Family members recently received an oil & gas lease in the mail. Included was a memo outlining our small interest in property in Borden County Texas, and terms outlining the location and mineral acres of the property. Enclosed with the documents was a bank draft for $9000.00 for a three year term.
Being unaware that we even held a mineral interest, the family felt that the bonus money was generous and sufficient. Also enclosed was the lease and instructions for us to sign the papers, have them notarized, and take the lease and draft to our bank for collection. (Which we did).
Upon the expiration of the 30 banking days outlined in the draft, we each (4 of us) received a check for $1300.00 and an apology for the "miscalculation" of the offer amount.
Although we understand the division numbers, we were told (by the landman) that the $9000.00 figure was correct for the amount of property being sought. This was when we called to make sure the offer was legitimate.
If the agreement was for $9000.00, the draft was for $9000.00 and the figures were verbally confirmed with the landman, do we think we have any chance of the court's ordering the oil company to honor their initial offer and bank draft? (We have not cashed the $1300.00 check).
Can the oil company say "oops" our mistake, and expect that we accept the lesser amount?
If the mistake is based on title, then yes they can do it.
The point of the bank draft is to give them time to make sure that the title is correct. What many people dont realize is that there can be a lot more invloved in title research than just a quick review of deeds. Especially when you are talking about a mineral interest that is divided amongst a large family. Depending on when people die and how they die, the interest of each surviving heir can change significantly.
Most Legit Oil And Gas Companies will pay you with a check. 9 times out of 10 they will pay you with a 30 draft so that buys the comany 30 days to sell your lease to an actual operator. But like Adam points out. They could have settled some title issues which could have been the reason for the miscalculation.
Adam said:
If the mistake is based on title, then yes they can do it.
The point of the bank draft is to give them time to make sure that the title is correct. What many people dont realize is that there can be a lot more invloved in title research than just a quick review of deeds. Especially when you are talking about a mineral interest that is divided amongst a large family. Depending on when people die and how they die, the interest of each surviving heir can change significantly.
Would you please explain or expand on your statement: Depending on when people die and how they die, the interest of each surviving heir can change significantly.
Thank you. Adam said:
If the mistake is based on title, then yes they can do it.
The point of the bank draft is to give them time to make sure that the title is correct. What many people dont realize is that there can be a lot more invloved in title research than just a quick review of deeds. Especially when you are talking about a mineral interest that is divided amongst a large family. Depending on when people die and how they die, the interest of each surviving heir can change significantly.
Texas has specific rules for people who die without a will (intestate). See attached document.
If a person dies with a will (testate), then the interest owned by that person follows what the will states. However, I have heard it argued by several attorneys that if the individual dies testate before the property is techinically inherited, then the interest is to be treated as though the individual died intestate.
Read the attached document and you will see just how many different scenarios are out there and why it can be very complicated. When I am trying to figure out an heirship situation, I make sure to go through it multiple times before making a final determination. Quite often, I remember a different rule that makes the interests change.
I have worked for lots of very large companies and plenty of small ones and they have all used bank drafts or some form of delayed payment. I have to disagree that 9 times out of 10 the bank draft is simply time to sell the lease. I know it happens, but it is far from 9 times out of 10.
I think you need to call the deal off or renegotiate. They did not pay what they offered, and I think the new amount reflects that it is a new offer that I think you are not bound to accept. Don't cash the checks.
I am a landman and my parents are mineral owners in Texas. My family will NOT except bank Drafts Period! If you want to lease our land then which is 640 acres in the heart of the Eagle Ford then you better come with somehing more then a bank draft. And as a Landman I refuse to lease a landowner and offer them a Bank Draft. Luckily the Company I work for lets the money do the talking and pays with a Check. Again, This is just my opinion. I dont like the intentions of any compnay offering a bank draft. Just Saying
Adam said:
I have worked for lots of very large companies and plenty of small ones and they have all used bank drafts or some form of delayed payment. I have to disagree that 9 times out of 10 the bank draft is simply time to sell the lease. I know it happens, but it is far from 9 times out of 10.
Thanks to everyone for giving me some insight. I gather that "if the landman made a mistake and offered an amount 10 times higher than what was due" that I have no recourse in collecting from the original draft. Next time it will be a "cash up front" deal.
We just learned that Borden County is included in the "Spraberry Field" and that mineral rights are now being leased at 15,000 to 25,000 per acre....Apparently this is a very hot area and we should do more research before we cash our $1300.00 check?
Does anyone have any information about the Spraberry Fields? The more I research, the shadier this whole process appears.
Mr.Mobley you might want to join the Borden County group and you might learn some of the leasing prices going on. Borden County is included in the Spraybeey field but in the esplorotory process. There are only currently two rigs drilling in Borden county as of last weeks rig count. Yes there is a lot of leasing going on in the area but the lease prices we have heard of are in the $300ac. If you join the Borden County forum on this site and read the comment wall and share your information all the members well learn and benefit off the discussion. I would guess that the going lease price is around $300 ac with 1/4 royality in the area.
Texas has specific rules for people who die without a will (intestate). See attached document.
If a person dies with a will (testate), then the interest owned by that person follows what the will states. However, I have heard it argued by several attorneys that if the individual dies testate before the property is techinically inherited, then the interest is to be treated as though the individual died intestate.
Read the attached document and you will see just how many different scenarios are out there and why it can be very complicated. When I am trying to figure out an heirship situation, I make sure to go through it multiple times before making a final determination. Quite often, I remember a different rule that makes the interests change.
Your statement about 9 out of 10 bank drafts being flipped in the 30 day draft period is false. While it is true that an experienced, educated mineral owner would never accept a bank draft, most companies tend to use drafts. Why? Since you are a landman you should know that most brokers or leasing agents confirm title during this period. Alternatively, the leasing agency or brokerage company may not have the cash on hand to pay the drafts and have to wait for their client to pay for the lease.
While I don't necassarily agree with the practice of drafting, I far less appreciate hollow statements such as " I am a landman and my parents are mineral owners..." what is your argument... anyone can say they are a landman?
Wilson Inc said:
Thanks Adam.
Adam said:
Texas has specific rules for people who die without a will (intestate). See attached document.
If a person dies with a will (testate), then the interest owned by that person follows what the will states. However, I have heard it argued by several attorneys that if the individual dies testate before the property is techinically inherited, then the interest is to be treated as though the individual died intestate.
Read the attached document and you will see just how many different scenarios are out there and why it can be very complicated. When I am trying to figure out an heirship situation, I make sure to go through it multiple times before making a final determination. Quite often, I remember a different rule that makes the interests change.
Mr. Mobley, are the acres they tell you you own significantly reduced as is the check / offer? If they are offering much less money for the same amount of acres in the original offer, it is a new offer and if you cash the checks you are accepting the new offer. I hope you have not forwarded the executed lease. From the information you have supplied thus far, it sounds like they may have made you a good offer and then reneged on it. If you agreed immediately to X amount, they may have thought it worth a try to get it for less. If you would be so kind as to supply the offer per acre $ bonus and royalty% and verify that the amount of acres remain unchanged ? Your thread has drawn the attention of at least 3 professionals ( I'm not one ). You might want to supply enough information so they could give you some to the point and probably very valuable advice.
Being such a generous first offer, my wife executed the lease and sent it to the land company. Of course they immediately filed the lease and then sent us a check that was about 1/10th the original offer (saying that they made a mistake on their division).
Anyway, the lease is filed and the landman says "sorry"! Hopefully they aren't pulling a scam to get the leases filed before they renege on their drafts?
Thank you for your reply.
r w kennedy said:
Mr. Mobley, are the acres they tell you you own significantly reduced as is the check / offer? If they are offering much less money for the same amount of acres in the original offer, it is a new offer and if you cash the checks you are accepting the new offer. I hope you have not forwarded the executed lease. From the information you have supplied thus far, it sounds like they may have made you a good offer and then reneged on it. If you agreed immediately to X amount, they may have thought it worth a try to get it for less. If you would be so kind as to supply the offer per acre $ bonus and royalty% and verify that the amount of acres remain unchanged ? Your thread has drawn the attention of at least 3 professionals ( I'm not one ). You might want to supply enough information so they could give you some to the point and probably very valuable advice.
It sounds exactly like they are pulling a scam if the amount of acres is not diminished. They already have your lease as hostage and the smaller than agreed on check constitutes a new offer in my opinion, cashing the check would be ratification of the new offer. I think you need to record a statement with the facts and demand a release of the lease.
John D. Mobley said:
Being such a generous first offer, my wife executed the lease and sent it to the land company. Of course they immediately filed the lease and then sent us a check that was about 1/10th the original offer (saying that they made a mistake on their division).
Anyway, the lease is filed and the landman says "sorry"! Hopefully they aren't pulling a scam to get the leases filed before they renege on their drafts?
Thank you for your reply.
r w kennedy said:
Mr. Mobley, are the acres they tell you you own significantly reduced as is the check / offer? If they are offering much less money for the same amount of acres in the original offer, it is a new offer and if you cash the checks you are accepting the new offer. I hope you have not forwarded the executed lease. From the information you have supplied thus far, it sounds like they may have made you a good offer and then reneged on it. If you agreed immediately to X amount, they may have thought it worth a try to get it for less. If you would be so kind as to supply the offer per acre $ bonus and royalty% and verify that the amount of acres remain unchanged ? Your thread has drawn the attention of at least 3 professionals ( I'm not one ). You might want to supply enough information so they could give you some to the point and probably very valuable advice.