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Sirr Royalty Essenti Group

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Buying Oil Leases

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One of the largest, publicly traded operators in the Permian basin had an extensive backlog of unstructured acquisition and lease records, including more than two thousand leases related to assets in the Permian Basin and the San Juan Basin.

The leasing pause only halts the sale of new leases on public lands. It does not affect current production, which can continue on all lands that are currently leased and producing. Furthermore, it does not prohibit companies from applying for new permits to drill or from starting production on the millions of acres of idle public lands for which they already have leases.

Today we have 990 active oil and gas leases covering approximately 400,000 acres of mineral estate. These leases resulted in approximately $1.5 billion earned for trust beneficiaries -- Colorado schoolchildren -- in the past 15 years.

The State Land Board offers oil and gas leases by competitive auction. Auctions typically take place in April, August, and December of each year. Auctions occur online through our third-party auctioneer EnergyNet. Pre-registration with EnergyNet is required to participate in the auction. Read more about the auction process, nomination information, and results.

State Land Board leases require a performance bond, which is separate from the bonding required by the Colorado Oil and Gas Conservation Commission (COGCC). State Land Board bonds are required by statute to prevent waste of state trust assets and can cover items such as (but not limited to) surface reclamation, rentals, and royalties. Bonds are required prior to accessing the surface of the property, commencing operations, or any disturbance on the land.

State leases do not have a pooling provision. In order to join state trust minerals with other minerals outside the lease (including a second state trust lease), a Communitization Agreement must be approved by the State Land Board. Communitization Agreement Guidelines and the Communitization Agreement form are available under Forms and Instructions.

The current bonding requirements for oil and gas leases, disposal wells and surface use agreements were approved by the Board and went into effect April 1, 2016. State Land Board leases require a performance bond, which is separate from the bonding required by the Colorado Oil and Gas Conservation Commission (COGCC). State Land Board bonds are required by statute to prevent waste of state trust assets and can cover items such as (but not limited to) surface reclamation, rentals, and royalties. Bonds are required prior to accessing the surface of the property, commencing operations, or any disturbance on the land. Performance bond requirements range from $25,000 per lease to a $100,000 oil and gas activity blanket bond. For details, please refer to the Oil & Gas Bonding Information and FAQs.

The fossil-fuel policy that has drawn the most attention in the weeks since Manchin and Senate Majority Leader Chuck Schumer unveiled their deal is a provision that requires the federal government to auction oil and gas leases on federal land and in the Gulf of Mexico. Though presidential administrations of both political parties have historically leased this territory for drilling, the Biden administration has attempted to halt the federal leasing program; recent lease auctions have also been delayed by litigation from environmental groups.

Fossil fuel companies might also be thankful that certain provisions were cut from the legislation at the last minute on technicalities: An earlier version of the bill, for instance, included provisions that would have increased costs for oil and gas companies in order to help reduce the number of abandoned wells on federal lands. Oil and gas companies are required to post financial assurances in the form of bonds to cover the cost of cleaning up their operations should they go bankrupt. But the amount of money that companies are currently required to post before they can drill on public lands is a fraction of the true cost of cleanup, which often forces the federal government to foot the bill. Current rules require operators to post $10,000 per individual lease and $150,000 for multiple leases nationwide. The bill initially raised the bonding requirement to $150,000 per individual lease and $2 million for leases nationwide.

A stockpile of federal oil and gas leases across an Ohio-sized swath of land in the West shows the fossil fuel industry was preparing for a leasing moratorium for years, former Interior Department officials say.

Why it matters: The move that all but ends the likelihood of the U.S. government selling new drilling leases in coastal waters in 2022 comes as gas prices hit all-time highs and after President Biden spoke of supplying European nations with fuel to ease dependence on Russian energy following the invasion of Ukraine, per the Washington Post.

If you are considering buying producing minerals, look to see who the operator is. If they are not familiar, look at their website (many have investor information detailing their upcoming plans). You may be able to find out if they plan to continue drilling operations in the area.

The Joe Biden administration has auctioned off $192 million worth of new oil and gas leases in the Gulf of Mexico, the Bureau of Ocean Energy Management announced this week. Exxon, Shell, Chevron and others bought up 1.7 million acres in all.

Reducing demand for oil in transportation and the rest of the economy would make a much bigger difference than blocking new oil and gas leases, said Ryan Kellogg, a professor of public policy at the University of Chicago.

2. Jones made his money in the oil business in Arkansas. He bought oil leases in 1982 for $15 million. After investing $35 million more in drilling and other costs, the company that sold him those leases bought out him and his partner for $175 million in 1986.

The first, by some members of the Biden administration, including White House Press Secretary Jen Psaki on Thursday, is that American oil and natural gas producers are sitting on hundreds of unused federal leases and thus do not need access to more. The second, by some industry opponents, is that ramping up U.S. production will not help the Ukrainian people today.

A number of environmental groups filed a lawsuit against the Biden administration Wednesday, in an attempt to block the new oil and gas drilling leases, the New York Times reported. The groups argue the permits violate the Endangered Species Act as well as other federal laws.

On April 18, more than a year after Biden issued an executive order prohibiting the sale of new oil and gas leases on federal lands, the White House announced it would resume the practice. However, it said there would be some changes.

Contract arrangements in the oil market cover most crude oil that changes hands. Crude oil is traded in the futures markets. A futures contract is a standard contract to buy or sell a specific commodity of standardized quality at a certain date in the future. If oil producers want to sell oil in the future, they can lock in their desired price by selling a futures contract today. Alternatively, if consumers need to buy crude oil in the future, they can guarantee the price they will pay at a future date by buying a futures contract. In addition to oil producers and consumers, futures contracts are also bought and sold by market participants or speculators who do not produce or consume crude oil. These types of traders buy and sell futures contracts in anticipation of price changes, hoping to make a profit from those changes.

The law requires the government to reinstate $192 million in leases in the Gulf of Mexico that were blocked by another court ruling last year. And it requires two more sales in the Gulf and one in Alaska before October 2023. Those sales had been canceled under Biden. The provision reviving them was inserted into the law at the insistence of West Virginia Democratic Sen. Joe Manchin, an advocate for fossil fuels.

Going forward the law says Interior will hold periodic oil and gas lease sales and offer at least 60 million acres (24 million hectares) of offshore parcels and 2 million acres (810,000 hectares) onshore during the prior year before it can approve any renewable energy leases.

In June, the administration sold leases on about 110 square miles (285 square kilometers) of federal land, mostly in Wyoming, despite concluding that future emissions from the parcels offered could cause billions of dollars in damages due to climate change impacts. Legal challenges of those sales by environmentalists are pending.

Only days after the Glasgow Climate Pact called for a phaseout of fossil fuel subsidies, the Biden administration opened auctions for oil leases in the Gulf of Mexico on Nov. 17. Buyers such as Chevron, Anadarko, and Exxon bid $191 million for 1.7 million acres at an average price of $112 per acre.

Would environmentalists buy offshore leases at $112 per ace if allowed Consider that Earthjustice alone spent $95 million on litigation over 2019 to 2020 and other groups with comparable budgets, such as the Natural Resources Defense Council and the Sierra Club, also spend on litigation. But this is just the tip of the iceberg: Environmental groups are well equipped to tap the $12 billion crowdfunding market for donors wanting to support climate causes.

Policymakers have few tools to greatly boost American oil production in the short-term, said Daniel Raimi, an economist who studies the industry at Resources for the Future. It will take years to bring new production online even if the Biden administration offers new leases and speeds permits of major projects. Keystone XL, meanwhile, is largely irrelevant because much of the Canadian oil destined for that pipeline already has found alternative routes to market.

An oil and gas lease is like a surface lease in that the owner gives the right to use real estate for a period of time in exchange for payment. Therefore, the owner is giving the right to another person (typically an oil and gas company) to explore and produce oil from the subsurface for a period of time. Most oil and gas leases in Kansas range from five to ten years unless production or exploration is active. If production or exploration is active, an oil and gas lease continues until such time as it is inactive for the term of the lease. Interestingly, the vast majority of real estate subject to an oil and gas lease is never explored. Companies purchase the lease and in the event oil and gas is found in the area, they can continue the exploration and production. 59ce067264


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