It's best to start with finding any paperwork you can find that may already have these answers. Any check stubs, deeds, division orders, oil and gas leases would provide a good start to this. Contact TFL Land Services Group with any questions about this.
TFL Land Services Group can take your stacks of paperwork and create an inventory for you that will make sense for you and your heirs. The inventory is key for allowing you to stay on top of the changes that will come your way as a result of owning oil and gas interests. It will provide a snapshot to you of your current interests and where they are located.
The term royalties is used interchangeable to mean either oil and gas mineral interests, royalty interests, or overriding royalty interests. These three interests are similar in that they all receive revenue from the production of oil and gas from a well. They do not pay for drilling or the monthly operating expenses of the well. There is a small difference between mineral interests and royalty interests, and a greater difference between mineral interests and royalty interests and overriding royalty interests. Mineral interests and royalty interests both involve ownership of the minerals under the ground. The main difference between the two is that the owner of a mineral interest has the right to execute leases and collect bonus payments and the owner of royalty interests does not execute leases or collect bonus payments. They both receive a portion of the income once the well is producing, but only the mineral owner receives an up-front bonus payment. Overriding royalty interests do not require ownership of the minerals under the ground. They require ownership of a portion of the revenues generated from the production of oil and gas from a well. Like mineral interest and royalty interest owners, the owner of override royalty interests also receives a portion of the income from the production of oil and gas. The main difference is the owner of an overriding royalty interest does not own the minerals under the ground, only the proceeds from the production of minerals. Once the lease has expired and production has ceased, the overriding royalty interest expires. The owners of mineral interests and royalty interests maintain their ownership after production ceases. An example of this would be: Bill Smith, a geologist, assisted securing leases for a well that XYZ Oil and Gas Company is going to drill. Instead of receiving a cash payment for his services, Bill may choose to receive a 1% overriding royalty interest in the well. This means, if the well is successful, Bill will receive 1% of the revenues generated from the sale of the oil and gas from this well.
People sell oil and gas interests for a number of reasons. Inheritance is the most common reason oil and gas royalties are sold. The heirs prefer cash instead of owning the oil royalties, the heirs are not familiar with the management of oil and gas royalties, or the oil and gas royalties are too small to divide among the heirs are some of the problems encountered through inheritance. Some owners sell because they need the cash for something immediate. And some people just want to simplify their investments because they no longer have the desire to manage their royalties.
We can probably prepare the documents for you. Please contact our office at 214.727.0199 and let us answer your questions and explain your options, so you can make the right decision regarding your oil and gas interests.
Take the number of mineral acres you own in a well's producing unit, divide that number by the total acres in the well's unit, and multiply this by your royalty interest as listed in your oil and gas lease. For example, if you own 10 acres in a 640 acre unit, and your oil and gas lease states that you signed for ΒΌ royalty, then your interest in the unit would be 0.003906, this would be on both the division order you received from the operator and on your monthly check.
There is no way to predict the future. There is a saying in the oil business, "The only thing for sure in the oil business is....Nothing is for sure in the oil business!" Just like the stock market, there are highs and lows depending on what is happening globally. Experts will tell you that production is up so prices are going down, and others will say the exact opposite.
The amount of oil and gas production and oil and gas prices vary from month to month. The amount you receive for your oil and gas royalties each month is based on this information. Oil and gas wells experience a decline in production over time. Each well is only capable of recovering a certain amount of oil and gas. As each month passes, there is less oil and gas remaining to recover. This leads to reduced production which would be reflected in the amount you receive each month. There are also times when a well is down for mechanical problems. If the well is down for mechanical problems, production ceases. The lack of production would be reflected in the income you receive for that time period.
There are 4 reasons why oil and gas royalty payments stop:
- The company responsible for paying your revenues may have changed and the new company is processing your oil royalties for payment.
- The amount due is less that the company's minimum disbursement amount. It will be disbursed once the minimum is accrued.
- Your account has been placed in "Legal Suspense" due to a change in address, change in ownership or if the company responsible is unable to disburse the revenue to you.
- The well may have stopped producing.
The quickest way to find out is to call the phone number on the last check you received. The last person who paid you is the best source for this information. If you do not have this information, contact us or call us at 214.727.0199 and we will provide you with the phone number you need.
Mineral Management to TFL Land Services Group means to first get to know what the minerals are by creating an inventory based on the records you have as well as what our research turns up. Then, to contact the Operators of wells that you have an interest in to make any necessary changes. Also, TFL will verify the amounts and make sure you are being paid properly. TFL can further check on the areas where you have an interest to see if any new production has begun that you need to be a part of.
TFL Land Services Group has and keeps a low overhead and only charges for the services you request. We are a small but enthusiastic group so you will not get lost in the shuffle. We cater to your needs and provide excellent, personalized service to get your oil and gas picture organized into a manageable enterprise. If you are looking for fancy with a lot of bells and whistles, TFL is not a good fit for you. If you are looking for someone to help make all of this make sense, TFL will be a great business partner for you.
Please feel free to contact us TFL Land Services Group or phone 214.727.0199. We are happy to try to answer any questions you may have.