Gas balancing is the process of settling gas imbalances that arise when co-owners of a gas well take and sell different amounts of gas than their ownership shares entitle them to — leaving some owners "overproduced" and others "underproduced" — resolved under a gas balancing agreement either in kind, by letting the underproduced party take extra gas later, or in cash.
A gas well is often owned by several working-interest parties, each entitled to its share of the gas. In practice they do not always take that gas evenly — one owner's purchaser may take more, another's market may be constrained, so one party ends up selling more than its share (overproduced) and another less (underproduced). That gap is a gas imbalance.
Because gas is sold as it is produced and markets differ across owners, imbalances are a normal feature of jointly owned gas wells — and gas balancing is how they get squared up over time.
Owners usually anticipate this with a gas balancing agreement that sets the rules for correcting imbalances. There are two basic approaches: Balancing in kind: the underproduced owner is later allowed to take more than its current share until it catches up, drawing the imbalance back to zero over time.
Cash balancing: the overproduced owner pays the underproduced owner in cash for the value of the gas taken beyond its share, often at settlement, at the end of the well's life, or on a schedule.
Which method applies, and how the price is figured, is governed by the balancing agreement.
Gas balancing is primarily a working-interest matter — it is the working-interest owners who take and market their own gas and thus fall in or out of balance. It affects the timing of what each owner realizes and can create a real receivable or payable, especially a lump-sum settlement at the end of a well's life for a long-standing imbalance.
Royalty owners are generally insulated from the mechanics, though how royalties are calculated on over- and underproduced gas can raise its own questions depending on lease terms and state law.
For anyone owning or buying a working interest in a gas well, an existing imbalance is part of the picture — being underproduced can be an asset (gas or cash owed to you), while being overproduced can be a liability (gas or cash you owe). A buyer diligences the well's balancing position and agreement, because it affects the interest's true value.
Buckhead Energy accounts for gas balancing positions when evaluating working interests in gas wells. This page is educational information, not legal, tax, or accounting advice.
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Educational information only — not legal, tax, or investment advice. Consult a qualified attorney, CPA, or landman about your specific situation.
The process of settling imbalances that arise when co-owners of a gas well take and sell different amounts of gas than their shares entitle them to. Some owners become overproduced and others underproduced, and balancing squares it up in kind or in cash.
Co-owners of a gas well do not always take their gas evenly — one owner's purchaser may take more while another's market is constrained. Because gas is sold as produced and markets differ, one party ends up selling more than its share and another less.
Under a gas balancing agreement, either in kind — the underproduced owner later takes extra gas until it catches up — or in cash, where the overproduced owner pays the underproduced owner for the value of gas taken beyond its share. The agreement sets the method and pricing.
Mostly no — gas balancing is primarily a working-interest matter, since working-interest owners take and market their own gas. Royalty owners are generally insulated from the mechanics, though royalty calculation on over- and underproduced gas can raise questions depending on lease terms and state law.
Because an existing imbalance is an asset or a liability. Being underproduced means gas or cash is owed to you; being overproduced means you owe it. A buyer diligences the balancing position and agreement because it affects the interest's true value, especially at end-of-life settlement.
Yes — Buckhead Energy is a direct buyer of mineral, royalty, NPRI, and ORRI interests across the United States, producing or non-producing. Buckhead Energy makes a free written offer, pays the title and closing costs, and charges no broker commission.
Buckhead Energy buys mineral and royalty interests across all 50 states and has completed acquisitions in 33 states. Buckhead Energy is a direct buyer, not a broker — we purchase mineral and royalty interests with our own capital. Buckhead Energy has been buying mineral and royalty interests since 2006. Buckhead Energy holds an A+ rating with the Better Business Bureau.
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