Texas Oil & Gas Jobs & Selling Mineral Rights & Royalty Interests
keeptexa on Due to the innovative technology known as horizontal drilling and hydraulic fracturing, or “fracking,” an energy revolution has been taking place in the U.S. The new drilling technology has allowed energy firms to tap into once prohibitively expensive and difficult to reach shale-rock formation deposits of enormous oil and gas reserves. Fracking has allowed domestic […]
keeptexa on Have you been considering selling your property but wonder if it has more value beneath the ground? Or maybe there’s more profit to be made from leasing the land for what’s underneath. But first off….
According to MineralWise mineral rights refers to “the ownership of the minerals on or under the surface, with the owner having the right to capture or recover and the right to delegate owner rights to another party to recover mineral by negotiating a lease agreement.” The United States is one of the few countries that allows landowners to have ownership of what is beneath the soil. But to see if this is an opportunity for profit, you’ll want to take a few steps to uncover the worth of the mineral rights on your land.
First off, you’ll need to know if there are any natural resources in your land. A geologist will take some tests and report the depth, area, and concentration of any natural resource present.
In Texas, the most common places for oil and gas drilling include the following shale and basin areas. If your land lies within one of these regions, there’s a greater chance that natural resources exist on your land:
Area of the Mineral Location x Depth of the Mineral Location
Ex: 50 acres of Mineral x 5 inches of Mineral = 250 acre-feet of the Mineral
Total Acre-Feet of the Mineral x Mass of the Mineral
Ex: 250 acre-feet of the Mineral x 10 tons of the Mineral per acre-foot = 2,500 tons of Mineral Present
There is a limit to the amount each resource can be retrieved from the soil. The recovery rate can is how much of the mineral can be safely extracted. Fortunately, most natural resources have recovery rates that hover around 90%, but coal can be as low as 50% to uphold the integrity of the topsoil.
Finally, you can determine the true amount of minerals available to the buyer.
Ex: 2,500 tons of Mineral x 90% Recovery Rate = 2,250 tons of Mineral Available for Extraction
Next, you’ll need to find out how much your mineral rights are worth. After all your calculations, ultimately the true market value of the mineral rights on your land will be the final determinant of its worth. Researching current sales prices of mineral rights in your area, deciphering the demand for that particular natural resource, and getting experts’ opinions will be a great basis for when you’re ready to open your land to the public for sale or lease.
After careful research and consideration, the true value will be determined once it is presented to the buyers’ market.
keeptexa on When gas or oil production is started on a plot of land, the owner of the land is entitled to royalties, or a percentage of the lease minus production costs. While oil and gas leasing can generate substantial revenue for a landowner, there are tax implications. Depending on the state, there may be state and […]
keeptexa on With international tensions rising, crypto-currencies gaining popularity and new technologies quickly displacing old ones, market volatility may scare off more than a few investors. At times like this, commodities gain a greater following, since their stability is directly strengthened by the unpredictability of stocks and bonds. What you might not know, however, is that valuable […]
