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HOW TO HANDLE YOUR PROPERTY TAXES IF YOU KEEP YOUR MINERALS IN TEXAS AND KANSAS

Pay property taxes promptly to avoid late fees and double payment confusion, as they will keep mailing you bills until you pay them and the amount owed changes, and you wont know if you’ve paid or not.  So pay them in the month you get them if you can, but for sure before the end of the year.  Be sure and put a SASE in with the payment in order to get a receipt, copies of which you may be required to provide to lenders or if the payment does not get booked.  I make the first batch right before Thanksgiving, and then the rest right before the end of the year.

SHOULD TEXAS PRORATE OIL

TEXAS SHOULD NOT PRORATE OIL, BUT MAYBE U.S. OIL STATES SHOULD?

As you also know, proration has a long history in many States to manage waste and product costs.  It may be time to implement a nationwide system in order to stabilize the industry.

I am not interested in Texas working with other governments to alter supply.  I am very much interested in examining the possibility of forming an Interstate Proration Board, as detailed below.  Such a system could:

1)   gain the US a seat at the table with OPEC and Russia

HOW DO I GET A COPY OF MY CHECK DETAIL OR BACKUP STATEMENT?

We get our ownership information from the County's tax records.  Unless very recently plugged, YOU WOULD NOT BE ON THE TAX ROLL UNLESS YOU OWNED IN A PRODUCING PROPERTY and thus you would not have received a letter from us.  You need to recover any funds in "suspense" prior to selling to us.

WHY DOES MY CONVEYANCE SAY TEN DOLLARS INSTEAD OF THE SALES PRICE?

Royalty and mineral interests are a form of real estate.  There are two ways to transfer real estate from one party to another, by gift or by sale.  In order for a sale to be valid, something of value must be exchanged for the property.  This is something of value is known as consideration, and in our case is whatever it is we are paying you for the property.

The first paragraph of our Conveyance states:  "in consideration of the sum of Ten and more dollars ($10.00) cash in hand paid and other good and valuable consideration."

VOLUME RISK AND PRICE RISK

Owning oil and gas interests has two main types of risk that an owner needs to be aware of. Factors outside of your control may result in large and unexpected gains, or may lead to sudden loss of income. In this blog post, I’ll explain how I view these factors.

UNDERSTANDING 1031 EXCHANGES

One of the tax advantages that mineral rights owners may be able to take advantage of as a result of the sale of their mineral rights is called a 1031 Like-Kind Exchange. By using a 1031 Exchange, you can actually qualify to pay no taxes at all on the proceeds of your sale.

VALUE DETERMINATION

The absolute best way to determine a value would be to engage an oil and gas engineering firm to calculate a market value based on assumptions about future production and product prices.  These firms are mostly located in the cities you would think of as being in oil and gas country. Houston, Dallas, Tulsa, etc.

However, the results from these studies will give you a range of net present values, but will normally not provide a MARKET VALUE, which is probably what you want.

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