WHAT YOU NEED TO KNOW ABOUT THE OIL & GAS BUSINESS WHEN SELLING YOUR MINERAL RIGHTS

April 10, 2017

Operators/Drilling companies are often referred to as E and P (Exploration and Production). The operators must “explore” and locate hydrocarbons or minerals in source rock or an underground reservoir. One of the best ways to see what is below the surface is using 2-D or 3-D seismic waves that bounce back and let the operator know the location of oil and gas reservoirs.  The seismic run must be carefully assessed before an exploratory well is drilled because of the high cost of drilling an oil and gas well. If the well is successful in locating hydrocarbons, then the well is completed to “produce”oil and gas.  The operator will market the oil and gas to produce a profit, and give a share of the profit to the owner of the mineral rights.


During the marketing process the oil and gas will be moved via pipe, truck, or rail by a Midstream Company. These companies transport oil and gas to refinery facilities.


Once downstream at the refineries, many products are extracted from the hydrocarbons. Depending on the type of oil, it can produce many products including gasoline, lubricants, waxes, and asphalt. Natural Gas is run through a separator to extract unwanted products before being sent to end users.

 

A Landman is the tie between the drilling company and landowner. Landmen are responsible for determining mineral rights ownership. The Landman will research the history by running title at a courthouse. After ascertaining who owns mineral rights in a proposed drilling location, the landman will approach the mineral owners with a lease. A lease is a document that allows the operator to explore for hydrocarbons in an owner’s mineral estate. In the lease there will be a term for how long the operator can hold the mineral rights. It will also state a percentage of royalties that the owner will receive if the mineral rights successfully produce hydrocarbons.

 

Once the oil and gas minerals are drilled, they are then transferred to refineries to be processed and purified for use. This process is commonly referred to the downstream sector of the oil and gas industry.

 

By working with Case Energy Partners (Case), the stress of owning and managing mineral rights for landowners is eliminated. Case is a group of highly skilled individuals who have an interest and experience in evaluating and purchasing mineral rights. This allows the landowner to receive an upfront cash payment for the value of their mineral rights and not risk the future payments on the success or failure of drilling operations. All of the legalities, paperwork, and closing costs are handled by Case. Landowners enjoy the immediate profit of selling the mineral rights.

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