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Oil/Gas/value of royalty and how to tell if oil co. is paying me the right amount

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Question
I know nothing about how the royalty system works, and would like to find how much my royalty would bring if I were to sell it. I have 10 acres in 13n 19w 10 Custer OK. Also I am curious how to tell if the oil co. is paying me the right amount, there are 3 or 4 wells on this section that are in production and my checks have really gone down and some months I don't even get one. Could you suggest a local royaltys buyer?  Thank you

Answer
If you want to sell them, list them for sale on my website, The Mineral Hub . It's free to list, and you'll get exposure to lots of buyers who will then contact us and make offers. The more the merrier right? We get lots of buyer traffic on our site so it's really the best way to go if you are selling in my opinion, and of course if they're listed as "make offer" you don't have to accept any offer you're not happy with. We'll help you figure out if an offer is a good one or not if you like, or you can of course decide for yourself.

Kaiser Francis does operate several wells in the section you mentinoed currently, though none are producing much. Prices for oil have come down a lot in the past six months, plus the lease continues to decline in production each month as the wells age, and will continue to do so unless new wells are drilled (not likely anytime soon). I believe the decline in oil prices over the past six months is the main reason your checks have gotten smaller. The wells are already so old that the production decline curve is not really that steep currently, so it's more the oil prices I think.

As to whether the oil company is "paying you right" it's really hard to tell these days what with all the "post production" costs that are often deducted from royalty checks (whether your lease allows for it or not). Often you have to actually sue the company or audit their books to determine whether they are paying you according to your lease terms. In most cases however, you can assume they are paying you "approximately" what they owe you. This assumes the decimal interest shown on your check stub is an accurate representation of the acreage you own within their drilling and spacing unit. You can use the decimal on your check stub to figure out how many acres they are paying you on if you also know the lease royalty (1/8, 3/16 etc.) and the "unit size" (160 acres, 640 acres etc.)

In your case I believe all the wells are spaced at 640 acres, so multiplying the "owner decimal" or "payment decimal" shown on your checkstubs by 640 and then dividing the result by your royalty (in decimal form...i.e. .125 for 1/8 or .1875 for 3/16) would give you the amount of acres they are paying you on. This number should match the acraege you own within their unit. Example: Decimal of .01245678 X 640/.125 = 63.78 acres owned.

Hope this helps you out.
Frederick M. Scott CMM, RPL
The Mineral Hub
www.mineralhub.com

Oil/Gas

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Frederick M. Scott

Expertise

Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.

Experience

I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written several articles which have appeared in various oil and gas industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and landwork over the past ten years, and also worked as a professional landman and lease buyer for a time. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

Organizations
National Association of Royalty Owners (NARO); American Association of Professional Landmen (AAPL)

Publications
National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Education/Credentials
Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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