Tag Archives: energy
What Is Mineral Rights Leasing?
The importance of energy, oil, coal, and other minerals and natural resources is very evident throughout the world. The demand for commodities such as oil and gas is increasing and many energy and mining companies are on the lookout for land and properties rich with minerals. With energy and mining companies looking and mineral rights owners possessing the potential to get a big profit, mineral rights leasing is undeniably a growing trend in the real estate market and energy/mining industry.
But what is mineral rights leasing all about?
A mineral rights lease is a formal agreement between two or more parties where one party gives the other the right to make use of the minerals in the property involved. In a situation between a mineral rights owner and an energy and mining company, a mineral rights lease is where the owner of the land and/or mineral rights gives the energy and mining company to drill or mine away the minerals underneath the ground.
The mineral rights owner gets benefits in return, of course. The mineral rights owner can get a bonus payment, royalties for every product (that resulted with the minerals) sold, and any other conditions that both parties have agreed to in the contract.
Mineral rights leasing is a complicated matter. This is because it doesn’t just concern the mineral rights owner and the energy/mining company. In some cases, it concerns the surface rights owner who may not be necessarily be the mineral rights owner.
The mineral rights owner may not necessarily be the surface rights owner for the particular reason that mineral rights are not the same as surface rights. Both are different from each other. While surface rights refer to the rights to work and operate on and above the surface, mineral rights pertain to the rights used to explore and produce the minerals below the surface.
In cases wherein the surface rights owner isn’t the mineral rights owner, one would have to speak to both the owners to get permission to operate on the property for the minerals. While the surface rights owner may not have any say in the operations to extract the minerals, it is still his/her property that will be involved. It is his/her property that will be bombarded with big machines and workers. Disagreements and disputes may erupt before and during the mining operations so all parties should be accounted for. It is wise to be specific of every detail involving all parties’ conditions in the mineral rights lease to prevent future problems.
As implied by the definition of mineral rights leasing, this is no simple matter. Mineral rights leasing is complicated from the start to the end of the operations. The contract is a very big deal, and legalities have to be satisfactory for all parties to be in agreement. When problem comes before the parties about the rights of each one of them, it’ll be the contract or lease agreement that’ll steer them all clear. Make sure to consult lawyers regarding mineral rights leasing. Asking for help from geology surveyors and real estate agents is also recommended.
Energy Project Financing
Even with the energy sector being the Golden Child of Wall Street, energy project financing has been elusive. There are presently over a trillion dollars in energy project financing requests laying dormant all throughout the United States. Its estimated though, that the number of energy projects needing funding presently in the U.S. alone borders on the quadrillion mark. So why does energy project financing get such little attention? Simply stated, it is because funding each energy project means a lot of risky zeros for the funder.
Think about it. If you funded commercial loans and you had a choice between a $2 million loan on a mall with lots of equity, or a $500 million energy project that has habitually exhausted its equity for years, which loan would you make in a questionable market? Exactly; the energy project financing request will be treated as a redheaded step childunless you deal with financial experts who specialize in the energy project funding arena. The energy sector has long behaved as if it would never run out of credit, funds, or customers. As such, in todays pinch market, energy project financing has taken a back seat to “safe bets.”
The difference between a big banker at “Big Banks Are Us” and an energy project specialist is the specialist isnt concerned about the risk of approving an energy project funding. A knowledgeable project financing specialist mitigates such risks with their expertise. The specialist knows specifically where to look in an energy project for gaffs, gaps, and misappropriation of funding requests. They know in fact, MORE energy projects must progress in order to keep up with the market demands. They know a winning proposal when they see one, and they also know when a project is being underfunded. Even a highly trained bank executive simply cannot be a specialist in all aspects of their funding requests. While the word billion has begun to lose its shock value in the world of energy project financing, its critical to conduct your business with a specialist who hasnt lost their edge in the energy project sector.
Because of expansions of natural gas, nuclear power, shale, solar power, electricity, crude oil, steam-power, and coal, the need for energy project financing has grown into one of the most demanded, yet underfunded industries worldwide. In many parts of the world, medical research receives three times as much funding as energy financing request even though the world of modern medicine is largely at the mercy of energy.
Our modern society consumes massive amounts of fuel and energy. Even third world countries would be debilitated without the sporadic energy resources they access at present. Developed countries around the world have essentially built their infrastructures around the use of energy. And how could they possibly avoid it? Unfortunately, going to traditional sources for energy project funding has proven to be a daunting task. Even though the Obama administration and a Democrat-controlled Congress have passed stimulus bills with massive amounts of funding for new, alternative energy sources, very little of this money is being thrown at the development and continuation of existing energy resources which we are already dependent upon. The answer to this dilemma is alternative energy project financing options which take into consideration future profits of a tangible energy asset which produces income rather than a debt. Sounds enticing, right? A true energy project financing specialist will know exactly how to accomplish this task. So do yourself a favor. Engage an energy project funding specialist for your successful financing.