What Louisiana Landowners Need to Know About Oil Royalties
Louisiana landowners often overlook a hidden layer of wealth beneath their very feet, which is oil and gas royalties. This blog explains the necessary information landowners must know about oil and gas royalties.
The good news is that these royalties represent a significant source of income. But navigating the world of Louisiana oil royalties is not as easy as it may sound. It requires a clear understanding, and ignoring it could mean leaving substantial wealth unearthed.
The story of oil in Louisiana is as old as the industry itself. Since the early 20th century, the state has been a prominent player in domestic energy production. This long history means that mineral rights ( the right to extract oil and gas) are often severed from surface rights, sometimes multiple times over generations.
As a landowner, understanding how royalties are calculated, paid, and protected is essential, especially if you own them.
So, what should every Louisiana landowner know?
Understanding Your Royalties
In plain words, royalty is a share of the production or revenue from oil and gas extracted from your land, and paid to the mineral rights owner.
Typically, this is a fraction of the gross production, though it can vary based on your lease agreement. But the gross production isn’t always what you’re paid on. Deductions for post-production costs – things like transportation, processing, and marketing – can also impact your net royalty check. This is an area where many landowners can lose out if they’re not watchful.
Know Your Mineral Rights: First and foremost, determine if you own the mineral rights beneath your land. This often requires a title search. You can look for a professional landman or title attorney to conduct a proper title search to confirm your mineral rights status.
Scrutinize Your Lease Agreement: If you are approached for a new lease or have an existing one, read every word. Pay close attention to clauses regarding deductions, pooling and unitization (where your land is combined with others for drilling), shut-in royalties, and the duration of the lease.
Verify Royalty Statements: Don’t just cash the check. Cross-reference your royalty statements with production reports to understand how the payment was calculated.
Seek Professional Guidance: The world of oil and gas law is complex, especially in Louisiana. For the best advice on your lease terms, royalty statements, and disputes, you may consult with an experienced Louisiana oil and gas attorney or a qualified mineral rights consultant.
And, lastly, Should You Sell Your Royalties or Hold On? A Louisiana Perspective
In Louisiana, this decision is particularly nuanced because of the state’s unique Mineral Code.
In short, selling provides immediate cash to use for specific financial goals, debt repayment, or other purposes. On the other hand, holding onto your rights means you continue to receive income as long as the well produces. It also retains the upside if commodity prices rise or new drilling increases production.
The key factor unique to Louisiana is the concept of mineral servitude and its 10-year prescription period. Always consider seeking advice from experts to evaluate the true ownership as well as the current market value of your interests.
If, selling your oil royalty in Louisiana aligns with your financial strategy, then finding a reputable buyer is the next step.
Mineral-Rights.com is a trusted mineral rights buyer with a wealth of experience in valuing and purchasing mineral rights across various regions, including Louisiana.
Why choose us?
- Seamless experience
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We will only ask for a few important documents to start the process. Give us a call. Our team will review and make quick offers.
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