Oil title refers to the legal possession of oil estates, which are associated with a given tract of land. Presence of lucrative minerals like oil in some areas has created a need for landowners to establish clear ownership for both the land and the mineral deposits in those lands. Title opinions have provided a more accessible, inexpensive and legal way of such ownership.
These title opinions describe the current ownership rights as well as what must be undertaken to make these rights marketable. Various title opinions exist in the oil industry. These title opinions serve different purposes and scope.
The following are some of the oil title opinions;
Before an oil exploration company drills a well, it has to commission a drilling opinion to be prepared. Also known as an original title opinion, this type of oil title determines whether a given title is marketable for any investment to be made. It identifies all the parties interested in the oil in the lands upon which the well is to be drilled. It also identifies problems in the titles of landowners and gives curative measures to these problems so that the drilling company is assured of full drilling and oil-producing rights. This will go a long way in combating risks of title failure that may arise due to third parties that are unleashed, claiming interests in the well when once drilling has begun. Unleased third parties are dangerous to any oil company since they have rights to a free well and royalty. This might cost the company a lot of money. This problem can be avoided by doing a thorough drilling opinion.
2.Division order opinions.
These opinions usually come after the drilling opinions. They are done after oil companies have found producible oil from the land. It states the parties that are entitled to benefit from the sale of oil produced from the wells and the percentage each individual will get. As in the case of drilling, possible problems are identified, and corrective measures specified so that each member is paid the correct percentage of revenue.
There are times when the oil company can decide to take a loan and fund the exploration project. The company can use the oil property as collateral. In such a case, lender opinions are written which are always specific to the borrower’s interests. The primary purpose of these opinions is confirming the nature of the oil interest being used as security for the loan.
An exploration company can decide to purchase an oil territory outrightly. Before doing so there is need to commission these opinions. These opinions are designed to help a company understand what it is buying, the issues in the title of the property as well as seller ownership of the property. They are also prepared in regards to purchasing and sale agreements.
These title opinions are essential for both landowners and the oil companies to ensure they exercise their mineral rights as well as property rights. These documents protect the two parties from competing claims, and they make sure there is a fair distribution of the benefits from the sale of the produce. These oil title opinions can also be tweaked to fit your needs that’s why you need someone that has experience in doing so. With Majr Resources be sure to have a trusted company with the expertise to meet your title opinion needs.