The home state of famous cowboy Will Rogers remains an oil and gas bonanza in the United States — the top producer of crude oil in 2018 and 2019.
Among the 32 oil-producing states, Oklahoma is the fourth largest producer of oil and fifth largest producer of natural gas. The state is also rich in limestone, gypsum, and other minerals.
If you want to profit from the shale boom, Oklahoma’s fossil fuel reserves extend across one of the most prolific oil and natural gas regions in the world.
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Significant potential remains untapped by new shale, fracking, and horizontal extraction techniques. The state is rich in unconventional recoverable fossil fuel resources.
On this page, we will outline some of the great shale and horizontal drilling plays being discovered, and how to buy and sell mineral rights and profit from Oklahoma’s mineral wealth.
Most Oklahoma counties are drilling new wells in 2021. New hydrocarbon extraction and production techniques have made Oklahoma a land of opportunity for those who hold the rights to the reserves.
Because mineral rights are part of split estates in Oklahoma, you will find many opportunities to buy and sell mineral rights in current and future development hotbeds across the states.
In Oklahoma, mineral rights can be separated from surface rights. An owner of a parcel of land can sell and lease the rights to the minerals beneath the surface. Moreover, these rights can be fractionalized across a number of owners. In the Sooner State, the mineral estate is the dominant estate. The mineral owners have a right to access the land for exploration and development. The surface owner must provide a reasonable right of access.
The severability and fractionalization of Oklahoma mineral rights create a rich trove of mineral rights opportunities across the state. Since mineral rights are treated as real estate in Oklahoma, these rights are considered real property.
Mineral interest owners have the right to explore, develop, and extract minerals, as well as access to the surface to carry out these activities. In Oklahoma, the mineral owner must agree to pay for any damages resulting from the drilling activity.
A right to the revenue or production from mineral production. The holder of the mineral interest does not incur the cost of production. The interest is for a period of time and is active whether or not the well is producing.
A working interest provides the right to drill and produce a mineral lease, or portion thereof. The holder of the interest shares in their proportional share of the production costs.
An overriding royalty interest entitles the holder to a portion of the working interests in a project. Unlike a royalty interest, when production stops, the overriding interest expires.
Oklahoma has significant unconventional reserves. More recoverable resource areas are being identified with new hydrocarbon extraction and production techniques. Unconventional reserves are those recoverable by new extraction technology.
These reserves include gas and oil shales, heavy oil and tar sands, and coalbed methane. Oil and natural gas companies are reporting potential reserves that far exceed expectations in all basins.
The major basins in the Sooner state include:
Anadarko Basin
A hotbed for horizontal drilling plays. Anadarko is the 5th largest oil basin in the United States, spanning Oklahoma, the Texas Panhandle, Colorado, and Kansas. The basin has natural gas production potential in excess of 100 trillion cubic feet. A recent study has found unconventional reserves have double the production potential. New estimates are 200 Tcf of natural gas and 16 billion barrels of oil. Anadarko is the only source of iodine in the U.S.
Ardmore Basin
The Ardmore Basin in Southern Oklahoma dips into the state of Texas. Drilling in this developing shale play is heating up. Shale plays include the Woodford, Barnett, Fayetteville, and Floyd. Exploration companies have increased their forecasts of extractable resources.
Arkoma Basin
The Arkoma Basin traverses the states of Oklahoma and Arkansas. Both the Woodford and Fayetteville shale plays traverse the Arkoma Basin.
STACK/SCOOP Play
The STACK (Sooner Trend (oil field), Anadarko (basin), Canadian and Kingfisher) refers to an area mostly spanning Canadian and Kingfisher counties, but also Blaine, Dewey and Major. The area rich in recoverable liquid minerals spans 3,300 square miles of the Anadarko Basin. Hot potential shale plays such as the Granite and Woodford reside here. The main play in the SCOOP (South Central Oklahoma Oil Province) is the Woodford. Only 20 percent of the STACK horizontal well potential has been tapped. IHS Markit forecasts another 4,000–5,000 horizontal wells will be drilled in STACK plays.
Your great grandfather and his siblings may have inherited and recorded mineral rights in the Oklahoma land registry in 1907. But since then, those rights may have been fractionalized, passed down several generations, sold to outside investors, or forgotten.
If mineral rights ownership cannot be established, the Oklahoma state will give oil gas and petroleum companies permission to drill on the land.
The lease payments from the exploration and production (EP) company to drill the mineral property will be paid into the Mineral Owners Escrow Account. Mineral rights owners have five years to claim the funds before they are transferred into the state coffers.
Therefore, you should always keep mineral rights records updated. If you want to buy or sell Oklahoma mineral rights, you need to first verify ownership.
You can find out who owns the rights on a tract of land by conducting a mineral title search.
Oklahoma real estate records are publicly registered with the Registrar of Deeds. Mineral rights and royalty interest transactions are registered at the local county registry office in the county where the land resides, alongside other local deeds, mortgages, and legal conveyances.
In the cases of transfers of inherited surface and subsurface rights, a lawyer may have registered the mineral rights with the land titles office. Mineral rights owners’ information may or may not be up-to-date with the county land records office.
The law does not require that owners register mineral ownership rights, transfers, or inheritances.
If an oil company wants to lease your mineral property, the company will send a letter to the last registered address of mineral owners.
In Oklahoma, a 1929 law called forced pooling allows an oil company to drill on your land if they are unable to contact you and enter into a royalty lease agreement.
Since 2008, Oklahoma mineral rights owners have registered mineral ownership with the Oklahoma Mineral Owner Registry.
If the current owner cannot be contacted, the State of Oklahoma will lease the rights on your behalf to oil companies. This means you will not receive signing bonuses or payment on current and future production.
If the wells on the land are currently inactive, you should still register with the registry. Oil and gas companies are deploying new drilling and extraction technology throughout the states to access shale and tight reserves. Most counties are expected to have new drilling activity in 2020.
A lawyer or title search company will conduct a search to ensure the mineral rights belonged to your benefactor.
If the mineral rights are not currently leased to a gas or oil producer, a deed of transfer will be filed.
If the mineral rights are currently leased, the rights to the lease will be transferred into your name.
You may discover your grandfather split the mineral rights among several beneficiaries. Those beneficiaries, in turn, may have sold or leased some or all of the rights. If the estate was administered by the Oklahoma courts, the transfer of the mineral rights to the beneficiaries should be recorded in the real estate records. If no transfer is filed, an affidavit can be filed.
A deed of transfer will then be made in your name and registered with the land registry office. Your agent should also ensure you are registered with the Oklahoma Mineral Owner Registry.
Leasing transactions are not always registered with the land registry office. No mineral royalty owners registry exists.
The leasing oil company will directly transfer the rights to the royalty payment streams to you. Royalty payments have a time limit. If you own the underlying mineral rights, the terms of the lease may allow royalty payments to be extended if more extractable reserves are found.
Oklahoma has no inheritance tax. Capital gains tax must be paid on any sale of mineral rights and income generated from royalty streams.
However, if the mineral rights have not been severed from the property, the county may not charge taxes beyond property taxes.
If you live in another state and earn income on mineral properties in Oklahoma, taxes must be paid in both states.
However, you can receive a tax credit from the state of Oklahoma if the income is over $1,000.
The discovery of large recoverable unconventional reserves has increased the value of mineral rights in Oklahoma. Royalty owners are negotiating higher royalty rates. Mineral rights value has been rising.
Recent oil production in the Anadarko region is rivaling that of the prolific Permian basin, which is almost twice the land area, according to the Energy Information Agency (EIA). So look at it this way. For every fish hook you throw in the water, you have the opportunity to catch double the number of fish.
Since the 1990s, Oklahoman mineral royalties have paid a minimum of 18.75 percent, but the 20 to 25 percent earned in Texas is not unheard of.
Rates have been trending upwards since the start of the shale boom. The price of mineral rights per acre ranges from under $500 to over $5,000.
A strategic analysis of your mineral interests, surrounding activity, unconventional recoveries in the region, and other factors can uncover hidden value.
Pheasant Energy has been buying and leasing mineral rights in the Oklahoma region and throughout the United States since the 1930s. We also manage investment partnerships and mineral trusts. Drawing on our connections and market intelligence, we selectively maintain a network of public and private investors.
We assess dozens of factors to strategically position your mineral properties to maximize your mineral rights value. Our team has a proven track record anticipating where the future opportunities will be discovered. This insight allows buyers to buy low before the next shale play is found and mineral owners to sell high at the peak of a boom.
Like the early gold rush, investors who stake their claims early will profit the most. But with thousands of wells being drilled across most counties, you need to know where the opportunities lie.
Pheasant Energy can help you search for mineral rights for sale. Our experience provides us with an invaluable strategic viewpoint.
We take a dozen factors into consideration when considering the future production potential of mineral rights. Drawing on extensive experience in these basins and fields over the decades, we add invaluable intelligence to the analysis of the mineral property and reserve production potential.
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