Author: Valor

Navigating the complex landscape of oil and gas interests can be a daunting task for both newcomers and seasoned professionals in the industry. From mineral rights to royalty shares, the various types of interests represent different sets of rights, responsibilities, and financial benefits. In this blog, we will demystify these different categories, explaining each type of interest—such as Mineral Interest, Royalty Interest, Working Interest, Overriding Royalty Interest (ORRI), Non-Participating Royalty Interest (NPRI), and more. Understanding these distinctions is crucial for anyone involved in the oil and gas sector, whether you’re negotiating contracts, managing assets, or planning new explorations.

Mineral Interest

This interest pertains to the ownership of the underground minerals (such as oil and gas) beneath a tract of land. Owners of mineral interests have the right to lease, sell, or participate in the development of these minerals.

Royalty interest

A royalty interest is a share of the gross production from a well, usually expressed as a percentage. This percentage is known as the Decimal of Interest or DOI. Royalty interest owners receive a portion of the revenue generated from the sale of oil and gas, but they are not responsible for the operational costs associated with drilling, extraction, and production.

A Non-Participating Royalty Interest (NPRI) is a specific type of royalty interest in the oil and gas industry. It grants the holder the right to receive a fraction of the production revenue from the minerals extracted but does not confer any rights to participate in leasing or operational decisions regarding the mineral property. An NPRI is categorized under Royalty Interests because it is purely revenue-oriented and does not involve participating in the operational or leasing aspects of the mineral estate. However, it is distinct from other royalty interests because of its non-participatory nature, which limits the holder’s involvement beyond receiving revenue shares.

Working interest

Working interest represents both the right to a share of production and a financial responsibility for a proportionate share of the operating costs. Working interest owners have a more involved role, contributing to operational expenses but also reaping a proportionate share of the profits. The well operator divides funds among those with working interests after operating expenses have been covered. Often times this interest type is referred to as a “non-op working interest”.

Overriding Royalty Interest (ORRI):

This is similar to royalty interest but is carved out from the working interest. It does not affect the mineral ownership but grants a share of production revenue. Overriding royalties typically expire once the lease has produced or at the end of the lease term.

Net Profits Interest

An interest that provides the holder a share of the net profits from the production of oil and gas, after certain costs are deducted. It is a non-operating interest, meaning the holder is not responsible for operating expenses.

Leasehold Interest

This interest is held by a lessee under an oil and gas lease. The lessee (often an exploration company) acquires the right to explore and develop the property for oil and gas production. This interest combines elements of working interest and mineral rights but is contingent on the terms of the lease.

Carried Interest

In this arrangement, one party (often a smaller partner) agrees to carry another partner through the exploration and/or development phase. The carrying partner covers the expenses, and in return, they receive a larger share of the profits or a reimbursement from the carried partner once production starts or reaches a profitable stage.

Contact Valor Today

Contact us today if you need a mineral management company to help you manage your assets.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

Mineral management – why it matters and how it benefits you

A common question we hear from mineral owners is, “What is a mineral manager?” and, more importantly, “Do I need to work with a mineral management company?” These are understandable concerns, as managing mineral assets can often feel overwhelming. Many of our beloved client relationships started out with them asking the same questions before working with us.

A mineral management company helps streamline the complexities of managing mineral rights, from tracking revenue and expenses to ensuring your assets are ready to be passed down to future generations. By working with a mineral management company, you gain expertise, peace of mind, and a team dedicated to maximizing the value of your assets.

What is mineral management?

Mineral management involves overseeing and administering mineral estates, which includes managing the leasing, production, and revenue aspects of oil, gas, and other minerals. This field plays a crucial role in ensuring that mineral rights owners maximize their investment returns while complying with legal standards and market conditions. Effective mineral management requires a comprehensive understanding of geological data, property rights, contract law, and the latest technology in resource management. Companies like Valor offer specialized services that help mineral owners navigate these complex processes, enhancing profitability and ensuring regulatory compliance. By entrusting mineral management to experts, owners can focus on their core businesses while leaving the intricate details of managing their mineral assets in capable hands.

What is a mineral manager?

A mineral manager is a professional responsible for overseeing and managing the various aspects of mineral ownership, including handling lease agreements, tracking production, ensuring accurate payments, and staying compliant with regulatory requirements. They work on behalf of mineral owners to maximize the value of their assets while relieving them of the day-to-day complexities of mineral management.

At Valor, our trusted mineral managers bring a wealth of experience from across the oil and gas industry, making us uniquely qualified to support our clients. We have team members who have personally owned minerals, worked for operators, served as landmen, and held roles at banks and organizations that manage minerals. Our diverse team also includes those with backgrounds in geology. These varying perspectives and skill sets allow us to provide well-rounded, comprehensive support to our clients, ensuring that every aspect of their mineral management is handled with expertise and care.

Challenges in mineral management

Managing mineral rights comes with a unique set of challenges that can be daunting for individual owners and even for experienced operators. One primary challenge is staying informed about the legal and regulatory changes that impact mineral ownership and operations. This can range from environmental regulations to changes in taxation laws. Another significant challenge is ensuring that your minerals do not go dormant and inadvertently revert back to the surface owner, which is a risk in certain states where laws dictate such transfers after periods of inactivity. Each state has different regulations, making it crucial for mineral owners to be vigilant and proactive in their management practices to prevent such outcomes. Additionally, the accurate valuation and management of royalties require precise record-keeping and a deep understanding of market conditions to ensure fair compensation. Disputes over ownership and lease terms can also lead to costly legal battles. Moreover, mineral owners must navigate the complexities of lease negotiation, which demands a thorough understanding of market trends and legal implications. Leveraging technology and expert services, like those provided by Valor, can help mitigate these challenges by providing comprehensive management solutions that streamline operations and reduce the likelihood of costly errors and oversights.

Self-managed vs. professional mineral management:

Deciding between managing mineral rights on your own or hiring a professional mineral management company can significantly impact the effectiveness and profitability of your mineral assets. Managing your mineral rights independently might seem cost-effective at first but requires extensive knowledge of legal regulations, market trends, and administrative tasks such as lease negotiations and royalty calculations. This approach can be overwhelming, especially for those unfamiliar with the complexities of the oil and gas industry, and most individuals lack access to robust mineral management software to manage their minerals effectively. Without a historical database of all transactions, tax filings, deeds, and other critical documents, managing these aspects can become a significant time sink.

On the other hand, professional mineral management services, like those offered by Valor, bring expertise and advanced technologies to the table. With tools like mineral.tech®, Valor provides mineral owners a way to digitize and organize their asset portfolio, greatly simplifying the management process. This technology ensures that all pertinent records are easily accessible, significantly reducing the time spent on administrative tasks. Additionally, working with a company like Valor can be instrumental in uncovering and recovering suspended funds; over the past two years, Valor has successfully recovered over $14 million in suspended funds on behalf of their clients. This expertise not only ensures compliance with legal standards and optimizes lease agreements but also manages revenues with precision. Engaging a professional service provides peace of mind and frees up valuable time, allowing mineral owners to focus on other business or personal endeavors without compromising the management quality of their valuable assets.

Streamlining your mineral assets: from chaos to clarity

At Valor, we serve a wide array of clients with vastly different needs. Some come to us with storage units full of historical documents and printed maps, showing us all of the historical details of their mineral interests. Others tell us they’re unsure of what exactly they own—they just know they receive royalty checks and aren’t certain if the amounts are accurate. The good news is that we provide immense benefits to both types of individuals. For many, our role is to bring them into the 21st century by getting everything digitally documented, mapped, and organized in our mineral management software. From there, we handle division orders, track interests, and even dig for suspended funds. For others, we’re starting from scratch, searching for historical paperwork, deeds, and leases and working to unravel the puzzle of their assets. No matter the starting point, we work to bring tremendous value by making their lives easier, optimizing their assets, and preparing everything for the next generation of owners.

Unlock the full potential of your mineral assets

Working with a mineral management company can be incredibly beneficial, regardless of your level of knowledge or active involvement with your portfolio. Whether you’re unsure of what you own or have detailed records of your interests, a professional team can help organize, optimize, and protect your minerals assets for the long term.

At Valor, we go beyond traditional mineral management services by utilizing our proprietary mineral management software, mineral.tech®, which provides a clear, organized database that many other mineral managers cannot offer. This technology, paired with our expertise, ensures that your assets are securely managed and easily accessible, giving you peace of mind and maximizing the value of your interests.

Contact Valor today

Contact us today if you need a mineral management company to help you manage your assets.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state

Discover Opportunities and Maximize Profits with Strategic Mineral Management Solutions

Mineral management can be overwhelming for owners who are juggling multiple assets, documents, and revenue streams. At Valor, we offer comprehensive solutions that make managing your asset portfolio easier, more efficient, and more profitable. Whether you’re focused on portfolio management, maximizing revenue, or streamlining operations, our proprietary mineral management software, mineral.tech®, and our expert team are here to help.

Portfolio Management: Optimized, Simplified, Visualized

Managing a diverse mineral portfolio can be complex and time-consuming, but with Valor’s software, mineral.tech®, we make it simple. Our platform is designed to optimize and simplify portfolio management by providing mineral owners with a visual and comprehensive view of their assets. mineral.tech® allows you to consolidate all your assets and historical documentation and data into one user-friendly dashboard, giving you access to key information like leases, royalty payments, deeds, and asset performance in real-time.

The visualization features of mineral.tech® provide actionable insights, helping you make informed decisions about your assets. By using a single, centralized system to manage your portfolio, you save time and reduce errors, enabling you to focus on growing and optimizing your assets. With our proprietary software, managing your mineral assets has never been easier.

Maximize Revenue: Discover Suspended Funds

At Valor, we understand that maximizing revenue is a priority for mineral owners. Our approach combines the power of mineral.tech® with the expertise of our team to uncover suspended funds or missing payments that may have slipped through the cracks. The software’s analytics help identify discrepancies and potential gaps in payments, while our experienced professionals actively search for opportunities to find missing income.

Our team digs deep into the details, ensuring that nothing is missed. Whether it’s tracking down missing royalty payments, ensuring proper lease deductions, or recovering suspended funds, our combined expertise and technology give you a deadly combo for ensuring that your revenue potential is fully realized.

Easier Operations: Streamline Your Mineral Management

Managing mineral assets involves more than just tracking payments. Valor provides a full range of services designed to simplify your operations, ensuring that every aspect of your portfolio is handled with precision. Here’s a list of what Valor can do for you:

• Full Accounting Services: From general ledger management to joint interest billing (JIB), we handle all your accounting needs.
• Division Orders: We ensure that your division orders are accurate and up-to-date, eliminating errors that could delay your payments.
• Mail Management: We can handle all of your mail, managing important documents and depositing received checks so you don’t have to worry about missing anything crucial.
• Asset Mapping: With mineral.tech®, you can visualize and see all of your assets digitally mapped for a clearer understanding of your portfolio.
• Operator Relations: Our team reaches out to operators on your behalf to resolve disputes, correct errors, and ensure smooth communication.
• Regulatory Compliance: We ensure that all of your operations are fully compliant with relevant regulations, avoiding costly fines and legal issues.
• Document Management: Our digital document management system keeps all of your files organized and easily accessible.

By outsourcing these tasks to Valor, you can focus on what matters most in your life, not the daily management of mineral assets. We take the burden of management off your shoulders, giving you peace of mind and confidence in your portfolio’s future.

Contact Valor Today

Contact us today if you need a mineral management company to help you manage your assets.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state

Exploring the pivotal role that energy sources play in driving cutting-edge technologies.

Industries and companies across the globe are eagerly adopting artificial intelligence (AI) to streamline their operations and enhance efficiency, and the energy industry is no exception. They’re constantly exploring AI to not only improve processes, but also boost productivity. However, there’s an interesting twist for the oil and gas and renewables sector. Unlike other industries, they don’t just benefit from AI; they also power it. The very energy that oil, gas, and renewables like solar and wind provide is what keeps the AI data centers up and running. Despite the push towards digital transformation, many people don’t realize just how much energy AI consumes, most of which still comes from traditional sources like oil and gas.

AI’s growing energy needs

Data centers, the backbone of AI operations, are among the largest consumers of electrical power in the tech industry. These facilities require continuous power for data processing, storage, and cooling systems. As AI technologies advance and become more widespread, the energy required to support them intensifies. According to projections, the overall electricity consumption from data centers, AI, and cryptocurrency could reach double the levels of 2022 by 2026​(IEA), demonstrating unprecedented rapid growth. According to CNBC, AI data centers in the U.S. could consume as much electricity by 2030 as some entire industrialized economies (CNBC).

Why data centers require so much energy

Data centers require substantial energy primarily due to their non-stop operations, extensive cooling needs, and redundancy requirements. Servers in these centers run continuously to process and store vast amounts of data, demanding persistent energy use. Cooling systems, which prevent equipment from overheating, consume almost as much energy as the servers themselves. Furthermore, data centers maintain redundant systems to ensure reliability, doubling the energy required for both primary and backup systems. As the demand for data storage and processing escalates, particularly with the growth of AI, these facilities must expand, further increasing their energy consumption. This continuous and intensive use of energy is compounded by the need for scalability and the inherent operational demands of maintaining a 24/7 service environment.

The surprising connection

While advancements in renewable energy are on the rise, the immediate demand for power is largely being met by established sources, predominantly fossil fuels. The U.S. Energy Information Administration reports that in 2020, about 60% of the world’s electricity was generated by oil, gas, and coal. This dependency highlights a critical connection between AI’s growth and the traditional energy sector, particularly oil and gas.

As AI and data centers’ energy demands grow, incorporating renewable energy sources like solar, wind, and hydroelectric power becomes increasingly relevant. These energy sources will need to provide a significant and consistent portion of the power needed by AI data centers.

Impact on the oil and gas industry

This increasing demand for energy not only underscores the importance of oil and gas in enabling current AI capabilities but could also present significant growth opportunities for the sector. As AI usage expands, so too does the need for energy.

Conclusion

The relationship between AI, oil and gas and renewables is complex and symbiotic. While AI promises enhanced efficiencies and automation, its growth is intricately linked to various energy sources. As we continue to embrace AI, understanding and managing this dependency will be crucial for sustainable development. Stakeholders are encouraged to consider how the energy demands of tomorrow’s AI-driven technologies will be met and the role both traditional and renewable energy sources will play in that landscape.

Contact Valor Today

Contact us today if you need help outsourcing your oil and gas operations.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state

Managing mineral assets can be complex and time-consuming, which is why choosing the right partner is essential. As one of the leading mineral management companies, Valor offers comprehensive mineral management solutions designed to optimize assets, streamline operations, and provide real-time portfolio insights. Whether you’re an individual or an organization, Valor’s expertise and cutting-edge technology, mineral.tech®, make managing your mineral interests easier and more effective. Our services include:

Revenue management

• – Revenue analysis framework
• – Monthly journal entry integration
• – Bank statement reconciliation – monthly
• – Digital and paper check processing
• – Monthly reporting of missing revenue by payor and interest
• – Depository and distribution services oversight
• – Asset reporting and analysis

Land management

• – Asset inventory and mapping (tracts, units, leases, and deals using GIS technology)
• – Lease analysis and negotiations
• – Title and ownership administration
• – Acquisition and sale analysis
• – Offset drilling and permit tracking
• – Division order analysis with suspended funds recovery
• – Comprehensive asset tracking
• – Public activity tracking
• – Pay status review reporting
• – Proprietary mineral management software access

Regulatory compliance and reporting

• – 1099s and W-2 processing
• – Property tax administration and payment

Full general ledger accounting

• – Expense accounting
• – Partnership/fund accounting
• – LOE (Lease Operating Expenses) review
• – Royalty analysis
• – Variance analysis
• – Reconciliation
• – Financial reporting

Document management

• – Historical document scanning and digitization
• – Digitization strategies
• – Centralization protocols
• – Third-party correspondence coordination

Joint Interest Billing (JIB) and expense tracking

• – Joint Interest Billing (JIB)
• – Monthly journal entries
• – Identify unbilled transactions
• – Year-end JIB audits
• – JIB payment processing

Need support with a service you don’t see listed? Tell us about it. Our goal is to provide custom services to fit your needs.

In an industry where efficiency and transparency are crucial, Valor stands out among mineral management companies by delivering tailored solutions that maximize value and minimize stress. With our expert mineral management solutions and advanced mineral management software, mineral.tech®, you can rest assured that your assets are in capable hands, allowing you to focus on what matters most. Trust Valor to elevate your mineral management experience every step of the way.

Contact Valor Today

Contact us today if you need a mineral management company to help you manage your assets.

The information provided by Valor in this blog is for general informational purposes only, not to provide specific recommendations or legal or tax-related advice. The blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.