Mark S. McGrew
It sounds unbelievable! A person can buy, own and control Oil wells in ….Texas?
Yes. In the State of Texas and all 50 States in the USA, individual people can buy oil wells, gold mines, silver mines etc. Natural resources belong to the people and NOT the government.
Is that possible for a non-USA citizen to own mineral rights?
Anyone, from anywhere in the World can buy oil wells in America. There may be restrictions for terrorists and other criminal people or governments. Venezuela owns a major oil company in America and Hugo Chavez has much to say about how that company operates in the USA.
Why oil?
Oil is the most important natural resource on Earth. If oil stopped flowing tomorrow, civilizations would collapse into chaos and ruin. Hundreds of thousands of chemicals are made from Petroleum. Paints, vinyls, fabrics, plastics, medicines, pesticides, herbicides, and fertilizers just to name the most well known products manufactured from oil. Without oil, machines would not function, cars would not move, planes would not fly, hospitals could not function, roads could not be built or maintained. In fact, oil is the “life blood” of modern civilization. Like it or not, without oil, we would not have this modern World. If the World stopped using oil, 90% of the population would cease to exist within 5 years or less. In fact, the population of the World today is a direct result of oil development. A graph of the World population growth since 1890, is almost identical to the graph of the increase in production of oil.
When you buy an oil well, the laws specify that every function is performed and managed by experts. The buyer has to only monitor the experts to be sure they are doing their jobs. Owning oil wells is a “hands off” business. If the experts do not perform to the owner’s expectations, the owner can easily replace the experts.
Why USA and especially Texas?
The USA is still the most stable business environment in the World. If a single individual owns 51% of an oil field and the largest oil company in the World owns 49%, that individual has more legal Rights than the company and has more control over the management of the oil wells.
The State of Texas is very helpful to oil producers. All States have different laws and rules. Texas is one of the best to work in for oil people. Also, Texas has many experts in the business that an individual can employ or contract with for advice and on-site help. A buyer can find every expert he needs, just in the one city of Houston. Geologists, engineers, Operators, managers, oil buyers, etc, are all easily contracted in Houston, Dallas, Austin, Midland, San Antonio and many other cities and small towns in Texas.
Texas, more than any other State in America is recognized as the “Oil Capital” of the country. It is Texas oil experts that the World calls on for emergencies and difficult projects, from the Arctic to the Sahara, in jungles in mountains and under sea. Texas and the USA is not the only Nation that has such experts. England, France, Russia, China, and many other countries have qualified experts. But, what other Nation allows individuals to buy and manage oil wells?
How much money do I need?
As little as $500 up to many millions of dollars. There are online auctions of small parcels of oil wells. And there are many multi-million dollar auctions. A buyer should expect his purchase of oil wells to produce a minimum 10% annual return and expect that oil well to produce an income for 20 years or more. Some oil wells in America have been producing oil for over 80 years.
NEVER spend more money on an oil well that you can afford to lose. As in any casino, as in any business, there is risk in the oil business that an individual can not control. In the 1980s, oil was selling for $42 a barrel. But, in the time of just a few months, the price dropped to $10. This is a 75% LOSS in a very short time. However, the people who kept their oil wells are now selling their oil for $100 a barrel. Some people who bought oil wells when the price was $10, based their decision on $10 a barrel oil. Now they are getting $100.
In how many ways can I participate?
A person can buy stock in large oil companies or small oil companies. A person can buy oil wells that are 100% his property. Or, any percentage he desires or can afford.
A buyer can buy a “Working Interest”. This means he is responsible for any and ALL expenses in maintaining that oil well. Those expenses are normally deducted from his oil income.
A buyer can buy a “Royalty Interest”. This means the buyer receives income and does not share in the expenses. The buyer’s income is paid before any expenses. The buyer’s royalty is considered an “expense” to the other owners.
A buyer can buy one oil well or 500 oil wells, depending on his budget.
How can I profit?
When oil comes up from the ground, a per centage is yours. You can make money from your percentage by selling the oil as it is produced and receive a monthly check or sell the total amount of your oil for cash. The cash price would be approximately equal to 60 months of the royalty payment. If you receive $10,000 a month in royalties, it can be sold for approximately $600,000 cash.
What is the annual return?
Annual returns can be from 0% to 200, 500, 1,000 per cent or more, depending on the project. The lower risk equals the lower return.
For example, if a buyer drills a new oil well and the oil well produces a lot of oil, the returns can be enormous. Most drillers do expect to have their total drilling expenses back in less than a year and expect to see that same 100% return each year for 5 years or more.
If a buyer does not want the risk of total failure and total loss of money, his reward will be smaller. A purchase of low risk Royalty Interest should pay the buyer a minimum of 10% a year for a long enough time for him to see his money returned 3 to 5 times. Many Royalties pay 20% a year.
All projects are different, but a general expectation of a buyer of Royalty should look for a project that will pay him 20% or more a year. A Royalty buyer is wasting everyone’s time if he wants a 30 or 40% annual return. If by chance, any projects do provide a return higher than 20%, the project is either a fraud or it can be sold in less than 24 hours to a friend of the seller.
Is that guaranteed?
There is only one guarantee in life: Buy a puppy. I guarantee he will make your floor wet.
How can I start?
Contact Minc Oil Co., LLC, discuss your desires, how much money you want to spend and what you expect to get in return. We can let you know if your plan is realistic and let you know when a property is available. Most of our buyer services are free. We will earn a fee when you make a purchase. If a buyer does not want to pay our fee, then please do not contact us. We are not interested in working for free.
If a buyer wants us to devote full time to finding an oil property we will require a monthly fee to be paid in advance.
What papers do I need?
You will need to show us “Proof of Funds” before we make any efforts on your behalf.
What documentation do I get if I purchase an oil well?
You will get a “Contract of Sale” and/or an “Assignment of Royalty Interest”, an “Assignment of Working Interest”, an “Assignment of Mineral Interests” or any other legally enforceable documents to record your purchase in the local Court House where the property is located.
Oil wells are “Real Property” the same as a parcel of land, a house or a commercial building.
How am I secure that what it is said is truth?
“Don’t expect, what you don’t inspect.” ALWAYS verify with an independent party that what you are told is the truth. Whoever sells you an oil well will be able to tell you where you can verify what he is telling you. If he can not show you how to verify his words, contract a Landman or Geologist or whatever expert is needed. If the experts can not verify the information cease any and all communications with the seller.
Most of what a person tells you about an oil property for sale can be verified with maps, records at the local Court House, the State regulatory agency, geologic reports, engineering reports etc. Normally, but not always, an oil property has meticulous records on every function of that property. A buyer simply needs to know where to go to find the truth.
What kind of ownership should I buy?
Every buyer has different goals and desires. In America some people NEED to lose money, because they will gain more money by manipulation of their tax situation, so they will buy something that has a very high chance of failure. The terminology for this is: “I need to show a loss on my taxes”. Great fortunes have been created this way.
Most people do not want to lose their money. Again, all buyers have different goals. What you decide to buy will depend on the risk you are willing to accept in exchange for the amount of money that you may earn. REMEMBER: The lower the risk, the lower the possible return. The higher the risk, the higher the possible return. NOTHING is ever guaranteed. If anyone ever tells you about an oil project that is guaranteed, he is either lying or he is an idiot.
How can I check that this transaction is real and safe?
NOTHING is safe in today’s World. Colonel Ghadafi was sitting on top of the World in the beginning of March. President Mubarack was firmly in control of Egypt in January. Statistically air travel is the safest form of travel available, but airplanes do sometimes crash. The only constant in life, is change.
Verify what you are told. Analyze the information you have TODAY and make an educated guess as to what it will be like tomorrow. Sometimes you will be right and sometimes you will be wrong. The only thing we can hope for is that we will be right 60% of the time.
Do I receive legal documents?
Yes. Similar as to what you would receive from buying any other kind of Real Estate. Most oil properties will have documents much more simple than Real Estate documents, but will still be equally enforceable.
What is the difference between an oil well deed to a real estate deed?
Depending on what type of Interest you buy, there may not be a Deed as such. With properties that do have a Deed, it is very similar to a Real Estate Deed.
How can I pay?
Cash, check, wire transfer. You will pay for the property, BEFORE you are given legal title to it. This is because it is much easier for you to reclaim your purchase money than it is for the seller to reclaim his property.
What are your fees and other expenses?
Our fees can be 10% of the purchase price on projects less than $1,000,000 and lower on larger projects. We take our fees in cash or part in cash and part in partial ownership of the property purchased. This is all discussed and agreed to before you make any purchases. We don’t like surprises and we know a buyer doesn’t like surprises.
How and when shall I receive my paycheck?
Normally, oil income is paid out each month as the oil is sold. On smaller projects, the payments may come every 3 months or 6 months or annually. This is because the Operators (managers) don’t want to take the time to add up and send checks for just a few dollars. If your income in over $100 a month, a monthly check is normal. Less than $100 is not usually paid out each month.
What other responsibilities do I have?
If you do not have an American Social Security number, you will need to apply to the Internal Revenue Service for a “Tax Payer Identification Number”. This is a simple affair that can normally be done on the Internet.
The only responsibility you will have is to pay income taxes on the income you receive from the oil production. The Operator (manager) handles everything else for you.
If the production stops, what am I supposed to own?
You will still own what you bought until you sell it. Oil production may stop today, but 10 years from now, it may start again. Oil underground can move from one place to another and some oil wells do “Re-charge” after some years pass. The price of oil may drop and you decide to not sell your monthly oil for a cheap price and would rather hold the oil in the ground, like holding your money in a bank.
You will always own what you bought whether there is oil coming out of your well or not.
What are the risks?
“Risk Factors” can fill 50 pages. ALWAYS assume the major risk is that you will lose all the money you spent. If you purchase a “Working Interest” your risk may be much higher that what you spent. You may be required to clean up an environmental disaster. So, be cautious in what you buy and be sure to spend the money necessary to hire RECOGNIZED experts to verify what you are buying.
Do you personally participate? Are you exposed to the same risks?
All projects are different. Sometimes yes and sometimes no. It mainly depends on what the buyer expects.
