My brother got an email from an oil survey company saying that their records indicated our late grandfather owned mineral rights on a small property in coastal Texas. They had found him with an internet search by matching names. We were able to verify we were kin. Since we were heirs, they needed our permission to survey and were going to pay us for letting them look. We both got a check and never heard any more. So, thanks grandpa!
@@TheZachLife My wife owns mineral rights on land in TX. The company who has been drilling, recently struck oil, and has begun paying us. How would you suggest we go about making sure we are being paid for the actual amount of oil being pumped? Any way we can put a meter on the pumps? Thanks!
@@apacheworrier3776 you receive statements that record how much oil is being pumped. If you want to check "their numbers" TX has a regulatory commission where all records on oil wells is recorded and maintained.
Zach, keep in mind that what you find as boring because you have seen and done it yourself 30,000 times over the years probably will not be boring to us. :)
Same here. Very interesting to me. I wish I could borrow (lease) just one well for one year. Cha-ching! I'd be good for the rest of my natural daze on Earth!!! Right?
@@christianmccollum1028 Wrong!!! I have five wells that I will give you right now!!! Be careful what you wish for!! There are economic wells and non economic wells. The non economic well are required to be put in working order or plugged. All of it costs money so you must be very careful what kind of well that someone is willing to give you. As is said, there is no free lunch and sometimes free is NOT cheap enough. If you wish to pursue this, the Railroad Commission of Texas , which controls all production in Texas, has abandoned wells (called orphans) that they will give you if you qualify as on "operator" Best of Luck. You are going to need barrels of it.
Good job. I appreciate the effort you will be making. Most people have NO idea how the oil and gas industry works especially the financial aspects of it. You show a pretty simple lease contract and they get so much more complicated. Not just the terms, but the royalties, taxes, federal regulations, EPA reviews, etc. I was in the oil and gas industry for over 25 years and mostly in the IT divisions and wrote programs and designed systems to manage the craziness. I know of wells that produce about 10 barrels a month and there are over 500 royalty owners getting a piece of that every month... in different amounts... in different ways... paid in different time terms. You haven't even gotten into the hedging and market fluctuations and productions contracts. I will be watching for you future videos for sure. Anyone that can use a V8 motor on a pump jack is alright in my book.
Great video. My grandmother "owned oil wells" in Oklahoma on the old family farm and got a check every month. Now I a better understanding of how these things work. She was likely the mineral owner or had leases that was assigned to someone to operate the wells.
Excellent class on oil/gas leases. We had a geologist in Osage County that would provide his services for a 3% overriding royalty. If we ran casing he was happy. If we plugged the well, not so happy. Informative and fun to watch, thanks!
For those unaware, It is interesting to note that any overriding royalty interest(s) is/are carved out of the 7/8th working interest. It does not come out of, or reduce, the mineral owner's 1/8th royalty interest. Furthermore, the working interest is seldom ever owned by a well operator. However, smaller operators such as Zach may also own the working interest. Working interest is typically owned by oil companies (Shell, ExxonMobil, Chesapeake, etc.). Wealthy folks such as lawyers and doctors often own small to medium working interests. If you own a working interest, you are responsible for your share of costs associated with drilling the well. If work is done on a well to get it pumping or flowing again, the working interest owners may be charged their proportionate share of the cost.
Thanks for the update here! Look forward to the series. I'm sure the attorneys in the O&G field are never short of work between the old agreements and the derivatives of that going downhill to today.
You do a very good job putting things in layman’s terms. My interest in oil production ends at the machine shop after the equipment is built, but you have a way of making oil interesting! Thank you for your efforts.
Very interesting...especially the part about having to produce commercial amounts of oil to keep a lease or to avoid having to plug a well. That's an ancillary benefit to a service I offer, which is recovering marketable amounts of oil from abandoned/offline wells. Cool videos...keep em coming!
I'm a new subscriber And I love this channel. I'm a retired engineer and you have to really appreciate all of the commonsense and unique engineering and many skills of this guy. Am a binge watcher...Awesome Channel! THANK YOU..keep'em coming!
That was a very good definition of what I call "et al's". That may help people understand the difference between board price per barrel and what you actually see on your check. It may be good to understand the difference between board price today and what your check says by the date your purchaser "turned on" your tanks.
Here in southern Indiana I used to live by a old man who had a lot of ground and back in the 70s he had it drilled with oil wells and there was several wells that turned out to be really great wells they said one by his house made 30000 bucks a month for the old man and he had several wells that did good they still pump them to this day thanks for sharing buddy very informative I’ve always wondered how a lease worked
I worked for a family that had gold mining leases on cattle stations in Australia, the station owners loved the idea because of all the infrastructure we built, being haul roads, massive dams, workshops and such and when we moved all the plant and equipment went with us to the next lease so no rubbish left behind. We did alluvial gold so no under ground hard rock mess left just mountain of washed gravel, perfect for there road building
Very insightful video.. I grew up in the country with old hit & miss engines running constantly supplying thanks on the edge of the woods with pipes scattered everywhere along the side of farm land. I always wondered how the legal side went. Thanks for the knowledge.
Interesting stuff! Can't wait to hear this whole series out. Never knew exactly how this stuff worked. Being here in the US it fascinates me. I especially like all the old iron and old school stuff .
Zack this is great. I am a born and raised Texan. I myself always wanted to know what an Oil lease really is. I was raised on a farm where my Mom and Dad owned the property but did not own the mineral rights and some oil company drilled a well just about 100 yards from our back porch. I think mama and Daddy may have gotten some kind of damages payment but like you said they pumped all the water out of our stock tank to drill the well. I am looking forward to your next video. Thanks for bringing us along. BTW it was a dry hole.
I have no doubt that your ability to service your own wells is key to your success. If one had to hire out service to low producers, it will not pencil out. Keep it up, good one .
Zach please do a video on who to contact about Investing in oil rig/leases. Interview lawyers, brokers , oil company employees who write contracts out etc.
Watching this in a hotel in Ennis Tx I’ve been looking out the window at oil wells all day and can identify everything I see thanks to Zachlife. I’ll be back in Conroe in the morning but really enjoyed the trip through the fields today
Clear mineral and water rights to a piece of land you want to buy are very important things that people tend to forget in getting title to land with out a professional historical search for these kind of things. I have seen whole subdivisions laid out and lots sold with no water rights here in the desert.
How true. I knew of an investment club in Tulsa that bought land around Dell City, Tx. to develop it. But the water rights were controlled by the City of El Paso, Tx. It didn't end well...
Holy crap now I know why so many people have been killed because of bad oil deals. When you think of oil nowadays you think giant multi billion dollar corporations. Not Ted and John that are gonna off Frank because he did something shady with a lease....Awesome video Zach! Cant wait for the next one.
Very interesting! I was very curious about the wording in a lease. Thanks for showing us one! I think it was over ten years ago, I was looking for businesses opportunities on eBay. Yes, eBay. I found a whole bunch of oil wells (or leases) like you talk about, in one, single lot which were for sale, the whole bunch for $200,000. I was looking into it, although I didn't have the 200k. Within five days of finding the ad, oil went from $20 to $100 a barrel.. If I had been ready to act, that would have been a nice windfall! I'm someone who would still buy something, oil or gas. Thanks again!
I really like the info and watching the videos. The thing that I don’t like about separating minerals from the surface is that the information never gets put in the surface deed. People can by property and get a big surprise when others come in and start doing things on the property. To my knowledge anything can be separated out of the property, timber rights, hay rights, mineral rights can be separated into coal, oil or gas. Please keep the info coming.
I just like to understand how stuff works and this channel is great for that. The only we have less of in Massachusetts other than Conservatives, is oil wells. So it's not something I grew up with. I have heard all of the doom and gloom stuff regarding the oil business for years. It is nice to hear from somebody closer to reality.
Zach, thank you for the video, and upcoming series. I believe I posted in another video a question or two, possibly rhetorical. You answered those, and what would have been many more followup questions. I look forward to the series. Considering the $10 and $72.50 in the example contract you used, what would be realistic up front costs in 2022 to get started in the industry, including all leases (land and equipment leases if there is such a thing), initial purchase of essential tools and equipment, etc. Thank you.
I've been working at the fringe of the oil field most of my life. I started as an oil field mechanic after the Army them after I opened my own shop I had contracts to repair and maintenance trucks and mobile equipment. All that time I've wondered how this stuff works.
During some bad times way back when I knew a dude (an Aggie like me) that had a lease that paid a $5/ton royalty on sulfur for some sour gas wells in East TX. The price of sulfur at the time was way more than $40/ton (i.e. $5/ton is less than 1/8th) So he bought up a bunch of sour gas leases and made bank producing the sulfur. And they make fun of Aggies like us. LOL. You gotta keep an eye out for odd ball deals like that.
In the 80's my family had 80 acres just built a nice new log cabin over looking about half of the property. It was beautiful. We could sit on the porch and watch deer/turkey at a feeder and the sun set. We had a prior lease for the prior owner and they put a well 75 yards from the front porch right in the middle of the view. We asked them to move it 100 yards either way but they would not.
As a Canadian oilpatch vet of 25 years, who has been involved in everything from drilling to production, and even have a family member who started his own oil company, this is interesting (altho it is different rules down south). Thanks for the explainer, its a window into the American oilpatch 👍🏼
In Alberta at least, most (but not all) landowners do not own below.. 6”? So an oil company can drill under your land whether you like it or not, they merely have to negotiate surface rights via the landman.
Yes, I didn’t state that because I thought it was obvious but should have. I imagine we have more red tape north of the border, based on talking to relatives who have worked in the US, so that’s also why I found this interesting.
A few years back I got a call from from an oil company, my two sisters and I had inherited something like 8 acres of mineral rights from our grandfather I only met a couple of times on my father's side. A couple of thousand dollars came my way after I provided proof via death certificates and a will. Then later more offers to buy my share of the lease from a few companies. I never sold my share and I have no idea what my sisters did with theirs. Never heard any more. Maybe with gas prices back up and if they stay up I'll hear something. When I bought the old house I'm living in I got the mineral rights also. This is a city lot ... it use to pay around 75 dollars per year. Who ever did the accounting on that well must have had a lot of paper work to account for all the city lots .
*_Good video. Thanks much._* From my experience, I compare a PETROLEUM LEASE to an APARTMENT [real estate] LEASE. The time period of the lease is the duration that, per the lease agreement --- that is, per the lease document, which, as described in the video, is a contract that is recorded officially in the local Court House --- you can live in an apartment, but, of course, you do not own the property. For the term of a PETROLEUM lease --- referred to as the PRIMARY term; where, generally, it concerns ONLY THE SUBSURFACE rock layers, including what PETROLEUM may be produced out of them --- you can explore, drill, and sell petroleum produced from that piece of leased property, but, again, you do not OWN the property. Note: here in the USA, the majority of times --- but, hardly is this universal --- the property OWNER will typically own both the SURFACE and the SUBSURFACE properties; where the SUBSURFACE part is referred to as the SUBSURFACE MINERAL INTEREST. When the owners of these are not the same, the mineral interest is referred to as SEVERED MINERAL INTEREST. So, when working with a severed minerals situation, for obvious reasons, the LESSEE needs to be well aware of this ... and, if a LEASE is taken on the subsurface minerals, he/she needs to also make separate arrangements with the SURFACE owner so that surface ACCESS, for petroleum operations, is possible. Note: also, a typical PETROLEUM LEASE almost never has anything to do with the ACTUAL GROUND SURFACE of that property; that is, where, other than surface access to that property, and permission to go in and out of that property in order to conduct "normal and customary" petroleum industry operations, the LEASE restricts you from doing, on the surface, just about anything else. For example, during the term of the PETROLEUM LEASE, I, as the LESSEE cannot use the SURFACE GROUND to grow and sell my own crops, or, raise a herd of cattle. [Ha-ha!] That is held by the PROPERTY OWNER; that is, the LESSOR. Note: a typical PETROLEUM LEASE never includes any gold, silver, diamonds, buried treasure, or, any other commercial minerals, which may be in that subsurface lease area; that is, anything of the kind --- other than PETROLEUM --- that may be encountered during the PETROLEUM exploration processes is NOT INCLUDED. [Ha-ha!] Also, subsurface water, which, in some areas is quite valuable, is not included in the typical PETROLEUM LEASE. So, just like an APARTMENT LEASE, you also TAKE a PETROLEUM LEASE; where, in both cases, from the owner of the property, who is called the LESSOR, the LESSEE TAKES A LEASE. [Note: the term TAKE A LEASE --- borrowing the property, so to speak, for a set time --- is used to make that distinction from BUY A PROPERTY; where, of course, when buying, you then OWN that property ... where you, personally, may then transact a lease with some other LESSEE.] Of course, as well explained in the video, in the case of the PETROLEUM LEASE, should COMMERCIAL volumes of oil and/or gas be discovered and produced from that lease, the LESSEE will PAY, on the pre-arranged basis as agreed contractually in the lease document, additional cash ... where that additional amount is determined by the amount of ACTUAL PRODUCTION and ACTUAL PRICE for which it was sold. Here's a significant difference, regarding the potential full life of any particular petroleum lease: if, BEFORE the EXPIRATION of the PRIMARY TERM, you do NOT discover COMMERCIAL petroleum, the lease simply expires; however, as is TYPICAL in such leases, if petroleum is discovered and COMMERCIAL production commences, the "life of the lease" is extended, typically, for the life of that commercial production. [Such a lease is referred to, informally, as an "HBP" lease, where GENERALLY said lease is HELD BY PRODUCTION [HBP] until the commercial production runs dry; that is, until the well no longer is capable of producing and selling petroleum necessary to making money.] Again, thanks for the great video. Good to see such information from someone working on the FRONT LINES of our CRITICAL Petroleum Industry. *_PS: for my ONE viewer vote, I vote for you to continue including your political comments; where, at this challenging time in our history and our economy, SADLY, politics plays an OVER-SIZED IMPACT role in our daily business; where, literally, political policies TAKES BREAD OFF OUR TABLES!_*
I have to tip my hat off to you Zach. This really cleared up a lot of stuff on leases from the past. I can only imagine how many fake leases are out in the real world. I know the price point is a very contentious subject matter. Will not even ask Zack. What I would like you to answer is just one thing. I was always told the business of oil and gas is called "feast or famine." This has to be true since when the gas drilling started in earnest in Pennsylvania twenty years ago during the governor Corbett era. Please excuse me of calling him CORDICK, which is just what he really IS without sugar coating anything. There was a outfit in central PA. who sold his business with all the leases he had and cashed in the big dollars. When asked why he did what he did the man said, I am a person who want to feast to hell with famine. NIcely done video fella. Please do more fella.
@@TheZachLife Let us not forget since you were introduced from an early young age doing things with your grandfather, one never forgets and will always have a soft spot for the business. Also, we need people like you to work the stripper wells so America can be somewhat independent from the other suppliers. Look forward to the new video fella too. vf
Had a friend who was a traveling oil and gas lease expert, he told me In the United States, mineral rights can be sold or conveyed separately from property rights, previous owner of the land could have sold the mineral rights, in which case you only own the SURFACE rights. Before buying a piece of property make sure the mineral rights were not assigned. In California if mineral rights were sold but have not been claimed for 20 years, they revert back to current landowner. In states where shale plays are either under way or possible, oil companies have separated the mineral rights from tens of thousands of homeowners, giving them the right to dig a well right on your backyard, contaminating your water wells, streams and air you breath.
Thanks Zach. For an Australian that was hugely informative. We don’t have many wells here in Australia but I would love to do it if we had a few. I just subscribed. I love your work mate.
Zach is it possible to have a Mineral rights owner and a land owner that are not the same ? If so do you have to make deals with both parties. One for the mineral rights and then a deal to drill on his land?
I used to witness the plugging of wells in TX. A few wells with expired "Non-Production" clauses made a few hundred barrels while trying to kill the wells to plug them. (Note all wells were hard to get to, or the landowner was hard to get along with.) On one well that made 1500 bbls the company man called the office. The big oil office said it will cost us $500,000 to re-write the lease as there were a few thousand royalty owners. So net result they plugged the well. Back when the Nobel Laureate Al G was running for POTUS, saw lots of good wells plugged on public lands. Those leases are a different story. Yes I know where they are if we go full Mad Max.
@@TheZachLife One thing good plugged wells & big spills have in common is they are hard to get to, or the surface owner is an a__ h___. Think often a contract pumper & even a company pumper ignore the hard to get to wells. If they have been writing down 7 bbls a day & the well has actually been down for 30 days, they report an invisible spill with just a little oil on the gerund, to balance the books. Not many pumpers are going to admit they have not been to a well. Heck saw Big Oil report a spill in the thousands of Bbls that was in the hundreds, to balance the books.
Just found out me and 5 family members are heir to 60 acres of land in Panola County Tx. Oil Gas & Mineral Lease purchased back in 1904. I was notified by a land man representing Rockcliff Energy. So………. Yea. Any info is appreciated
Hi Zach. Can you explain in your next video the scenario where the landowner may not be the owner of the mineral rights? It’s all very interesting! Regards, Brett.
Is there a liability clause in oil leases now? If I was leasing out I would want to be protected against any liabilities from oil companies or their sub leases. And I guess that is why some very low producing wells are still pumped is to just keep the lease.
It's a legal precedence that there is no liability to anyone other than the working interest owner and or operator even if its been decades since any operating.
My brother and I bought 76 acres in Gladwin Mich. there are pumping wells within 1 mile of our property. The former owners were offered a lease years ago and turned it down, how do we find a person like your self here in Michigan that might be interested in signing a lease and drilling a well or 2 thanks Dean Sova we do own the mineral rights.
👍👍🙃 Man My Family has in our family name for the last Lot of Lot of many years, My Great, Great, Grand Dad land and all those things that take the black stuff and Stinky stuff out the ground is still producing to day. But by the time Both sides of the Family today get there cut. I laugh at what is put in the bank. But yes your dead right. You need good Lawyers who are good at this stuff. yes we still have a bunch of wells, and things, but as you said. Back in those days the land owners really got a tiny bit. But looking at the whole pitcher, it's much better to have something on your land, than nothing at all, Money is Money and it adds up. Great Video. right on point.
Having been in the Kansas oilfield for the last 16 years I'm excited to see this content to fill in the gaps of what I haven't experienced. Zach I posted a short video of my rig running some tubing if you want to see, I don't have ig to send you a message. I also found the flyer of the Frank's service rig from the 50's that you will love to see I'll get it to you sometime.
Please explain the Difference between Mineral acres vs Surface Acres in lease agreements as well as Lease Bonus payments calculated to secure the initial lease agreement !
Well you know what's funny I live in the state of South Carolina in Greenville county where there are no oil wells and there is gold but it's not worth getting cuz it's in court I work for a guy who was purchasing a house and someone sold the mineral rights out from under the house and then tried to sell the house took about 6 months to straighten out but it makes no sense cuz it's just dirt here
So an oil lease is what it sounds like? Renting access to the oil or gas under the ground? Who provides equipment is irrelevant to what an oil lease is?
seems the lease-overhead-maintenance-equipment costs are quite high? the pumper goes up and down with electricity? electricity costs too? including wiring conduits?
J. Sandefer bought leases here for about 30 properties just before the bottom fell out in 82. My first question is, this was based on seismic survey results, not a matter of public record like drill data. Where and how could I find and look @ this data?
I am a new subscriber but I’ve watched several of your videos on your oil production business and your production maintenance and I find it fascinating. Is this a business, that an out of state investor could buy into; and have someone such as you maintain and receive a percentage???
I'm a liberal who recognizes that petroleum products will be critically important for the rest of my life and beyond, even after the industry begins to shink. We cannot move away from fossil fuels suddenly. It will be a very gradual process for a long time. I don't think it's immoral to be in the business, and I don't think government should make life difficult for petroleum producers and refiners.
I inherited several oil leases jn Wyoming and Montana. The only paperwork I recall was "division orders" in Wyoming might have been something else in Montana. I get royalties from many companies most are small. It is mostly for gas. I am guessing that the oil may have been depleted and they have been fracked. I think they are BLM leases. I get checks from Mavericks, Carbon Creek, Hilcorp pays good, might be oil, I'd have to go online to see the report. I don't know much I am hoping to learn more from your series. One 160 acre lease has about 30 wells on it, pays very little.
I own a few acres that had the mineral rights sold a generation or more ago, and I can't find out who the owner is or if they are paying their taxes (I was told they have to pay a percentage by the court house) but it makes the land very hard to use for a home etc.
Very interesting the difference between the USA and Canada. Up here very few people own the mineral rights. The crown (government) owns the mineral rights. The land owner only usual owns the surface rights.
My brother got an email from an oil survey company saying that their records indicated our late grandfather owned mineral rights on a small property in coastal Texas. They had found him with an internet search by matching names. We were able to verify we were kin. Since we were heirs, they needed our permission to survey and were going to pay us for letting them look. We both got a check and never heard any more. So, thanks grandpa!
Hahaha sounds like a win.
@@TheZachLife
My wife owns mineral rights on land in TX. The company who has been drilling, recently struck oil, and has begun paying us. How would you suggest we go about making sure we are being paid for the actual amount of oil being pumped? Any way we can put a meter on the pumps?
Thanks!
How much have you both made from it? Just ballpark, I'm curious.
@@apacheworrier3776 you receive statements that record how much oil is being pumped. If you want to check "their numbers" TX has a regulatory commission where all records on oil wells is recorded and maintained.
Zach, keep in mind that what you find as boring because you have seen and done it yourself 30,000 times over the years probably will not be boring to us. :)
Its pretty interesting to me, thats for sure
I think he's talking about holes
Same here. Very interesting to me. I wish I could borrow (lease) just one well for one year. Cha-ching! I'd be good for the rest of my natural daze on Earth!!! Right?
@@christianmccollum1028 Wrong!!! I have five wells that I will give you right now!!! Be careful what you wish for!! There are economic wells and non economic wells. The non economic well are required to be put in working order or plugged. All of it costs money so you must be very careful what kind of well that someone is willing to give you. As is said, there is no free lunch and sometimes free is NOT cheap enough. If you wish to pursue this, the Railroad Commission of Texas , which controls all production in Texas, has abandoned wells (called orphans) that they will give you if you qualify as on "operator"
Best of Luck.
You are going to need barrels of it.
Drilling is boring init?
Good job. I appreciate the effort you will be making. Most people have NO idea how the oil and gas industry works especially the financial aspects of it. You show a pretty simple lease contract and they get so much more complicated. Not just the terms, but the royalties, taxes, federal regulations, EPA reviews, etc. I was in the oil and gas industry for over 25 years and mostly in the IT divisions and wrote programs and designed systems to manage the craziness. I know of wells that produce about 10 barrels a month and there are over 500 royalty owners getting a piece of that every month... in different amounts... in different ways... paid in different time terms. You haven't even gotten into the hedging and market fluctuations and productions contracts. I will be watching for you future videos for sure. Anyone that can use a V8 motor on a pump jack is alright in my book.
hahaha thanks
So how do i find an oil lease/company to buy that doesn't have 500 royalties?
@@JayLupe I'm pretty sure it was either monthly or possibly quarterly...
Great video. My grandmother "owned oil wells" in Oklahoma on the old family farm and got a check every month. Now I a better understanding of how these things work. She was likely the mineral owner or had leases that was assigned to someone to operate the wells.
Excellent class on oil/gas leases. We had a geologist in Osage County that would provide his services for a 3% overriding royalty. If we ran casing he was happy. If we plugged the well, not so happy. Informative and fun to watch, thanks!
For those unaware, It is interesting to note that any overriding royalty interest(s) is/are carved out of the 7/8th working interest. It does not come out of, or reduce, the mineral owner's 1/8th royalty interest. Furthermore, the working interest is seldom ever owned by a well operator. However, smaller operators such as Zach may also own the working interest. Working interest is typically owned by oil companies (Shell, ExxonMobil, Chesapeake, etc.). Wealthy folks such as lawyers and doctors often own small to medium working interests. If you own a working interest, you are responsible for your share of costs associated with drilling the well. If work is done on a well to get it pumping or flowing again, the working interest owners may be charged their proportionate share of the cost.
Exactly.
Thanks for the update here! Look forward to the series. I'm sure the attorneys in the O&G field are never short of work between the old agreements and the derivatives of that going downhill to today.
You do a very good job putting things in layman’s terms. My interest in oil production ends at the machine shop after the equipment is built, but you have a way of making oil interesting! Thank you for your efforts.
Thanks.
Very interesting...especially the part about having to produce commercial amounts of oil to keep a lease or to avoid having to plug a well. That's an ancillary benefit to a service I offer, which is recovering marketable amounts of oil from abandoned/offline wells. Cool videos...keep em coming!
I'm a new subscriber And I love this channel. I'm a retired engineer and you have to really appreciate all of the commonsense and unique engineering and many skills of this guy. Am a binge watcher...Awesome Channel! THANK YOU..keep'em coming!
That was a very good definition of what I call "et al's". That may help people understand the difference between board price per barrel and what you actually see on your check. It may be good to understand the difference between board price today and what your check says by the date your purchaser "turned on" your tanks.
Here in southern Indiana I used to live by a old man who had a lot of ground and back in the 70s he had it drilled with oil wells and there was several wells that turned out to be really great wells they said one by his house made 30000 bucks a month for the old man and he had several wells that did good they still pump them to this day thanks for sharing buddy very informative I’ve always wondered how a lease worked
Tuber Here
Professor Zack another great video, bringing your experience to the tube, so we can better understand the way things work in your world.
Hahaha Thanks.
I worked for a family that had gold mining leases on cattle stations in Australia, the station owners loved the idea because of all the infrastructure we built, being haul roads, massive dams, workshops and such and when we moved all the plant and equipment went with us to the next lease so no rubbish left behind. We did alluvial gold so no under ground hard rock mess left just mountain of washed gravel, perfect for there road building
Thats awesome, I've always been amazed by the gold industry.
Very insightful video.. I grew up in the country with old hit & miss engines running constantly supplying thanks on the edge of the woods with pipes scattered everywhere along the side of farm land. I always wondered how the legal side went. Thanks for the knowledge.
Thanks Zach. I appreciate you taking the time to explain these subjects.
Superb advice and channel content - thanks for your time to make these
Interesting stuff! Can't wait to hear this whole series out. Never knew exactly how this stuff worked. Being here in the US it fascinates me. I especially like all the old iron and old school stuff .
Very well done, Zach. Very informative. You always do a great job explaining the details. I'm always looking forward to your next video.
Zack this is great. I am a born and raised Texan. I myself always wanted to know what an Oil lease really is. I was raised on a farm where my Mom and Dad owned the property but did not own the mineral rights and some oil company drilled a well just about 100 yards from our back porch. I think mama and Daddy may have gotten some kind of damages payment but like you said they pumped all the water out of our stock tank to drill the well. I am looking forward to your next video. Thanks for bringing us along. BTW it was a dry hole.
Its was what's know as land damage payment. Thanks.
I have no doubt that your ability to service your own wells is key to your success. If one had to hire out service to low producers, it will not pencil out. Keep it up, good one .
It is.
Zach please do a video on who to contact about Investing in oil rig/leases. Interview lawyers, brokers , oil company employees who write contracts out etc.
Cool video I especially liked the example at the end with the 70 year old pump lease. Very informative
Watching this in a hotel in Ennis Tx I’ve been looking out the window at oil wells all day and can identify everything I see thanks to Zachlife. I’ll be back in Conroe in the morning but really enjoyed the trip through the fields today
Clear mineral and water rights to a piece of land you want to buy are very important things that people tend to forget in getting title to land with out a professional historical search for these kind of things. I have seen whole subdivisions laid out and lots sold with no water rights here in the desert.
How true. I knew of an investment club in Tulsa that bought land around Dell City, Tx. to develop it. But the water rights were controlled by the City of El Paso, Tx. It didn't end well...
Holy crap now I know why so many people have been killed because of bad oil deals. When you think of oil nowadays you think giant multi billion dollar corporations. Not Ted and John that are gonna off Frank because he did something shady with a lease....Awesome video Zach! Cant wait for the next one.
Grew up in West Texas. I invest in Oil & Gas land trust. Enjoy watching and learning some of the hands on and historical aspect from you. Thanks
Very interesting! I was very curious about the wording in a lease. Thanks for showing us one!
I think it was over ten years ago, I was looking for businesses opportunities on eBay. Yes, eBay. I found a whole bunch of oil wells (or leases) like you talk about, in one, single lot which were for sale, the whole bunch for $200,000. I was looking into it, although I didn't have the 200k. Within five days of finding the ad, oil went from $20 to $100 a barrel.. If I had been ready to act, that would have been a nice windfall! I'm someone who would still buy something, oil or gas. Thanks again!
Very informative. I am looking forward to the next video.
I really like the info and watching the videos. The thing that I don’t like about separating minerals from the surface is that the information never gets put in the surface deed. People can by property and get a big surprise when others come in and start doing things on the property. To my knowledge anything can be separated out of the property, timber rights, hay rights, mineral rights can be separated into coal, oil or gas. Please keep the info coming.
I just like to understand how stuff works and this channel is great for that. The only we have less of in Massachusetts other than Conservatives, is oil wells. So it's not something I grew up with. I have heard all of the doom and gloom stuff regarding the oil business for years. It is nice to hear from somebody closer to reality.
I love your videos. As a former roughneck. You give so many great answers and such great insight! So many Americans are clueless!
Thanks.
I've appraised a lot of minerals that have been in continuous production (and lease) for 90-100 years. And they still produce some oil or gas.
I find this fascinating as the mineral/royalty laws are completely different than than Canada. Very cool.
Zach, thank you for the video, and upcoming series. I believe I posted in another video a question or two, possibly rhetorical. You answered those, and what would have been many more followup questions. I look forward to the series. Considering the $10 and $72.50 in the example contract you used, what would be realistic up front costs in 2022 to get started in the industry, including all leases (land and equipment leases if there is such a thing), initial purchase of essential tools and equipment, etc. Thank you.
Thanks. This is one of those questions thats too complex to answer. It depends on so many things.
I don't care if you make 1 dollor or a million . I just like the running and repairing of the equipment of the old wells. May your barrels be full.
HELL YES A NEW ZACH LIFE VIDEO
This is really similar to leasing farm land from what I understand. Great video!
...but way more asks from the property owner
Thanks.
Super interesting insights Zach, Thanks!
I've been working at the fringe of the oil field most of my life. I started as an oil field mechanic after the Army them after I opened my own shop I had contracts to repair and maintenance trucks and mobile equipment. All that time I've wondered how this stuff works.
I used to be a well tester and now I raise capital for oil wells. I’d like to learn more about how to find these leases etc.
Right on. Great explanation. Thanks for sharing!
During some bad times way back when I knew a dude (an Aggie like me) that had a lease that paid a $5/ton royalty on sulfur for some sour gas wells in East TX. The price of sulfur at the time was way more than $40/ton (i.e. $5/ton is less than 1/8th) So he bought up a bunch of sour gas leases and made bank producing the sulfur. And they make fun of Aggies like us. LOL. You gotta keep an eye out for odd ball deals like that.
Don't have time to watch now, but looking forward to seeing the series. At present, I know enough to be dangerous!!!
Great video. Always enjoy your presentations.
Hey Mr. Zach I'm new to the world of oil production. Looking forward to your videos about selling oil. Thanks
In the 80's my family had 80 acres just built a nice new log cabin over looking about half of the property. It was beautiful. We could sit on the porch and watch deer/turkey at a feeder and the sun set. We had a prior lease for the prior owner and they put a well 75 yards from the front porch right in the middle of the view. We asked them to move it 100 yards either way but they would not.
Well done. My family has mineral rights on some of our farmland and I never understood how it worked very well. Thanks for the info!
As a Canadian oilpatch vet of 25 years, who has been involved in everything from drilling to production, and even have a family member who started his own oil company, this is interesting (altho it is different rules down south). Thanks for the explainer, its a window into the American oilpatch 👍🏼
In Alberta at least, most (but not all) landowners do not own below.. 6”? So an oil company can drill under your land whether you like it or not, they merely have to negotiate surface rights via the landman.
@@GoViking933 ... and they need to obtain a Lease from the Alberta government
Yes, I didn’t state that because I thought it was obvious but should have. I imagine we have more red tape north of the border, based on talking to relatives who have worked in the US, so that’s also why I found this interesting.
I'm looking forward to the follow up videos to this. I've been wondering about this stuff too
your best videos are those about the oil business. more of those please.
One must do a title search before buying any land, always a good pratice.
A few years back I got a call from from an oil company, my two sisters and I had inherited something like 8 acres of mineral rights from our grandfather I only met a couple of times on my father's side. A couple of thousand dollars came my way after I provided proof via death certificates and a will. Then later more offers to buy my share of the lease from a few companies. I never sold my share and I have no idea what my sisters did with theirs. Never heard any more. Maybe with gas prices back up and if they stay up I'll hear something. When I bought the old house I'm living in I got the mineral rights also. This is a city lot ... it use to pay around 75 dollars per year. Who ever did the accounting on that well must have had a lot of paper work to account for all the city lots .
Where's our update on oil leases? Waiting patiently
*_Good video. Thanks much._* From my experience, I compare a PETROLEUM LEASE to an APARTMENT [real estate] LEASE. The time period of the lease is the duration that, per the lease agreement --- that is, per the lease document, which, as described in the video, is a contract that is recorded officially in the local Court House --- you can live in an apartment, but, of course, you do not own the property.
For the term of a PETROLEUM lease --- referred to as the PRIMARY term; where, generally, it concerns ONLY THE SUBSURFACE rock layers, including what PETROLEUM may be produced out of them --- you can explore, drill, and sell petroleum produced from that piece of leased property, but, again, you do not OWN the property.
Note: here in the USA, the majority of times --- but, hardly is this universal --- the property OWNER will typically own both the SURFACE and the SUBSURFACE properties; where the SUBSURFACE part is referred to as the SUBSURFACE MINERAL INTEREST. When the owners of these are not the same, the mineral interest is referred to as SEVERED MINERAL INTEREST. So, when working with a severed minerals situation, for obvious reasons, the LESSEE needs to be well aware of this ... and, if a LEASE is taken on the subsurface minerals, he/she needs to also make separate arrangements with the SURFACE owner so that surface ACCESS, for petroleum operations, is possible.
Note: also, a typical PETROLEUM LEASE almost never has anything to do with the ACTUAL GROUND SURFACE of that property; that is, where, other than surface access to that property, and permission to go in and out of that property in order to conduct "normal and customary" petroleum industry operations, the LEASE restricts you from doing, on the surface, just about anything else. For example, during the term of the PETROLEUM LEASE, I, as the LESSEE cannot use the SURFACE GROUND to grow and sell my own crops, or, raise a herd of cattle. [Ha-ha!] That is held by the PROPERTY OWNER; that is, the LESSOR.
Note: a typical PETROLEUM LEASE never includes any gold, silver, diamonds, buried treasure, or, any other commercial minerals, which may be in that subsurface lease area; that is, anything of the kind --- other than PETROLEUM --- that may be encountered during the PETROLEUM exploration processes is NOT INCLUDED. [Ha-ha!] Also, subsurface water, which, in some areas is quite valuable, is not included in the typical PETROLEUM LEASE.
So, just like an APARTMENT LEASE, you also TAKE a PETROLEUM LEASE; where, in both cases, from the owner of the property, who is called the LESSOR, the LESSEE TAKES A LEASE. [Note: the term TAKE A LEASE --- borrowing the property, so to speak, for a set time --- is used to make that distinction from BUY A PROPERTY; where, of course, when buying, you then OWN that property ... where you, personally, may then transact a lease with some other LESSEE.]
Of course, as well explained in the video, in the case of the PETROLEUM LEASE, should COMMERCIAL volumes of oil and/or gas be discovered and produced from that lease, the LESSEE will PAY, on the pre-arranged basis as agreed contractually in the lease document, additional cash ... where that additional amount is determined by the amount of ACTUAL PRODUCTION and ACTUAL PRICE for which it was sold.
Here's a significant difference, regarding the potential full life of any particular petroleum lease: if, BEFORE the EXPIRATION of the PRIMARY TERM, you do NOT discover COMMERCIAL petroleum, the lease simply expires; however, as is TYPICAL in such leases, if petroleum is discovered and COMMERCIAL production commences, the "life of the lease" is extended, typically, for the life of that commercial production. [Such a lease is referred to, informally, as an "HBP" lease, where GENERALLY said lease is HELD BY PRODUCTION [HBP] until the commercial production runs dry; that is, until the well no longer is capable of producing and selling petroleum necessary to making money.]
Again, thanks for the great video. Good to see such information from someone working on the FRONT LINES of our CRITICAL Petroleum Industry.
*_PS: for my ONE viewer vote, I vote for you to continue including your political comments; where, at this challenging time in our history and our economy, SADLY, politics plays an OVER-SIZED IMPACT role in our daily business; where, literally, political policies TAKES BREAD OFF OUR TABLES!_*
Theres a lot to that.
Very educational as always. Thanks
I have to tip my hat off to you Zach. This really cleared up a lot of stuff on leases from the past. I can only imagine how many fake leases are out in the real world. I know the price point is a very contentious subject matter. Will not even ask Zack. What I would like you to answer is just one thing. I was always told the business of oil and gas is called "feast or famine." This has to be true since when the gas drilling started in earnest in Pennsylvania twenty years ago during the governor Corbett era. Please excuse me of calling him CORDICK, which is just what he really IS without sugar coating anything. There was a outfit in central PA. who sold his business with all the leases he had and cashed in the big dollars. When asked why he did what he did the man said, I am a person who want to feast to hell with famine. NIcely done video fella. Please do more fella.
I'm going to talk about this in a future video, but its absolutely a feast or famine business.
@@TheZachLife Let us not forget since you were introduced from an early young age doing things with your grandfather, one never forgets and will always have a soft spot for the business. Also, we need people like you to work the stripper wells so America can be somewhat independent from the other suppliers. Look forward to the new video fella too. vf
Very educational thank you for explaining this
Had a friend who was a traveling oil and gas lease expert, he told me In the United States, mineral rights can be sold or conveyed separately from property rights, previous owner of the land could have sold the mineral rights, in which case you only own the SURFACE rights. Before buying a piece of property make sure the mineral rights were not assigned. In California if mineral rights were sold but have not been claimed for 20 years, they revert back to current landowner. In states where shale plays are either under way or possible, oil companies have separated the mineral rights from tens of thousands of homeowners, giving them the right to dig a well right on your backyard, contaminating your water wells, streams and air you breath.
Here in Louisiana most homes are built on top of plugged wells because of the foundation pads.
I’ve been working a pole truck around Haskell TX for a lil while just heading out west now
How about talk a little about the geology, traps, permeability, porosity, depth to sea level, bottom hole pressure, that kind of thing?
Informative
Thanks Zach. For an Australian that was hugely informative. We don’t have many wells here in Australia but I would love to do it if we had a few.
I just subscribed. I love your work mate.
Awesome thanks.
Thank you for educating us
You sound like a true American to me! Impressive videos.
Zach is it possible to have a Mineral rights owner and a land owner that are not the same ? If so do you have to make deals with both parties. One for the mineral rights and then a deal to drill on his land?
I used to witness the plugging of wells in TX. A few wells with expired "Non-Production" clauses made a few hundred barrels while trying to kill the wells to plug them. (Note all wells were hard to get to, or the landowner was hard to get along with.) On one well that made 1500 bbls the company man called the office. The big oil office said it will cost us $500,000 to re-write the lease as there were a few thousand royalty owners. So net result they plugged the well. Back when the Nobel Laureate Al G was running for POTUS, saw lots of good wells plugged on public lands. Those leases are a different story. Yes I know where they are if we go full Mad Max.
Interesting, I have a friend that is a plugger and he has plugged some good looking wells.
@@TheZachLife One thing good plugged wells & big spills have in common is they are hard to get to, or the surface owner is an a__ h___. Think often a contract pumper & even a company pumper ignore the hard to get to wells. If they have been writing down 7 bbls a day & the well has actually been down for 30 days, they report an invisible spill with just a little oil on the gerund, to balance the books. Not many pumpers are going to admit they have not been to a well. Heck saw Big Oil report a spill in the thousands of Bbls that was in the hundreds, to balance the books.
Just found out me and 5 family members are heir to 60 acres of land in Panola County Tx. Oil Gas & Mineral Lease purchased back in 1904. I was notified by a land man representing Rockcliff Energy. So………. Yea. Any info is appreciated
amazing information
Hi Zach. Can you explain in your next video the scenario where the landowner may not be the owner of the mineral rights? It’s all very interesting! Regards, Brett.
Awesome guy
Is there a liability clause in oil leases now? If I was leasing out I would want to be protected against any liabilities from oil companies or their sub leases. And I guess that is why some very low producing wells are still pumped is to just keep the lease.
It's a legal precedence that there is no liability to anyone other than the working interest owner and or operator even if its been decades since any operating.
@@TheZachLife I didn't know if the surface owner could be liable.
I would like to see how they pickup the oil and how they decide the quality/price for the oil
I'm going to do those at some point, just haven't had time.
Great Video Zach gave me a lot of information.
My brother and I bought 76 acres in Gladwin Mich. there are pumping wells within 1 mile of our property. The former owners were offered a lease years ago and turned it down, how do we find a person like your self here in Michigan that might be interested in signing a lease and drilling a well or 2 thanks Dean Sova we do own the mineral rights.
👍👍🙃 Man My Family has in our family name for the last Lot of Lot of many years, My Great, Great, Grand Dad land and all those things that take the black stuff and Stinky stuff out the ground is still producing to day. But by the time Both sides of the Family today get there cut. I laugh at what is put in the bank. But yes your dead right. You need good Lawyers who are good at this stuff. yes we still have a bunch of wells, and things, but as you said. Back in those days the land owners really got a tiny bit. But looking at the whole pitcher, it's much better to have something on your land, than nothing at all, Money is Money and it adds up. Great Video. right on point.
Thanks.
Having been in the Kansas oilfield for the last 16 years I'm excited to see this content to fill in the gaps of what I haven't experienced.
Zach I posted a short video of my rig running some tubing if you want to see, I don't have ig to send you a message. I also found the flyer of the Frank's service rig from the 50's that you will love to see I'll get it to you sometime.
What is there to ensure oil / gas producers accurately report production for royalty / tax payments?
I hope to see more of this topic , very interesting
I heard they got a lotta nice girls in LaGrange
Think they closed down! Marvin Zindler, Eyewitness News!!!
Please explain the Difference between Mineral acres vs Surface Acres in lease agreements as well as Lease Bonus payments calculated to secure the initial lease agreement !
Well you know what's funny I live in the state of South Carolina in Greenville county where there are no oil wells and there is gold but it's not worth getting cuz it's in court I work for a guy who was purchasing a house and someone sold the mineral rights out from under the house and then tried to sell the house took about 6 months to straighten out but it makes no sense cuz it's just dirt here
After your comment on Biden and liberals, you are officially my favorite youtube personality!
Hahaha.
So an oil lease is what it sounds like? Renting access to the oil or gas under the ground? Who provides equipment is irrelevant to what an oil lease is?
yes
@@TheZachLife Sweet Thanks. So are there instances where a landowner can revoke an oil lease?
Have you ever built anything similar to a fracturing pump?
seems the lease-overhead-maintenance-equipment costs are quite high?
the pumper goes up and down with electricity? electricity costs too? including wiring conduits?
hell yeah brother
Hello Zach, are you going to make a video on taking over orphan wells ? I would like to know more.. great video as always
Seems very similar to the logging industry in the Northeast.
Cool information 👍🏻
J. Sandefer bought leases here for about 30 properties just before the bottom fell out in 82. My first question is, this was based on seismic survey results, not a matter of public record like drill data. Where and how could I find and look @ this data?
Neat, and educational!
I am a new subscriber but I’ve watched several of your videos on your oil production business and your production maintenance and I find it fascinating. Is this a business, that an out of state investor could buy into; and have someone such as you maintain and receive a percentage???
I'm a liberal who recognizes that petroleum products will be critically important for the rest of my life and beyond, even after the industry begins to shink. We cannot move away from fossil fuels suddenly. It will be a very gradual process for a long time.
I don't think it's immoral to be in the business, and I don't think government should make life difficult for petroleum producers and refiners.
I inherited several oil leases jn Wyoming and Montana. The only paperwork I recall was "division orders" in Wyoming might have been something else in Montana. I get royalties from many companies most are small. It is mostly for gas. I am guessing that the oil may have been depleted and they have been fracked. I think they are BLM leases. I get checks
from Mavericks, Carbon Creek, Hilcorp pays good, might be oil, I'd have to go online to see the report. I don't know much I am hoping to learn more from your series. One 160 acre lease has about 30 wells on it, pays very little.
Sound good, I hope you enjoy, you will hear about devision orders in the next video.
I own a few acres that had the mineral rights sold a generation or more ago, and I can't find out who the owner is or if they are paying their taxes (I was told they have to pay a percentage by the court house) but it makes the land very hard to use for a home etc.
Very interesting the difference between the USA and Canada. Up here very few people own the mineral rights. The crown (government) owns the mineral rights. The land owner only usual owns the surface rights.
Depends on the province. In Manitoba, 75% own. In Alberta, 10%.
Getting a lawyer would be the best thing
So if I was to buy property make sure it won't be connected to a lease
Is crude an organism?I hear that wells that have been used up, years later they are back. The claim is they are alive and prolific.
Would an old lease actually stand up to legal review? Most leases are only legally enforceable for ~99 years before they have to be resubmitted.