you to find mineral rights owners in your area. Starting having conversations with them.

How to Find Who Owns Mineral Rights

Websites such as Mineral Holders (https://www.mineralholders.com/) take readily available information and store it into their online database. Although the information is not complete for the whole country, the website has probably the most comprehensive list of mineral rights owners in Texas. Website visitors can break down mineral ownership by county and can also search for specific individuals or companies that may own shares.

A Quick Guide to The Oil and Gas Laws of the United States

Oil and Gas Laws of the United States: A Quick Guide

, ,

Oil and gas ownership has one of the most interesting legal histories in the United States. The United States is one of the only countries that allows for private ownership of minerals found on the earth. Within the state, the laws surrounding mineral rights and oil and gas laws vary greatly between each state. In this article, we are going to outline the essential oil and gas laws to be aware of in the United States.

Who can own oil and gas in the United States?

The term when rights to own oil and gas below the surface of a property is “mineral rights.” In the United States, mineral rights is claimable by private individuals. Moreover by corporations, Indian tribes, or by local, state, or federal governments. The ownership and transfer of oil and gas rights are mainly operated under regional statutes and common law. These both fall beneath constitutional and federal law as well.

Oil and Gas Rights as Property

Over the past 150 years, oil and gas ownership in the United States has diverged into a huge portfolio. For private oil and gas rights today, the mineral rights of a piece of land can be sold, bought, or leased. It is as if they are any other piece of property. Mineral rights or “subsurface rights” is purchasable, sellable, or leasable independently. Moreover together with a property’s surface rights.

Finding Oil and Gas on Public (Federal or State) Property

The General Mining Law in the United States allows individuals and companies to “locate” mining claims on public lands. At the federal level, there is BLM (Bureau of Land Management) land. This is where individuals can explore the area for potentially valuable minerals. An individual does not become the subsurface rights owner of public land. With approval by the federal government, the individual can have access to develop and extract the minerals.

The same system is in place for state-owned land. The specific oil and gas laws surrounding ownership and transfer vary from state to state. For a full list of Mineral Rights Laws by state, see this index page from MineralWeb.

How long do mineral rights last?

How long do mineral rights last?

,

There are many situations in which someone may ask, “How long do mineral rights validity last?”. Sometimes, an individual may inherit mineral rights from someone deceased, only to be left with unexpected taxes and a whole lot of questions.

In other cases, abandoned residential and commercial plots can be orphaned, leaving former owners to wonder if they are entitled to the property. In this article, we will explain how long mineral rights last and what that means for future owners.

Mineral Rights Last as Long as You Do

If you own mineral rights, they are yours. You own them until the day you die, that is unless you give them to someone else. There are three ways mineral rights are transferred: as a sale, as a gift, or in a will in the event of a death. Mineral rights are just like any other piece of property. As the rightful owner, you have the right to it so long as they are yours.

Does a person or a business were to own mineral rights and then fail to pass them to another party? then the property is considered abandoned. This is going to happen if a person dies or simply forgets they own the property or if a business were to cease operation but fails to sell its land.

Abandoned or Unclaimed Mineral Rights

In America, mineral rights laws vary from state to state. For the vast majority of states, however, abandoned or unclaimed mineral rights are going to eventually default to the current surface rights owner. This can take over 10 years, although is only usually a handful, depending on your location.

Conclusion

In conclusion, it is always important to do and keep your paperwork in order. If you own mineral rights, you own them until they are transferred from you in business or in death. Do you intend to bequeath your mineral rights to an heir? Then, it is important to make sure that everything is in order.

If you have further questions about mineral rights validity, feel free reach out to us here.

Can I sell land and keep my mineral rights?

Mineral Rights to Land | Can I sell land and retain mineral rights?

,

So you’ve got to move, it’s a shame. No matter what lies next, it is almost always difficult. Difficult to let go of the land and home in which you have spent so much of your life in. What makes it even tougher, however, is if that land is also earning you a monthly income. That’s a situation where you, as a seller, want to retain mineral rights to land.

For some, leasing mineral rights is a highly profitable venture in which little effort is needed. If you own your land and have leased your mineral rights to an oil and gas company that is drilling and selling precious minerals, then you are earning oil and gas royalties. Surely, you’d like to keep those checks coming in the mail, right?

Retaining Mineral Rights in a Sale of Land

Well, the answer is yes. You can sell your land and keep your mineral rights. In order to do so, you must add an exception in the contract for the sale of your land. You will be entering into a split estate contact with the new party, who will now be the owner of the surface rights.

Benefits of Keeping Your Mineral Rights

Are you receiving royalties from your mineral rights? Then, retaining their ownership will keep your income stream steady. If your land has not yet been explored for oil, gas, or precious minerals, then your non-producing mineral rights still may be valuable. If a company were interested in drilling on your property, as the mineral rights owner, you would be in charge of the negotiation.

Downsides When Seller Wants to Retain Mineral Rights to Land

Unfortunately, everything isn’t always going to work out one hundred percent in your favor. If you are the seller who wants to retain mineral rights (especially if there is active drilling), the pool of interested people is going to shrink. Some potential buyers may not like the idea of only owning the surface rights. Especially while the mineral rights are under maintenance by someone else. This may result in a lowered negotiated price for the sale of the land.