Ilios Resources

What is the Haynesville Shale in Louisiana?The Haynesville Shale is a geologic formation of sedimentary rocks containing natural gas.

What are mineral rights? Mineral rights are the rights to sub-surface minerals such as oil, gas, coal and metal ores under the land, while surface rights are the rights for land for agriculture, residential housing, commercial, and other purposes. In Louisiana and many other states such as Texas, mineral rights can be leased and sold separately from the surface rights.

What are royalties? Royalties are the mineral owner's proportionate share of production as reserved in an oil and gas lease.

Why sell your minerals? Cash from the sale of your minerals is a sure thing. Leasing your minerals is a gamble. Will they drill in your area? Will the well produce? If it does produce, how much and for how long? When you sell your minerals, you receive the full agreed upon sales price, regardless of if a well is drilled or if it produces.

What is a Division Order?

A Division Order is a document that the well Operator issues. It describes the property, the Operator, the legal description, the Owner's remittance address and tax ID information, if known, as well as the Owners's decimal interest in the property. The Owner is asked to sign and return the Division Order. This information is used by the Operator to remit proceeds to the Owner.

How do I know if I own mineral rights on my property?

If you own the land, it doesn't mean you automatically own the mineral rights under the land. Most landowners in Louisiana own the mineral rights to their property, but the best way to be sure you own the mineral rights is to have a land professional or attorney conduct a title examination.

How much can I expect to receive for my minerals? All mineral interests are just as unique as the surface itself. The value of a mineral interest is derived from various factors such as location, leasing activity in the area, and well and production activity in proximity to the mineral interest. And, market conditions within the oil and gas sector are also considered when determining a price paid per acre. Mineral sale offers made by Ilios are always in line with the fair market value of the minerals at the specific time of sale.

Will I receive a draft as payment for the sale of my minerals, or a check? And when will I be paid? Ilios renders payment on the sale of minerals with a certified check. Drafts often take too long for processing and other bank regulations, resulting in a delay of funds to the payee. Ilios issues a check as payment, and the check is delivered on the date of closing. If a seller desires, the funds can also be wired into the seller's bank account.

If I have already leased my minerals, can I still sell them? Yes, you can. You still own the minerals, and as such, they are yours to sell. The lease was simply a "rent" agreement, giving the Lessee the right to explore for oil and gas.

What is the 10 year prescription rule? How does this work? In Louisiana, there is a prescriptive period of 10 years, and this means that the minerals revert (prescribe) back to the current surface owner under certain conditions. Starting from the effective date of sale and going forward for 10 years, if there has been no well drilled, or if production has ceased for 10 years, then the mineral buyer loses the minerals and the mineral interest is returned to the current surface owner at the end of Year 10. But if a well is drilled and is producing within this 10 year period, then the minerals remain with the buyer for the life of the production until the production has ceased for a 10-year period.

What is the difference between a royalty owner and an interest owner? A royalty owner shares in production revenues free of costs, while a working-interest owner bears the costs of development and operations.

Why does my monthly payment sometimes vary? Many factors contribute to your payment, including: market conditions, fluctuating commodity prices, regulatory or contractural changes, production volumes, seasonal conditions and well downtime.

How is the route for a proposed pipeline determined? Construction, environmental and landowner considerations are the forefront of the routing process. Where possible, the route is selected to avoid public impacts while minimizing environmental issues, such as the number and location of water body crossings, scenic waterways, byways, wilderness, national parks, and monuments. Where possible, the proposed route will run parallel to existing pipeline and power line corridors and/or property lines and boundaries.

Will a pipeline on my land affect property values? And, will it affect my insurance rates? Property values are generally based on the actual use of the land. Construction of a proposed pipeline will not change the general use of the land, although certain building structures and landscaping cannot be built on the right-of-way. According to a 2001 study funded by the Interstate Natural Gas Association of America (INGAA), the presence of a natural gas pipeline had no significant impact on the sale price or demand for properties located along a pipeline right- of-way. And, to our knowledge, a natural gas pipeline would have no impact on landowner insurance premiums.

What is an easement and how will I be compensated? An easement is the same as a right-of-way, which allows the pipeline company the right to use the land to install the pipeline, but an easement does not transfer title of the land to the company. The landowner continues to maintain ownership of the property, although certain land-use restrictions are associated with a right-of-way. All landowners are compensated for an easement, and the pipeline company will work with landowners to determine fair market value for the easement.

What about damage to trees, crops, fencing, etc.? There is (should be) a clause in the language of the Agreement/Grant specifically addressing the damage to, compensation for and restoration of such things. If the language is not specific enough to satisfy the landowner, he/she can and should make the concern(s) known to the negotiator. Damages for surface use and pipeline right-of-way are also considered non-taxable items. Make certain that the funds issued for this are identified as "damages" for IRS purposes. By executing this agreement, this substantiates as your "receipt" of being reimbursed for damages.

Why should I consider granting an easement in the first place? The current drilling and production activity in North Louisiana has resulted in an ever-growing number of new wells drilled. If a landowner has been approached for the granting of a pipeline right-of-way, the chances are that he/she are being asked for the right to transport the very natural gas (or oil) from which he/she expects royalty payments. There is a need for new infrastructure in the petroleum industry. Without it, simply put – NO ONE GETS PAID.

How do I clear the title to my mineral rights? How long does it take to receive my first check? If petroleum can be produced in commercial quantities on your land, it is time to clear the title to mineral rights. You should consult with an attorney or other land professional to assist you in handling this. The Department of Conservation must receive official notice of the first well completion. After a well is drilled and completed, the oil and gas company must have an abstract of title prepared, in which copies of the property's records are obtained by the abstractor. Then, the abstract of title is provided to an attorney for examination of title to all mineral rights in the well. Prior to an attorney rendering the final title opinion, any ownership questions or discrepancies must be resolved. This process can take several months to complete. Once finalized, the title opinion reflects the current ownership of the surface and mineral interests. From this, the well operator prepares a division order for each royalty owner in the well. The royalty owner should check his division order received, to verify the ownership decimal interest is shown correctly. This entire process, from abstract of title to delivery of division order, may take anywhere from 6 months to 1 year after completion of the drilling of the well.

What does the word "Ilios" mean? The greek word for the sun is Ilios. We recognize the sun as the source of all fossil fuels.

When are royalty payments suspended? For your protection, payments are suspended upon a title dispute, the assignment of interest, notice of death, transfer of property, or in the event of no known address. Keeping your information current can prevent this inconvenience. If you any questions about your royalty payments, you should contact the operator of the well.

Abandon
To temporarily or permanently cease production from a well or to cease further drilling operations.

Assignment
The legal instrument whereby an interest is transferred to another party.

Assignee
The person to whom the interests are assigned.

Assignor
Person who conveys interest in an assignment.

Borehole
The hole created by the drilling of the well.

Bottomhole
The lowest or deepest part of a well.

Casing
Steel pipe placed in an oil or gas well to prevent the wall of the hole from caving in, to prevent movement of fluids from one formation to another and to aid in well control.

Check stub
Stub attached to a check disclosing well name, month of production, price received, total volumes produced, and net decimal interest of payee.

Completion
After the drilling of a successful well, the "completion" includes all the work required to make the well ready for commercial production.

Conveyance
Legal term for transferring the title of a property from one party to another, typically by deed (or bill of sale, etc.)

Crude Oil
A naturally occurring mixture of liquid hydrocarbons as it comes out of the ground.

Deed
A written legal document by which the title to a property is transferred from one party to another.

Depreciation Allowance
Income tax deduction allowed for the exhaustion of a natural resource.

Division Order
A Division Order is a document that an Operator of a well issues that describes the property, the operator, the legal description, the owner's remittance address and tax ID, information, if known, as well as the owners's decimal interest in the property. The Owner is asked to sign and return the Division Order. This information is used by the operator to remit proceeds to the Owner.

EUR
Estimated Ultimate Recovery. An estimate of the cumulative volume of reserves that will ultimately be recovered over the life of the well, field, or property.

Fracturing
A procedure undertaken to attempt to increase the flow of oil or gas from a well. A fluid (usually crude oil, diesel oil or water) is pumped into the reservoir, with such great force that the reservoir rock is broken and split open.

Grantor
The person who grants or conveys lands, minerals, etc.

Grantee
The person acquiring the grant of land, minerals, etc.

Horizontal Drilling
The newer and developing technology that makes it possible to drill a well from the surface, vertically down to a certain level, and then turn at an angle, and continue drilling horizontally within a specified reservoir, or an interval of a reservoir.

Joint Operating Agreement
A contract in which multiple partners who own the operating rights in a tract of land agree to share costs of exploration and development.

Landman
The person who secures leases and handles damages for oil and gas companies who are drilling wells or laying pipelines.

Landowner
The person who generally owns all or part of the minerals under his lands and is entitled to lease the same. The landowner's ownership may also be limited to surface ownership.

Lease
A legal contract by which the owner of the mineral rights to a property conveys to another party, the exclusive right to explore for and develop minerals on the property, during a specified period of time.

Lessee
The person who acquires the right to drill an oil or gas well.

Lessor
The mineral owner who grants an Oil, Gas, or Mineral Lease.

Natural Gas
A mixture of hydrocarbon compounds and small amounts of various non-hydrocarbons (such as carbon dioxide, helium, hydrogen sulfide, and nitrogen) existing in the gaseous phase or in solution with crude oil in natural underground reserves.

Operating Expenses
The costs of operating a well.

Operator
The party designated by all working interest owners to conduct the operations for the well which is stated in the Joint Operating Agreement.

Paid-up Lease
An oil and gas lease that is paid-up through the primary term. It is paid to the Lessor when the lease is signed.

Reserves
The amount of oil and gas in a reservoir calculated to be recoverable and described in measurements of barrels of oil, or million cubic feet (MCF).

Royalty
A royalty is the mineral owners share of the gross production, which is free of the costs of production. It is probably the most important part of the lease to the mineral owner and is a negotiated term, amongst other terms, agreed to prior to executing the oil, gas & mineral lease.

Royalty Revenue
Funds received from the production of oil or gas, free of costs, except taxes and other transportation charges which are incurred in order to transport the product to the point of sale, which are paid to the lessor based upon the percentage of gross production.

Salt Water Disposal Well
A well into which oilfield salt water is disposed.

Shut-In
An oil or gas well that is capable of future production but for some stated reason, is not producing at the time.

Spacing Unit
The size (amount of surface area) of a parcel of land on which only one producing well is permitted to a specific reservoir.

Surface Owner
The person who owns the surface rights to a tract of land.