- IF OIL COMPANIES WANT THESE LEASES, WHY DON'T THEY JUST BUY THEM AT THE AUCTIONS?
Oil companies do want these leases; each one we acquire is through bidding against their landmen. We are often outbid; it is no secret that Exxon et al. have far deeper pockets than we do. Certainly, we can not hope to acquire the few super-premium oil leases that come up for sale at each auction – for instance, direct offset acreage to prolific new wildcat discoveries that often sells for $1,000 an acre and more. However, companies will often exhaust their auction budgets in fierce bidding wars for these pricey oil leases; they often have to let other geologically favorable leases go to competitors such as us. After the dust settles from the auction, and companies recharge their land acquisition budgets, we entertain purchase offers for these good second-tier leases we have acquired on our clients' behalf.
- MAY I ATTEND THE AUCTION AND BID MYSELF? WHY DO I NEED YOU?
Certainly you may do it yourself. All American citizens, or corporations in good standing, have the legal right to participate and bid for oil leases. However, the leases are offered with no indications of their value or geologic potential; the offering agencies do not concern themselves with this. The agencies simply offer parcels of land they control (described by township, range, section and subdivision), whether naked granite, studded with dry holes, or undrilled land bordering a new wildcat discovery. The bidding itself can be fast, aggressive and confusing. That's where we come in, with our decades of Rocky Mountain oilpatch experience and attendance at over one hundred of these auctions.
- ISN'T THE “LOWER 48” A DRILLED-OUT, TAPPED-OUT, OVERMATURE PETROLEUM PROVINCE?
Our backyard is without a doubt some of the most heavily drilled real estate on earth. It's safe to say that no giant field like East Texas or the Permian Basin remains to be discovered here. It's also a fact that new oil and gas reserves are being found right here at home with new exploration technologies, new geologic thinking, and the powerful incentive of high prices; and, ever-evolving production technologies are rendering formerly “unconventional” reserves economic, especially when it comes to gas. When we began this business, the vast coalbed methane plays in several Rocky Mountain basins did not even exist. And, the U.S. is “home”; a lot of global oil supply is found in very nasty places that seem to be getting nastier every month. 1,545 rigs turning as of mid-
February (vs. 1,295 a year ago) on our native soil aren't out there for the fresh air.
- IF I ACQUIRE A GOVERNMENT LEASE, IS IT MINE TO DO WITH AS I WISH?
No, it remains public land. You only acquire the subsurface rights to explore for, extract, and market any oil and gas underneath the acreage, and to make such improvements to the surface as are necessary for this. You may not build a cabin on the lease, or, if the surface is in the public domain, prevent access by the public for hunting, fishing, birdwatching, etc. except to the actual drilling/producing facilities.
- SO I CAN DRILL FOR OIL MYSELF?
Of course; this is the right you have purchased from the government through us. However, because of the enormous expense of a modern drilling operation, the idea in actual practice is to sell your rights to an oil company and let them do it – reserving for yourself a percentage royalty (usually 3-5%) on all production from the lease.
- HOW LONG MAY I KEEP MY LEASE?
Federal leases have an initial tenure of ten years before production must commence. State leases have a five-year time fuse. The law does not provide for extensions.
- WHAT AM I OBLIGATING MYSELF TO WHEN I ACQUIRE A LEASE? ARE
THERE PROPERTY TAXES ON THE PARCEL?
There are no “taxes” per se. There is an annual rental obligation, payable in advance beginning with the second year of the oil lease's tenure, on the “anniversary” date of the lease – the date on which the lease went into legal effect. This rental is your exclusive responsibility. It is $1/acre/year for State leases. For Federal oil leases, it is $1.50/acre for the first 5 years and $2/acre for the second 5 years.
- YOU GET A “CUT” OF THE PROCEEDS FROM THE LEASE, RIGHT?
Absolutely not. Like all businesses, we have overhead, and we do make a profit. However, this is all taken care of out of the initial acquisition fees. We feel it is only fair that the client have full enjoyment of any and all profits from his lease ownership, and we take no percentage whatsoever of any proceeds or royalties from any client leases.
- CAN I DEDUCT THE COST OF ACQUIRING A LEASE AS A BUSINESS EXPENSE ON MY TAXES?
We are not tax experts or advisors, but it is our understanding that lease acquisition expenses may be deducted against any income derived from future production on the lease.
- WILL YOU STICK AROUND AND HELP ME IF IT NEED IT?
Yes. We retain naked title to the lease for administrative purposes; the lease is administered for the sole benefit of the client, as is spelled out in our Administration Agreement. Any purchase inquiries from oil companies will come to us as title-holder of public record. We immediately communicate all purchase offers to you, and offer our advice and assistance with this transaction on a no-fee basis.
- WHAT ARE YOUR CREDENTIALS?
Our Principal, Robert C. Michael, is a licensed Professional Geologist with the State of California Board for Geologists and Geophysicists. He is also a licensed Mineral, Oil and Gas Broker with the California Department of Real Estate. He is a member in good standing of the Rocky Mountain Association of Geologists, the Coast Geological Society, and the Pacific Section of the American Association of Petroleum Geologists. He graduated Cum Laude in Geology from Pomona College and did graduate work at Yale University and the University of Wyoming.
- DO YOU OFFER A GUARANTEE? CAN I GET A REFUND IF I'M
DISSATISFIED?
As the oil business is entirely subject to the unpredictable vagaries of global economics and politics, we cannot and will not give any guarantees as to the value of any lease acquired through our efforts. Nor can we guarantee that the lease will be purchased by an oil company; if purchased, drilled; and, if drilled, produce. We can only guarantee that we will work with all due diligence to get you the most favorable lease possible based on availability, competition, and funds available. Prior to acquisition, you may request a full refund with no fees or penalties; after lease acquisition, no refunds can be made.
- CAN I SPEAK WITH SOME OF YOUR SUCCESSFUL CLIENTS?
We are very sensitive to our clients' personal and financial privacy, and would prefer not to prevail upon them for “testimonials”. Your business with us will be treated with the exact same discretion.