What is the difference between surface interest and minerals interest?Mineral interest are ownership of the minerals below the surface. Surface interest can be, and in many cases, are separate from mineral interest. Surface interest pertain to ownership of surface property and any buildings/developments above the surface.
How does Blue Flame Minerals value mineral interests?We take a large number of factors into consideration when valuing mineral interests.
Operator: Some operators are more active than others, meaning the likelihood of further exploration in your section is very much dependent on which operator is drilling in your unit.
Production in your unit: Blue Flame Minerals analyzes large amounts of well data to project the future production of the current wells in your unit along with any wells that may be drilled in the future.
Production surrounding your unit: The more data the better. Blue Flame Minerals analyzes the producing wells in units surrounding yours in order to identify trends and better project future production and ultimately give you the best offer possible.
Current and future commodity prices: The price of oil and natural gas is always changing. Blue Flame Minerals values mineral interests at the most current price of commodities and future prices.
Royalty Interest: Your royalty interest in current and future wells is one of the most important factors because it determines all revenue you receive. For more on royalty interest calculations, see "Check Stubs Explained" below for more information.
WHAT DOES IT COST ME TO MONETIZE MY MINERAL INTERESTS?
Monetizing your mineral interest is provided free of cost to you. Blue Flame Minerals ensures all of the title and closing costs associated with the transaction are paid by the acquisition party. The amount you are offered is the amount you receive at closing. If there are issues with your title, like unpaid property taxes, liens, or a mortgages, they will need to be addressed before closing.
Do I have to monetize all of my mineral interests or can I monetize a portion?
No, you don't have to monetize all. Blue Flame Minerals will purchase only a portion of your mineral interests. The most common percentage is 50% of someone's interest.
What is a lease agreement?A mineral owner has the right to hold the minerals and/or delegate held interest to another party to recover minerals by signing a lease agreement. Lease agreements are typically made between the mineral owner and an operating company. The lease agreement gives the operator the right to produce oil and gas from the property. The amount of the royalty is established in the lease agreement and we highly recommend consulting with an oil and gas attorney that represents you prior to signing a lease. Royalties are revenue streams paid to the mineral owner by the operating company managing the production of oil and gas.
Lease agreements often have term limits based on production of a well or wells and usually have several items that can be negotiated prior to signing. Leases greatly affect the value of the mineral interest for the mineral owner.
How do I know if I own my mineral interests?If you currently receive royalty checks, you most likely own all or a portion of your mineral interest.
If you have a non-producing mineral interest, you must do a thorough title search to determine mineral ownership. If you have executed an oil and gas lease, that can be a good indication that you own all or a portion of your mineral interest, but it doesn’t guarantee ownership. If you have questions regarding your ownership, please contact us.
What is pooling and unitization?Oil and gas have the ability to move through the underground substructures and rock formations so a well drilled on your property could drain the oil and gas from underneath your neighbor's property. Because of this, some States have regulated the fair allocation of oil and gas through the concept of pooling and unitization. Unitization leads to the sharing of royalties from the oil and gas produced within a specified area.
Check Stubs ExplainedUnderstanding your royalty check and all the factors that go into calculating the revenue is vital. In addition to the explanation below, we've included links to some of the major operators' websites where they explain their individual check stubs in further detail. If you have a royalty check you do not understand, please contact us (501-827-3500), and we will be happy to assist you.
YOUR ROYALTY CHECK IS BASED ON THREE MAIN FACTORS:
1. Your royalty interest in a well(s), which is a factor of your share of the drilling unit multiplied by the royalty percentage agreed on in your Oil and Gas Lease.
2. The oil and gas production from the wells on your property
3. Current commodity prices for oil and natural gas.
ROYALTY INTEREST: This is the basis for all payments made to you from a well, so it is important to understand the origin of this number.
EXAMPLE: If you own 10 net mineral acres in a 640 acre drilling unit, have a 12.5% royalty in your lease and the well is 100% in your drilling unit, the math would be as follows:
(10 / 640) * .125 = .00195313
To calculate the payment you should receive for a given month, you take the oil and/or gas production, multiply it by the price received per BBL or MCF, deduct expenses and multiply that number by your royalty interest. An example of the math is as follows:
30,000 MCF (Production) * $3 (Price) = $90,000 (Gross Revenue)
$90,000 (Gross Revenue) - $10,000 (Expenses) = $80,000 (Net Revenue)
$80,000 (Net Revenue) * .00195313 (Royalty Interest) = $156.25 (Royalty Payment)
XTO(to our knowledge XTO has not provided a link to understanding their check detail, but here is a link to their FAQ page)