Certain Parameters to Consider Before You Sell Oil and Gas Lease They say the luckiest person is one who owns a land and suddenly finds out there is an oil and gas reserve in that piece of land or property. And rightly so! This is because landowners who have and oil and gas hold in their land can now sell oil and gas lease to raise a significant amount of capital. Though selling an oil and gas lease can be a tricky and challenging process but if done successfully, the landowner can literally just sit and enjoy the perks of the oil and gas lease. It may require immense hard work in the beginning, but once the lease is signed, there is no work required from the landowner’s end and the oil company handles the process. The process varies depending upon the location and the kind of land. For some areas it is fairly simple while for other places it can be particularly challenging and tedious. Another factor that greatly influences the lease of the land is how “legally-free” the interest is. The term “legally-free” essentially means whether an individual or a corporation owns the land or property or it is a common property that is owned by more than one owner. The case becomes more complicated when a certain piece of land belongs to more than one owner and oil companies usually try to deal with
single owners because those leases and contracts are fairly simple and less complicated. However, that certainly does not mean that one cannot sell the oil and gas lease of a land owned by a group. It might just involve more time and negotiations but it is fairly possible. Companies just prefer landowners who are straightforward so the contract does not have too many tricky clauses that can get them in trouble eventually. While a simple mathematical equation right now will not help, it becomes fairly less complicated and simple when the landowner and the oil company sit together to decide the terms and agreements of the contract. In such scenarios, it is beneficial for the landowner to do a prior market research and have knowledge about the market rate of such leases and how much can he potentially benefit in terms of capital from a similar contract. Knowing the terms and conditions beforehand also helps. However, at times the help of a legal expert is needed in order to ensure that all the transactions are legally allowed and will not get you into trouble. Hiring a lawyer also ensures the chances of a safe contract and smoothens the entire process for you. There are certain parameters that determine the buyer’s proposal along with some basic terminology that is important for even a layman who is getting into an oil and gas lease to be aware of.
Reservoir The term reservoir in such cases denotes the underground depositedfoundation, which could be either in the form of limestone, dolomites, sandstones, shale or some other kinds. These stones can determine the composition of the oil and gas the land holds.
Production curve This is one of the most significant factors that need to be considered before signing an oil and gas lease. In this process, the petroleum engineers assess and evaluate a
landowner’s land to judge the composition of water in land when compared to the amount of oil and gas it holds.
Taxes Taxes constitute one of the most significant parts of oil and gas lease and they vary from state to state because the law differs in various regions. The tax determines the lease because it greatly influences the amount of capital both parties will save after paying taxes. https://youtu.be/gDDuTtwk_3s