mineral sales. overview current state of oil and gas industry primary areas of operation inside the...
TRANSCRIPT
Mineral Sales
Overview• Current state of Oil and Gas Industry
• Primary areas of operation inside the U.S.
• Common terms used in the industry
• Gaining experience and education
• Opportunities in the O&G industry
• Questions and Answers
• Closing
State of the Oil & Gas IndustryDespite reports from the gold standard (Baker Hughes) rig counts stood still during
November and December, with no measurable gains after a steady incline throughout the year. Decreasing natural gas rig counts offset rising oil counts through years end and caused the industry to show year-to-year declines in U.S. drilling permits of 5 to 10% for the months of October & November. So, is the party over? Definitely Not…!
For the third straight year companies project sizeable increases in drilling for the coming year. Following a 13.8% increase in well completions during 2010 and a 21.3% year-to-year increase in 2011 as of October, according to the counts from the U.S. Energy Information Administration, Independent operators say they plan to increase drilling in 2012 by another 37.6%.
In a survey that was just reported to the American Oil & Gas Reporter, 78.9% of large size drillers and 72.2% of medium size drillers say they will drill more wells this year than last year, compared to only 50.0% of the Small drillers (reporting to drill 0-4 wells projected in 2012). The outlook is very positive for the O&G industry leading into 2012.
• U.S. Rig Count (2012)– Jan 6th, 2012 thru Feb 10th, 2012
State of the Oil & Gas Industry
• U.S. drilling permits approved in December 2011
State of the Oil & Gas Industry
State of the Oil & Gas Industry
Primary U.S. Areas of Operation
• (RI) Royalty interest: – A share of production or the value or proceeds of
production, when and if there is production. Royalty is normally expressed in a fraction (e.g., 1/6th). A royalty interest owner has no right to operate the property and no right to lease the property. Different types of royalty (land owner’s Royalty; Non-Participating Royalty; and Overriding Royalty).
• (ORRI) Overriding royalty interest:– A share of production free of the costs of production,
usually carved out of the lessee’s interest under an O&G lease. Normally used to compensate parties who have helped structure a drilling venture. Overriding royalties usually terminate when the lease terminates.
Common Industry Terms
• Lease vs. Sale• Open for lease• (NMA) Net mineral acres vs. Gross mineral acres• (HBP) Held by production• Gross lease vs. Net lease• Bonus or (Lease Bonus): a payment to induce a
lessor to execute the lease• No deductions clause• Commencement clause• Depth clause• Pooling or Unitization clause
Common Industry Terms
• Read and study the industry
– American Oil & Gas Reporter magazine
– Oil and Gas Law in a Nut Shell (5th edition, by John S. Lowe)
– Independent Oil and Gas Association of (name of state)
– (NARO) National Association of Royalty Owners
– (IPAA) Independent Petroleum Association of America
– (NAPE) North American Prospect Expo * The World’s
Largest Prospect & Property Expo in Houston, TX. Held
twice per year.
Gaining Experience and Education
• Outright sale of mineral interest
• Outright sale of oil & gas companies
• Outright sale of oil & gas equipment
• Mineral lease marketing and negotiations
• Mineral rights and lease auctions
Opportunities to make revenue in the Oil & Gas Industry
Questions and Answers
Shawn TerrelVice President
United Country Auction Services
The End