I recently inherited mineral rights in Oklahoma from my late grandfather; and I am feeling a bit overwhelmed with the responsibilities that come with it. I am hoping to get some guidance from this community on the best steps to take to ensure I manage these rights effectively.
The mineral rights are spread across several counties, including Grady, Stephens; and Carter. I have received a few lease offers from different companies; but I am not sure how to evaluate them.
Should I be looking at more than just the bonus amount and royalty percentage? Are there specific terms I should be negotiating to protect my interests in the long term?
I am also curious about the legal aspects of managing mineral rights. Are there any particular legal challenges or pitfalls I should be aware of in Oklahoma? Should I be consulting with a lawyer or landman regularly; or are there resources available that could help me navigate this on my own?
You can observe qualified professionals (often with localized expertise) who provide services to mineral owners right here on The Mineral Rights Forum. You will notice them in 3 different places on the site:
Condolences on the passing of your grandfather. Welcome to oil and gas minerals world. You can do this. It is a bit of drinking from the firehose in the beginning. We are here to help.
The Mineral Rights Forum is an excellent place to start. Read the Mineral Help tab above.
The National Association of Mineral Owners (NARO) www.naro-us.org
is an excellent organization to join for networking and education on mineral rights. They are offering a free webinar now on how to search for Deeds, leases or other important documents. They have an introductory membership for your first year. The OK chapter holds townhalls, webinars and conventions for mineral owners. We are hosting one in Tulsa in late October or early November. The OK NARO conference is usually in late April or early May.
If you join, you have access to the other webinars that they offer. I recently gave on on “How to get Information From Your State Oil and Gas Regulatory Agency” for OK. It is available for replay and has an hour of tips and tools to make managing minerals easier.
Your mineral rights are in a very hot area, so proceed with caution and knowledge. Learn about leasing and force pooling before deciding. You definitely want professional legal help when leasing as the draft leases are not generally in a mineral owner’s favor and need quite a bit of editing.
Suggest that you read through the topics in your counties and get a feel for the activity and the answers to questions you probably have.
Get organized. If you need a template, come back and ask about that. Collect all data that you can from your grandfather’s files if he had them. If he did not, then you really need the webinar info.
Look for unclaimed funds from the OK Treasurer’s office (or the state he lived in plus Delaware.)
Regarding lease bonuses and royalty interests. The greater the bonus the smaller the royalty. In other words these are inversely related. What you choose will depend upon your situation. It is important to understand how a lease works. Typically, there is a 3-year lease which is the time limit wherein the company must start operations to recover. (drilling, preparing site, etc.). If this is not commenced by the end of the period then the lease expires. However, if they begin operations and begin to produce, then the lease will continue as long as there is production in paying quantities. So, leases can continue for decades. That is why it is important to have good lease provisions.
Unless they are strapped for cash, most savvy owners focus on the royalty more than the bonus.
Apart from the bonus and royalty, the devil is in the detail in the lease. The lease you will be offered is in the company’s best interest. Usually companies are willing do negotiate various clauses to protect your interest.
I also recommend NARO as a good organization.
This post is not legal, tax or investment advice. Reading or responding to this post does not create an attorney/client relationship.
