Are you new to the industry? Welcome! This resource is your introduction to oil and gas. What type(s) of ownership do you have in your portfolio? What can you expect in your royalty check? We’re covering the questions we hear from new owners. Have a question? Send it in.

THE FIRST THING YOUR INTRODUCTION TO OIL AND GAS WILL TEACH YOU IS THAT ULTIMATELY, ‘IT DEPENDS’ IS THE ANSWER.

Your compensation is determined by what type(s) of ownership you hold. This can be confusing for new oil and gas owners because you can have several types of ownership simultaneously. Here are popular ownership types:

SURFACE RIGHTS

Are they drilling or transporting on your property?

If you answered yes, you’re a surface rights owner and should be compensated for both damage and usage. If a pipeline runs through your pasture, you have surface rights and revenue considerations.

Do owners with surface rights receive a portion of the oil and gas produced?

Sometimes… It depends on if you’re also a mineral rights owner and what you negotiated in your lease agreement. If they’re only transporting the resources across the surface of your property, then you’re not defacto entitled to a percentage of the mineral rights. However, if they’ve drilled into your resources, you’re entitled to your percentage aka decimal interest. Learning about leases can keep you from being baited into a bad deal.

MINERAL RIGHTS

Do I own the mineral rights to my land?

When people purchase land, they generally assume they own it all, including the mineral rights. However, it’s not uncommon for mineral rights to be separated from the surface rights. You need to check your deed. 

How would I know if someone wanted to lease my land for oil and gas activity?

Many people are surprised when they receive an operator’s letter or greet a landman at their door. If you want to know who’s operating in your area, you don’t have to wait to find out. Your land office is where operators will be researching titles, so your land office staff will know who’s operating in your area. As a national firm, GMM has relationships all across the country and can help you research opportunities using our experienced eye.

WORKING INTEREST

How can people without surface rights or mineral rights invest in oil and gas?

Yes, it’s possible, and it’s called a working interest. People or companies with a working interest in a well own a percentage. They own a percentage of the costs associated with the lease, the drilling, the production, etc… And they’re also entitled to a proportionate percentage of the production revenue.

INTRODUCTION TO WELLS & DRILLING

The next chapter in your introduction to oil and gas covers the production aspect: wells and drilling. There are also different types of wells, stages of production and classifications–all of which impact your payments.

What is pooling? What does that mean for my check?

Drilling a well is expensive, so ensuring it can drill efficiently is important. It’s also important that all mineral owners are compensated proportionally to their ownership quantity. When the pool of oil and gas sits beneath several owners’ land, pooling is the process of extracting the resources efficiently. Each owner is compensated according to his/her decimal interest.

The well is ready. Why isn’t it producing and when will I get my check?

Just because a well is capable of producing, doesn’t mean it will anytime soon. There are wells all across the US currently classified as paused. They’ve been drilled, they’re ready to produce, but they’re waiting for better prices and market conditions. Interested in paused well research? This article is for you.

What do rights to a producing well entail? What exactly do we own?

Do you have an ownership stake in a producing well? Congratulations! A producing well can also be called a commercial well, and it simply means the well is operational and successfully extracting resources. If you own a decimal interest in the mineral rights, a producing well generates royalty checks. Now is a good time to think about staying organized for tax season.

WHAT STEPS SHOULD YOU TAKE AFTER THIS INTRODUCTION TO OIL AND GAS?

1. KNOW WHO’S ON YOUR TEAM.

   Even if you’re not ready to sign up for support, get involved in the industry and meet the players. We’re members of TIPRO and NARO, which has state chapters in addition to national resources.

   Looking for more free resources to support your thinking? Pop over to our Knowledge Base resource hub and check out Finding Your Fit: Mineral Owners Guide to Evaluating Advisors.

2. STAY ON TOP OF INDUSTRY NEWS AND FLUCTUATIONS.

   Our Knowledge Base is a hub of resources designed to help owners understand the oil and gas industry. We believe in transparency and that means helping you learn and understand. Bookmark Knowledge Base, use the free resources, and send in your questions.

3. WATCH THE SPOT PRICES.

   Oil and gas shifts fast. Want to know what your next royalty checks or lease negotiation could look like? Watch the data. We’re sharing our models fee-free, so tap in here and skip the analytical leg work.

4. INVEST IN KNOWING WHAT YOU OWN.

   We see it all the time. An individual inherits land and rights and starts to wonder why Grandma didn’t receive oil money when all of her neighbors did. Well, it could be because they couldn’t find who owned the land.

   Titles are messy. If all your neighbors have royalty checks, and you don’t, it is time to look into it. You may find that there’s unclaimed royalty money. You may find out that back in ’65 someone bought the mineral rights and you only own the surface rights. You may find out that your title needs to be ‘cured.’

5. ASK GOOD QUESTIONS.

   This one is last, but it’s powerful. If you see a term, a phrase, a piece of data that you don’t understand… ask. Nobody’s born an energy industry expert overnight, and we know talented attorneys, accountants, geologists and landmen who are great people.

   In fact, pop on over to our Contact Page and send in your questions. What do you need to know? What’s been causing uncertainty?