Interested in recommendations for forming an LLC and farmout options. I am a landowner w/full Gas & Oil rights recently awarded 100% gas & oil right and complete ownership of an active well via a recent favorable breached lease dispute court settlement.
Not interested in functioning as the well operator or producer, but would like to form an LLC for liability protection, estate inheritance planning, future well exploration and negotiation purposes. Already have a relationship with an interested producer who has recently completed a number of nearby wells. I’m thinking this LLC in-turn would enter into a farmout/well & equipment sale agreement to the interested producter, while retaining a non-working interest in the existing well and an ORI w/option to convert to a non-working interest in any new well(s).
If you are going to end up with a non-working interest ( a royalty interest and/or an overriding royalty interest), you do not need an LLC. If you end up with a working interest, an LLC is in order for liability protection.
If you are doing business in Texas, the LLC will be subject to the Franchise Tax in addition to the income tax you will pay as the flow through owner of the LLC. Something to consider.