The decline in commodity prices has made many mineral owners consider selling their mineral and royalty interests as the timeline for a rebound is uncertain. Unfortunately, many of these owners are not well-versed in the methods and resources available that allow them to fully maximize the value of their transaction. Even worse, some mineral owners receive and accept unsolicited purchase offers in the mail for their minerals that represent a small fraction of what they are actually worth, only to realize years down the road that selling for that price was a huge mistake. The following tips for maximizing the value of oil and gas minerals and royalties in a sale are geared towards mineral and royalty owners with property located in Texas:

1. Consider selling just a portion of your minerals. One thing that is certain about a mineral sale is that when the minerals have been sold, they are gone forever. What many mineral owners don’t realize is that you can sell just a portion of your minerals, such as 50%, 25% or any other amount, allowing you to still keep an interest in the property.

2. Consult the online records of the Texas Railroad Commission (the “RRC”) prior to selling. The RRC is the governing body for oil and gas activities in the State of Texas, and provides an extensive amount of constantly updated data about the oil and gas activity on tracts throughout the state. The easiest and most effective tool that they provide, which also happens to be free, is their “GIS Viewer” which allows you to see what the production and permitting activity looks like around your area. Having knowledge of what the production and permitting activity is around your tract is the first step to being informed when putting your minerals on the auction block.

3. Do not take the first offer you are given without exploring other options! While this may seem like common sense, it is tempting for a lot of people to accept the first offer when they are presented with a large sum of money for what they previously thought had minimal value associated with it.

4. Do not be pressured by “take it now or risk losing it” offers. If a mineral buyer wants your property today, they’ll want it tomorrow, two weeks from now…these are long term investments for many buyers and the arm twisting tactic of take it or leave it offers is simply that, a tactic. It is reasonable to request two weeks to evaluate a purchase offer.

To find out more about Hilltop Royalties, please visit our website at www.hilltoproyalties.com or send us an email at info@hilltoproyalties.com. We are also available by phone 7 days a week at 214-494-1024.

Reduced Oil / Gas / Mineral Royalty Payments

You’ve probably seen the news: Crude Oil prices have dropped by half their value in less than a year. Oil was traded for $100+ per barrel in July 2014, and then began to slip. To $80-85 per barrel in October. $55-60 per barrel in December. And now currently hovering around $45-50 per barrel.

With lower commodity prices come lower royalty payments for mineral owners. And, often in these times, an oil company may “shut-in” a producing well if they cannot afford to operate the well, or if they hope prices will improve in the future.

We have been approached by many royalty owners who are concerned about their decreasing payments, and have considered selling their interests. At Hilltop Royalties, we never advise an owner to sell their interest. However, we also realize that many people have become accustomed to a certain level of income from their royalties, and wish to maintain their lifestyle. Or, their current life situation necessitates more money now than what they are receiving.

There are many mineral buyers on the internet, all who claim to work in your interest. They don’t. They may have cold-called or mailed you, offering top dollar. They don’t. We estimate the majority of them to be “flippers”, who want to buy as much of your interest as they can, for as little as possible, and then “flip” the minerals to a larger investment group, pocketing the profit. Please contact us first before talking to a mineral buyer. You have many options.  

Instead of selling all of your interest, consider some alternatives:

• Sell only a fraction of what you own, to meet your immediate financial goal.

• Sell for a fixed period of time. For example, you can sell your minerals for a 10 year term, or for the life of a current oil and gas lease. In the end, you will still own the mineral rights.

• Sell only a specific “strata”. Oil and gas is typically produced from one specific “strata” or geographic layer of the earth. However, there could be oil and gas lying above or below that layer.

• Sell only the royalty interest, keeping the right to lease in the future. You determine if and on what terms your minerals are leased in the future, and can collect the bonus payment.

These are but a few examples. Every client’s needs are different, and we listen to you to determine what is best for you.

If you absolutely need to sell your minerals, please contact us first. We work with a large network of professional mineral buying companies, high-net-worth investors, and private-equity companies to secure the best deal for you.

Hilltop Royalties, LLC is not a law firm, and we do not create an attorney/client relationship with any client. Many of our clients have their own attorneys, and we will happily work with them, or refer you to a reputable attorney if you desire legal advice.  

To find out more:
Email us at info@hilltoproyalties.com
Visit our homepage at www.hilltoproyalties.com
Checkout our Facebook page at www.facebook.com/HilltopRoyalties
Or phone us at (214) 494-1024

Seismic Permits and Agreements – Watch Out!!

Oil and Gas minerals under the ground are highly valuable and highly profitable, but highly expensive to extract. Before an oil and gas company spends millions of dollars on leasing, drilling, and operating a well, the company will want to have a high degree of certainty that oil and gas are actually under the land.

Geophysical surveying, or Seismic surveying, is one way of figuring out what is under the land. Maybe you have been approached by a company asking you to sign a Seismic Agreement or Permit. If so, be very cautious with what the agreement says! There are several important considerations when executing an agreement, including:

• Time and length of the agreement – when their crew can enter your land, and how many days or weeks they can stay.
• What land is covered by the agreement?
• Consideration for the agreement or permit – what are they going to pay you, and is it fair?
• Care of your roads, fences, gates, vegetation, and livestock (if you own the surface), and Surface Damage payment in anticipation.
• Clean up of trash and waste by the seismic crew.
• Indemnity/Insurance – what happens if one of the crew members is injured on your land?
• Whether you can get a copy of the seismic data.
• And perhaps most importantly, make sure there is not an option to lease hidden within the Agreement you sign!

The Option to Lease clause inserted into many Seismic Agreements is a sneaky way for the oil company to enter into an Oil and Gas Lease on very cheap terms.

For example, hidden within a 2 or 3 page, small-print, seismic agreement, there may be a clause stating that the oil company has the option, but not the obligation, to lease your land for oil and gas development at $50.00/acre. If the seismic research is favorable, the oil company will want to drill, and you will have to accept the $50.00/acre bonus, even if other companies are paying 5 times that amount. If the seismic research is not favorable, the oil company does not have to lease or make any additional payments. It is “win-win” for them, and “lose-lose” for you.

Many times, it pays to have somebody on your side. A two-page agreement may seem simple when presented by a landman from an oil company, but that is rarely the case when you dig deeper into things. If you’ve been approached about seismic permitting, give us a call or email. We’re here to help.

Hilltop Royalties is proud to work alongside mineral owners. All of our work is done cost-free to you, and we only get paid when we strike a deal acceptable to you. It is our goal to turn the oil company’s “win-win” situation into your “win-win” situation.

Click here to read our top 10 tips for negotiating an oil and gas lease!
Click here to learn more about the services we offer!
To find out more:
Email us at info@hilltoproyalties.com
Visit our homepage at www.hilltoproyalties.com
Checkout our Facebook page at www.facebook.com/HilltopRoyalties
Or phone us at (214) 494-1024

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Oil & Gas 101: The Creation of Minerals

We often post about leasing minerals, so we thought it would be nice if we changed direction and did a post about the minerals themselves

How is oil and gas created?

How do companies know where these minerals are?

We’ve written a brief primer to help answer these fundamental questions.

There are several theories as to how oil and gas deposits are formed. The most popular theory is that oil and gas deposits were formed from vegetable and animal life in the seas. Over the course of millions of years, the seas and continents move great distances, life forms decompose and turn into carbon, and layers of rock gradually form. Time, heat, pressure, and other factors cause these once organic life forms to turn into oil and gas, trapped inside rock formations.

Not all rock is created equal. If you sliced open the earth, you would see dozens of different layers of rock and sand. The Grand Canyon is a perfect example of what the earth looks like underneath the surface. These layers differ in thickness, depth, porosity, and permeability. In order to find oil and gas, the oil company must first find rock that is capable of holding these minerals, and capable of letting them out.

Porous, permeable rock formations are most attractive to the oil company. Porous rock is that which has a lot of space in between particles, making it capable of physically holding oil and gas (sort of like a sponge, on a molecular level). Permeability describes the resistance of the rock. If the rock holds oil and gas, but resists the movement of the minerals, then the oil company may not be able to extract the minerals. Therefore, the company will look for rock that is capable of holding mineral deposits and rock that has little resistance to the minerals movement.

So, how do oil companies know where these rock formations are? Mostly through educated guesswork and actual drilling. Large oil companies will hire teams of geologists, geophysicists, engineers, and other scientific types to help pinpoint where these formations may be. These people may do seismic research, on-the-ground surveying, look at well logs in the area (data from other oil wells), and core samples (rock samples from the drilling operation). Until a well is actually drilled on a particular piece of land, the oil company will not know 100% if there is oil and gas, or whether there is enough oil and gas to make a profit.

Exploring and drilling is a high-risk activity. Going into an area with a past history of drilling aides the company in predicting what kind of rock may be underground and what may be in the rock. Even so, rock formations can differ greatly in distances as short as a mile. Today’s technological advances take some of the risk out of the equation. Nonetheless, to know for sure what is underneath, the oil company must drill.

Of course, this is a good thing for the mineral owner. All the data may be unfavorable, but a company may still venture out and drill just to know for sure, and hopefully get lucky. These “wildcatters” sometimes go broke, and sometimes strike it rich. However, the “unknown” is attractive to oil and gas companies, and many times they will take leases even if the odds aren’t in their favor. That’s where Hilltop Royalties comes in. Visit our other pages to learn more about us and what we can do for you!

To find out more:
Email us at info@hilltoproyalties.com
Visit our homepage at www.hilltoproyalties.com
Checkout our Facebook page at www.facebook.com/HilltopRoyalties
Or phone us at (214) 494-1024

Best Texas Oil and Gas Title Opinion Attorneys
3 Tips for Hiring Accurate Oil & Gas Attorney
Active Operators and Midstream/Pipeline Companies in Eagle Ford.