Thanks so much for your informative videos covering all things Oil and Gas specifically geared towards royalty owners! It has been a great condensed eye opener for so many things I, as a mineral owner, have had to spend an inordinate amount of time trying to figure out. I have minerals in a couple of sections in south Dawson county, Texas among two other relatives (33% net mineral acres). We received a lease offer recently that the other two owners are willing to accept at the value that was presented, as a minority owner would I have any negotiating power at all? I already tried to explain to them some of the clauses that needed to be reworded or outright stricken but no luck. Things like sharing 20% of the cost to get the oil to "marketable" condition, being paid for the value of the oil "at the mouth of the well", free usage of water, no pugh clause (there is a pooling clause) and probably more that my lack of knowledge blinds me too. Thanks so much for what you do for us mineral owners!
My siblings and I inherited gas wells a few years ago. I didn't know anything about working interest until I filed the wrong tax forms and got a letter from IRS asking for $30,000 plus dollars for taxes and late filing fees. We can't afford an oil and gas lawyer to help us. All of my siblings and I own a certain percentage of these 17 wells. To make matters worse, these wells are in Louisiana, but we're all living in different states.
That's so frustrating! I would probably contact a CPA familiar with oil and gas income for that amount. As a royalty owner, you should just receive a 1099 from the operator that you enter as misc income. There’s also a 15% depletion allowance you can claim for your property being reduced in value (since the royalties you are paid are from draining the reserves downhole).mineralwise.com/owners-guide/leased-and-producing/royalty-taxes/depletion-allowance If you have working interest instead of royalty interest, the process is different. This might be what happened here. you can also deduct the expenses paid from the royalties. On your pay statement, do you see a RI or WI?
@PecanTreeOG I contacted the land person and was told it is a work interest. Can you suggest any good books for oil and gas royalty owners? What preparations should take in order to pass this inheritance to my children? Should I hire a lawyer in the state I reside or where my wells are located. I really appreciate your help.
@@lindcobbs4615 www.amazon.com/Oil-Gas-Law-Nutshell-Nutshells/dp/0314289585 This is a good book for some of the technicalities on some of the different situations and terms you might run into. A little advanced, but hopefully still helpful. You'd want an oil and gas attorney in the state where the property is physically located. They'd be the most aware of the specific laws and rules of the state governing the production. However, a CPA familiar with oil and gas in ANY state could assist with making sure you're properly filing the taxes and getting all the correct deductions. To owe $30k in taxes would mean you should have made over $100k in revenue, which doesn't sound like a small WI. Either the interest is larger or the taxes aren't being properly applied. A CPA would be a cheaper place to start than an attorney. The Mineral Rights Forum (www.mineralrightsforum.com/) and NARO-LA (www.naro-us.org/chapters/louisiana) can be great starting points for questions also, as there are many who have been in your shoes and are willing to offer free advice. The best preparation you can do now is to get both paper and digital copies of everything you can, organize it by parish, township, range, and section, put additional copies of the documents in folders organized by operator, and KEEP EVERYTHING. Also, start including your heirs now so this isn't a new topic for them when they inherit it. They're more likely to appreciate and better manage it if they're included now in the process. Finally, putting the assets into an LLC will make the transition from one generation to the next pre-planned, pre-paid (rather than paying for probate later), and private. Oil and gas properties are real estate and need to be titled into the LLC just like a house would, but it's much easier to manage an estate all in one place like that. If it makes sense to do this for your estate depends on your personal financial situation and portfolio, but that's what I'd recommend if you can afford it.
@@lindcobbs4615FYI that you may already be aware of, but if not: if you have a working interest you probably need to be paying operating expenses every month unless the operator nets the check.
Thanks so much for your informative videos covering all things Oil and Gas specifically geared towards royalty owners! It has been a great condensed eye opener for so many things I, as a mineral owner, have had to spend an inordinate amount of time trying to figure out. I have minerals in a couple of sections in south Dawson county, Texas among two other relatives (33% net mineral acres). We received a lease offer recently that the other two owners are willing to accept at the value that was presented, as a minority owner would I have any negotiating power at all? I already tried to explain to them some of the clauses that needed to be reworded or outright stricken but no luck. Things like sharing 20% of the cost to get the oil to "marketable" condition, being paid for the value of the oil "at the mouth of the well", free usage of water, no pugh clause (there is a pooling clause) and probably more that my lack of knowledge blinds me too. Thanks so much for what you do for us mineral owners!
Thank you for this
My pleasure!
My siblings and I inherited gas wells a few years ago. I didn't know anything about working interest until I filed the wrong tax forms and got a letter from IRS asking for $30,000 plus dollars for taxes and late filing fees. We can't afford an oil and gas lawyer to help us. All of my siblings and I own a certain percentage of these 17 wells. To make matters worse, these wells are in Louisiana, but we're all living in different states.
That's so frustrating! I would probably contact a CPA familiar with oil and gas income for that amount. As a royalty owner, you should just receive a 1099 from the operator that you enter as misc income. There’s also a 15% depletion allowance you can claim for your property being reduced in value (since the royalties you are paid are from draining the reserves downhole).mineralwise.com/owners-guide/leased-and-producing/royalty-taxes/depletion-allowance
If you have working interest instead of royalty interest, the process is different. This might be what happened here. you can also deduct the expenses paid from the royalties. On your pay statement, do you see a RI or WI?
@PecanTreeOG I contacted the land person and was told it is a work interest. Can you suggest any good books for oil and gas royalty owners? What preparations should take in order to pass this inheritance to my children? Should I hire a lawyer in the state I reside or where my wells are located. I really appreciate your help.
@@lindcobbs4615 www.amazon.com/Oil-Gas-Law-Nutshell-Nutshells/dp/0314289585 This is a good book for some of the technicalities on some of the different situations and terms you might run into. A little advanced, but hopefully still helpful.
You'd want an oil and gas attorney in the state where the property is physically located. They'd be the most aware of the specific laws and rules of the state governing the production. However, a CPA familiar with oil and gas in ANY state could assist with making sure you're properly filing the taxes and getting all the correct deductions. To owe $30k in taxes would mean you should have made over $100k in revenue, which doesn't sound like a small WI. Either the interest is larger or the taxes aren't being properly applied. A CPA would be a cheaper place to start than an attorney.
The Mineral Rights Forum (www.mineralrightsforum.com/) and NARO-LA (www.naro-us.org/chapters/louisiana) can be great starting points for questions also, as there are many who have been in your shoes and are willing to offer free advice.
The best preparation you can do now is to get both paper and digital copies of everything you can, organize it by parish, township, range, and section, put additional copies of the documents in folders organized by operator, and KEEP EVERYTHING. Also, start including your heirs now so this isn't a new topic for them when they inherit it. They're more likely to appreciate and better manage it if they're included now in the process. Finally, putting the assets into an LLC will make the transition from one generation to the next pre-planned, pre-paid (rather than paying for probate later), and private. Oil and gas properties are real estate and need to be titled into the LLC just like a house would, but it's much easier to manage an estate all in one place like that. If it makes sense to do this for your estate depends on your personal financial situation and portfolio, but that's what I'd recommend if you can afford it.
@@lindcobbs4615FYI that you may already be aware of, but if not: if you have a working interest you probably need to be paying operating expenses every month unless the operator nets the check.
I can relate to #4.. It's no fun when no information is left behind.
I completely understand! If we only had a Time Machine 😊
Excellent advice
How do i find out the value of my mineral rights?
What website would I search under to find state of Louisiana's well sites?
The top for links on this page are probably what would help the most! www.sonris.com/