Frequently Asked Questions
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Drilled wells and seismic lines are evidence for exploration. The potential for future production is dependent on technical evaluation and the price of petroleum.
The best way to determine whether there has been any exploration in your area is to determine whether any wells have been drilled. A number of organizations have maps showing the locations of all the oil and gas wells in Oklahoma; they are described in Sources of Oklahoma Oil and Gas Data and in question 1. In some cases, seismic exploration may have been done in an area but was not followed up with a well. Numerous private brokers of seismic data have maps showing where seismic lines have been run. The seismic data are extremely expensive, but maps of the lines are not. However, no broker knows the locations of all the seismic lines, and those run for major oil and gas companies are proprietary and neither the data nor the locations of the lines are available.
Only trained geologists and/or geophysicists can determine the potential for future production. After examining enormous amounts of data, they may recommend drilling a well to test the area. Whether the well can produce oil or gas in economic quantities depends on a number of factors, not the least of which is the market price of oil or gas. Wells with lower production rates become prospective if the price of oil and gas is high
No. You do not have to sell all your minerals in any given area. You may sell any portion of your holdings at any time it makes financial sense in meeting your investment objectives. We do have a minimum acquisition requirement of $25,000.00 at this time. However, we will diligently search for buyers with a lower minimum.
Yes. If your minerals are currently leased you can still sell the underlying asset. The leased property's value is partly determined by the royalty interest you currently are recieving. For example, if you have a 1/8th royalty interest the value would be 1/3rd less than a 3/16th royalty. Likewise a 1/4 interest would be valued at one third more.
Please check with your tax professional regarding the sale of your mineral assets. Mineral interests are currently treated as long term capital gains at 15% (as of 2010) under Federal Tax Codes and have a 100% State exemption in the State of Oklahoma. Other States have favorable tax consequences as well, and you should check with your tax professional to explore available options by State.
Nothing. There are no commissions or fees. The offer we make is clearly defined in our paperwork and a bank draft will reflect the exact net income to you as the seller of the minerals. Ferrell oil covers all costs related to closing the transaction including attorney fees, landman fees, and title opinions. In some circumstances, client(s) will be responsible for costs related to curing title defects. Our staff will discuss the related cost(s) of curing these title defects, as well as options for payment of the fees in those situations.
First decide with your C.P.A. and other advisers if liquidating your mineral portfolio is a good investment at this time. If your goal is to diversify your assets or free up cash to acquire new minerals than it may be wise to liquidate in this market environment. We do not counsel sellers on their investment strategies. Ferrell Oil can maximimize your asset value at the time you wish to sell.
The typical process from decision to close can take about 60 business days. Once we have a signed mineral deed and draft we order the title work and send landman to check records in the corresponding counties for ownership history. If there are no title issues, transactions typically close seven (7) to ten (10) business days after receipt of a clear title opinion.
Detailed mineral/oil/gas evaluation requires a great deal of work and ultimately the services of an expert geologist. However, even after completion of such an evaluation only the drill bit can definitively determine the value of the asset. The evaluation of mineral or petroleum potential is an interpretation based on the data available. Where this data is abundant, far more confidence can be put into the interpretation than where the data is sparse. Please note that even where a lot of drilling has taken place in the past, there could be a deeper potential.
Independent consulting geologists perform mineral/petroleum evaluations. Names of consulting geologists are listed in the yellow pages of the telephone directory under "Geologists." The Ardmore, Oklahoma City, and Tulsa Geological Societies (see Appendix) are professional organizations that have the resumes, special qualifications, and areas of geographic expertise of many consulting geologists.