Opportunities abound for the astute person in the oil and gas industry. These range from leasing mineral rights to actual jobs in the resultant oil and gas industry. Being aware of the facts will help you take advantage of those opportunities to the fullest advantage. It can be fraught with pitfalls, but a little information can guide you through the maze. If you are a landowner with mineral rights to offer, there are things you need to know.
Mineral rights are the rights to gas and oil that lie below the surface of any land you own. Oil companies are often interested in leasing the rights to drill and remove these deposits from your property. You will be offered an upfront bonus, usually substantial, and then you will be paid a percentage of any production that results from your minerals – a royalty.
The quantity of production from the well drilled to extract oil and gas from your site is measured and recorded prior to leaving the site. This is a legal requirement. This production is used to figure your royalty. The opportunities are not all clear-cut, however. You will have reductions in your royalty for production costs to make the product usable. These will be shown on the royalty statement.
Reductions to your royalties involve production costs. These are such things as compression, dehydration, and removing impurities. These are necessary to get the product in the state to be piped through pipelines. These costs are shared by all parties. In addition, further reductions in your profits will result from various taxes that will be charged on both the state and local levels.
Another variable that can affect your opportunities for earnings in the oil and gas production from your land is the fact you are dealing with a commodity. Commodities are those products that are pretty much the same no matter where they come from. They are priced on the markets, based on supply and demand. They can be quite variable, depending on the balance between supply and demand. This affects the amount of royalties you earn.
Though most of the time the oil companies contact the land owners directly, based on studies they have done as to which properties are most likely to produce, you can sometimes increase your opportunities by contacting them. You can find out who is leasing in your area by a couple of methods. You can talk to your neighbors to see if they have been approached. Also, you can check at the courthouse to see who has been looking to lease mineral rights in your area.
Opportunities abound in the area of oil and gas production, and in leasing your mineral rights. However, there is chance for fraud if you are not aware of the facts. Also, you can be more proactive and possibly improve your chances of getting the best deals, as well as getting all that is available in your situation. Study the facts, know the basics, and you can find opportunities you didn’t even imagine.