I am not an expert, and just looked for the heck of it at the SEC filings for NFX stock. On the 15th, the CEO and 4 other Officers sold a total of about a half million shares of common stock. If I had it, I would do it, but does this ring alarm bells for anyone ? Honestly, I am a bit ignorant of the financials, as I am not an investor.
Suzanne, be sure to file Schedule E for Supplemental Income and loss. There are a number of expenses you can deduct from your royalty income, depletion and taxes are probably the main ones but there are a few others that could apply to you. You will also have to file an Oklahoma non-resident tax return. My experience has been to get a refund on the state tax. These are just a few suggestions, you might want to hire a professional if very much money is involved.
Michael, thank you so much for the tax information. I do have a lawyer in Oklahoma who I will contact. Also, I did file the Oklahoma non-resident tax return when I received it from one of my leases with Marathon oil so the refund suggestion is great. Suzanne
Michael look at the Sched E. Royalty is supplemental income subject to several expense deducts, similar to Sched C for self-employed income. Depletion and taxes can add up to a lot of money.
I didnt think there was anything you can claim as a deduction when dealing with royalty income. I thought it was simpleā¦ taxable income.
A few questions here for those in the know. With the price declines and company responses, and since there are many new wells in various stages of completion, hereās my questions: Is there a point in the well development/completion where they need to just complete the well to produce ?
Also, is there then a real need to continue to pump products, or can companies just stop production at any time and if stopping, what happens (other than royalties ending).
Here is the geologistās short answer. Yes, there is a certain point at which they have to temporarily abandon the hole or complete. Each costs money with completion being very expensive. On the horizontal wells, they could just perf and frac a short bit of the hole, produce a little and then come back later and frac the rest. Probably not such a good idea since it will cost more to come back and do it. Most likely better to perf and frac the whole thing and then cut back on the choke to handle the rate of flow.
If they shut in a well, you lose royalties. Check the terms of your lease for what your clause says about it. They can hold the lease a long time by shutting in the well and you are HBP and stuck. However, oil wells do not like being shut in (generally). On the one hand the pressure can build back up, but sometimes they have trouble getting them to actually produce as well as they did before. The down hole sands (natural or frac) can clog the perfs by turning on and off. Costs a lot of money to clean up. Gas wells donāt have as much of a problem, but still risky. Kind of works along the lines of āif it aināt broke, donāt fix itā. Messing with wells is expensive and can have unintended consequences. Does that answer the question well enough?
M Barnes, Thank YOU for this. Excellent and exactly to the point. This is the answer. I appreciate so much your responses and expertise on this and other Forums.
I would bet also there is a place to deduct all those production costs that they have been sharing with us
UGHā¦everyone around here in oil field country has a sad story to tellā¦not fun going to the coffee shops any moreā¦and from looking at our sad little checks this month Iām glad we took our own advice and didnāt chump off and buy that new house we were looking at! Maybe next year will be better, huh? Glad I read in the Bible about not storing up treasures on earth where they will rust and decay but laying up treasures in heavenā¦got to get busy on that part!
Oil and Gas prices on the rise todayā¦hope it continues!
Martha, Hutch, Anyone: I have a weird letter from a āpermit agentā for Dawson Geophysical Company in Midland TX. He "requests permission to conduct āa 3D geophysical survey for and on behalf of Silverthorneā¦ā whatever Silverthorne may be, on Sec 32 2N-4-W. Then it describes W/2 W2 NE/4 etc. etc.
He also says āGrantor agrees to permit personnel & equipmentā¦to enter upon the landsā etc. Well, I donāt own the surface, so I obviously couldnāt give that permission. Soooo, what is this all about?
Thanks Martha. The section is already leased to CLR, with the Claudine on it. So does this mean CLR is paying Dawson to find out if itās worth drilling another? I wish theyād hold off until prices go up, assuming they will. Itād be sad to see a new well with prices this low.
Mā¦is your letter from Dawson wanting to seismic or drill or ???
Just opened my mail and also have a request from Dawson and it is a pretty big area. I will keep an eye on it. I will be signing my letter.
Martha & Lindaā¦ Yes, Iāll sign the letter now that I know itās legit. And Linda, the Claudine goes part-way into 32. Apparently it was stopped by a fault.
Seismic for Dawson.
They need permission from a surface owner and a mineral owner. Probably just using the same form. They are legit and reputable. Silverthorne is a seismic company that has been contracted by the actual potential drillers. I think the other thread to this same question is in Grady or Garvin. Itās okay to do. You could ask if they are giving compensation. Sometimes yes, sometimes no.