There are three general ways that oil and gas companies secure an oil title. In some instances, they’ve already owned the land they’re looking to develop for a period of years, which means all they have to do is alert the state government that they’re going to develop the land and secure the proper permit. Second, they purchase the land from a private land owner. They approach the land owner, make an offer to secure the oil title to the land, and then once the landowner approves of the purchase, they’re cleared to start oil exploration. And finally, these oil and gas companies can secure the oil title from the government. In some cases this means buying the oil title from the federal government because they’re looking to explore for gas on federal land, such as what’s currently happening with the Arctic National Wildlife Refuge, and in others it means securing the oil title from the state government because the land is state-owned. These are the three primary ways in which oil companies secure oil titles and leases in the US.
As you might expect, there are different laws and regulations that pertain to these different purchases. If an oil company is looking to secure an oil lease from a private landowner, they’ve got to follow the rules and regulations regarding this type of purchase. Those regulations differ from state to state in terms of the taxes they have to pay, the paperwork they have to provide to the landowner, and sometimes even what amount of money they have to pay to the landowner. Thus, it’s imperative for oil companies to understand these state-by-state differences so that they’re able to ensure that their purchase is entirely legal and follows all local regulations and laws.
Oil companies also understand that purchasing oil titles from state governments is different than purchasing titles from private landowners. States require oil companies to provide all sorts of information, such as how much oil they expect to extract and what they expect market prices to be during the extraction process. Of course, regulations regarding oil title purchases from state governments also differ from state to state, which is why most oil companies seek landman services from businesses like MAJR Resources. Such businesses understand these differences and are able to help oil companies go about their purchase in the proper way.
Obviously, purchasing oil titles from the federal government is also a different process than doing so from private landowners or state governments. The federal government generally requires even more information if an oil company wants to develop federal land, and if the company wants to get access to the land, they have to provide the federal government all of the information they’re seeking.
As you can see, purchasing oil titles is complex, which is precisely why most oil companies have a team of lawyers and experts that help them throughout the process. The oil companies want to make sure they’re doing everything in the proper way, so they seek the advice of experts throughout the buying process.