Acquisition Of Mineral And Leasehold Rights

Mineral and Leasehold Acquisition Rights - So that you can sell oil and gas leases one more do research into laws and regulations governing "mineral rights." America grants property owners the right to their land and the minerals below it. This includes the rights to the minerals and natural gases found below the surface. The restrictions to selling and transferring those minerals are governed by individual state laws. To sell oil and gas leases means that you are effectively selling the rights to the oil and natural gases found below the surface is a relatively straightforward process that usually involves the property owner as well as a lessee who offers payment for the oil and/or natural gases.

Selling Oil and Gas Leases - As outlined by geology, a website published by licensed geologist Dr. Hobart King, to sell oil and gas leases is dependent upon the property owner and also on the state. Hobart contests that since the lessee usually won't know the total amount or sort of oil/natural gas the property holds, they will usually pay a fee to lease the land rather than purchase it. After the lease is signed, the lessee performs different tests to ascertain the type and quantity of minerals, as well as whether the minerals may be extracted and used. However, the benefit to the property owner comes within the type of the lease payment and possibly a "signing bonus" for the use of the land. In addition, should the land is found to be rich in oil or natural gases that will be extracted and used, then the lessee can opt to extend the lease, rendering payment to the property owner. In contrast, in the event the land is determined to be unusable or not as profitable to the lessee, then the lessee can decide not to renew the lease and let it expire.

In addition, should the land is found to be rich in oil or natural gases and also the lessee decides to extract a big quantity of the minerals, then the property owner is often paid depending on the amount extracted. Put simply, the property owner receives a share of the profit from extracting the minerals from their land. In accordance with the Environmental Protection Agency (EPA), you can find approximately four thousand oil and natural gas platforms operating in United States waters. With oil and gas combined, they supply 65 percent of U.S. energy. In order to sell oil and gas leases you need to make understand the legal ramifications of the process and understand that they may be depending on the individual property, the total amount of minerals found, and also the lessee's desire to extract the available minerals.

Most people are confused by what is a working interest of an oil and lease. It reality, it's not that complicated.

The best way to describe it is this: In every business you will find expenses and there is income. The working interest will be the ownership of the expenses. It is often also known as WI in oil and gas documents.

Thus, if you own 50% working interest; it means you need to pay 50% of the bills that can be due for that lease. So if you own 10% WI, you pay 10% of all bills.

The very first question newbies ask is "Why in the world would you want ownership in expenses?" Which is a reasonable question. The answer is quite simple - it's because the working interest owners are usually entitled to a percentage of the income, called net revenue interest.

The net revenue interest is the income, the working interest will be the expenses. To make this quickly apparent, I want to present a normal oil and gas lease. One landowner, one oil company. The landowner owns the mineral rights and signs a lease that gives him a 20% royalty. The oil company drills and finds oil and produces it.

The landowner owns 20% of the net revenue interest, so he receives 20% of the revenues.The oil company owns 100% of the WI, thus pays for 100% of all expenses. Alternatively, the oil company only has 80% of the net revenue interest.

If the oil company sells 50% of their WI, then they still own 50% of the WI, and 40% net revenue interest. Remember, the royalty owners net revenue interest will never change because of anything that the working interest owner does.