Oil Leases

[Skink]

Are the oil companies paying rent every month on unused land?

[tularetom]

1. I know of some that are

My daughter's father in law collects some royalties from an oil company for mineral rights he has leased to them. He used to own the land but retained the mineral rights when he sold it. Far as I know they've been leasing these rights for years and have never drilled for anything. It's not much money just a couple thousand bucks a year.

[exothermic]

3. Royalties are paid from the production of minerals/oil...I imagine that's what he's getting.

That kind of money would be -huge- for lease rental unless it's thousands of acres. ;-)

[tularetom]

4. Yep you are correct. As it happens he just called and I asked him.

They are pumping from some mineral rights he has retained.

[exothermic]

5. Yep. I still get a nice little monthly from oil I worked to find and drill 45 years ago.

But the landowners get about 1000 times more than I do...they became multimillionaires back in the 1950s. :-)

[exothermic]

2. There are zillions of acres under lease in the USA (and elsewhere)

that were acquired long ago. Some have rental payment stipulations, some were obtained by granting overriding royalties (or even working interest which was a bargain 40 years ago but could be very expensive now.)

And then there are mineral deeds, many of which were executed in an underhanded manner...the sellers being unaware or confused about what they were signing - that has happened a lot.

I get -many- offers to buy my mineral interests by mail from people I never heard of. $140/bbl oil will generate a lot of that sort of activity!

Are you mainly interested in public land here?...if so much of it is under decades-old contracts which may or may not require rental payments. Private owners have always been free to negotiate their own terms.
:D

edit to add a word I out :D

[Bandit]

6. Usually they are long term leases and they pay very little.

They pay by the lease (usually fifty to a hundred years) and not by the year and are usually given incentives from the government way in excess of any lease value. The very first year Murkowski became the Governor of Alaska he gave the oil companies one hundred million dollars as incentive to buy up leases. At exactly the same time he discontinued a hundred million dollar program for Senior Alaskans.. It was a very typical Republican way of operating..:shrug:

[TexasObserver]

7. Yep, and every month Land Men sign up thousands of new acres.

I have a couple of friends who are Land Men. They research properties and sign up citizens, usually in rural areas, for long term oil and gas leases. The leases pay a small amount each month, but if a well is drilled and hits in the immediate area (as defined by state law), they get a piece of the action.

I have a friend who owns a bunch of wells. When he bought them, he needed oil to sell at $10 a barrel to make money. He and many like him are simply making a killing now.

[yellowdogintexas]

8. down here in the Barnett Shale, they are trying to lease land left and right

we were initially offered about $2500 an acre signing bonus and override on any production that might result. The most recent offering sent out to our neighborhood is $20000 an acre signing bonus. We would get about $6k according to the latest letter, based on the size of our lot. There would still be override. With horizontal drilling I don't know how they would figure that out ..which gas came from under whose house? The mind boggles.

However, the ultimate goal is to lease the entire city of Fort Worth I think. There are 3 companies trying to lease this section of town.

Lots of gas wells going in every week, and if you are the landowner and they find a big hit on your land, you will make some good money.

They can't drill in our actual neighborhood because the homes are too close together..there has to be a certain distance between the drilling operation and any residence, school or medical facility, but they can run the horizontal pipe a long way ...

I would not expect to receive residuals in any way but the signing bonus would be nice. I hope the neighborhood associations hold out for $30k an acre at least. I expect they are holding out until they think the biggest offer that will be made has been made. Then we will all get letters telling us it is time to sign.