RRC has no interest in or information about the details of title opinions or mineral ownership. What documents the oil company will provide varies between companies. Mineral owners are responsible for understanding their minerals. You can trace the mineral history yourself or hire a landman to do this for you. The Fisher County records are available from1909 forward on TexasFile. You can sign up and pay $2 per document to review or pay $1 per page to purchase. Ted Weiner invested in and traded minerals, so your basic issue is the determination of what Ted Weiner owned at the time of his assignment to your predecessor. You can trace backwards, by reviewing the deeds into Weiner and the deeds out of Weiner over the years for that section. Presumably this will take you back to the referenced 1940 deed. Based on your notes about the conversation, you will probably find that Weiner only owned a 1/5th NPRI at the time he subdivided into others your predecessor. This may be because a 1/5th owner assigned an NPRI out to someone and that interest eventually passed down to Weiner. Or it may be because Weiner owne the whole NPRI and had already assigned away parts to H, I, K, M, etc and so only had a 1/5 NPRI left when he assigned to your predecessor. A great opportunity to gather your deed history.
TennisDaze,
Once again, thank you for your response and the info about Texas File.
I have tried accessing Texas File for information on my Fisher County holdings. The site claims to have records back to 1909. However, when I search for a document from 1954 that I obtained from the county by the names listed on the document, it does not show up. When I try searching for Ted Weiner, I can’t find any documents older than 1954. When I try to search for Huddleston, the listed lessor, I find nothing. I have tried various combos such as last name first and first name first and last name only. Anybody know what I am doing wrong?
If you enter Weiner Ted in Grantor / Grantee field without any other fields filled in, then 120 documents on 3 pages will be listed. Be sure to use the Search button next to the names at the top. Many are assignment of oil and gas leases. Looks like there is a 1947 deed from LL and Ava Huddleston to Ted Weiner in Vol 214, Page 476 which assigned a 1/8 royalty / NPRI, listing the 5 tracts. By royalty deeds, Weiner assigned partial interests to various parties, eg 5/1745th to Johnson in royalty deed in Vol 215, Page 12. Other royalty deeds out of Weiner in Vol 214, P 547 - Vol 215, P 21 - and Vol 215, P 154 and maybe more. You will have to buy each royalty deed to see how much of Weiner’s interest had already been assigned before your relative’s assignment in Vol 220, P 297. The name Huddleston L will produce 192 documents on 4 pages back to 1919. Some are L L, some are L M and some are just L. It will take some research to determine whether L L owned 100% or some lesser interest in the tracts at the time of assignment to Weiner.
I heard back from the DO analyst and, as usual, am still in the dark.
I was provided a much redacted partial copy of the supplemental division order title opinion (SDOTO). This document includes 2 lines listing my ancestor, which, when added together), total the stated decimal interest for her. These 2 lines appear to be a result of the operator acquiring 2 very recent leases that each claimed 50% ownership in all the minerals in the relevant area.
question 1 - Does an operator have to acquire 100% of the mineral rights in an area by lease or purchase before they are allowed to drill?
question 2 - If I requested the specific document that accounts for the 1/5 factor, is it reasonable to expect them to identify that document?
The operator can drill with any percentage of mineral ownership under lease. In reality operators do not drill without having most of the minerals under lease. As to requested documents, some companies will and some will not provide a copy or the recording information. As noted above, there are multiple documents in the chain of title to factor into your net interest. You can do the research yourself or hire someone to do it for you or accept the oil company’s determination.
Just a brief update. I contacted a producer to get on the pay list for a well in which I hold a NPRI. They presented a DO that showed a DI 1/5 of what the royalty deed indicated. I requested info from the company showing what document accounted for the 1/5 multiplier. They did not provide that, but the paperwork they provided proved that my ancestor was on their pay list. So, while trying to figure out a new way of going about this, I received a DO for a second well that is just going into production. This DO shows my DI being 60% higher than I would expect. Both well interests stem from the same royalty deed and I factored in the proper allocation. In frustration, I signed and submitted both DOs. So is this a situation where an error was made on the first DO that they did not want to correct due to the amount of work and thus offered “compensation” in the form of a higher DI on the second well?
Very doubtful. Have you sent them a certified letter requesting the information you want?
Yes, I sent a certified letter with part of the text being “Please provide the relevant part of the drilling title opinion that supports this 1/5 multiplier…”
I also sent an email advising of the coming certified letter and included the following: “…copy of the relevant portion of the drilling title opinion that provides specifics as to what legal document(s) provide the basis for the 1/5 multiplier”.
The info provided to me included a highly redacted portion of the Supplemental Division Order Title Opinion that listed 2 entries for the person I inherited from, which when added together, equaled the DI they said I had. The info also included 2 leases from within the last 2 years that each claim 50% ownership in all the minerals. Presumably each of these leases tracks back to one of the SDOTO entries.
Jeff: Is it possible that this “1/5th-20% multiplier as you call it” is the royalty percentage on the oil and gas lease that your non-participating interest is subject to? Just a thought.
I am not sure how to answer TODD_M_BAKER’s most recent question. As many have pointed out, a total title search is probably called for.
However, I am working under some self-imposed financial restrictions. I don’t want to spend more money perfecting something than will be returned in revenue from the holding. The first well, with the 1/5 multiplier, has been in production for about a year. Based on production reported to RRC, the estimated revenue difference between what they state the DI is and what I thought it should be is the difference between about $70 vs about $350 in revenue (assuming I did my math right). On a previous matter, I contacted an attorney who wanted $3000 to review the material I had and suggest a course of action (for additional funds).
When I look at Texas File and consider doing the research myself, I have to pay to look at each document to determine if it applies to me.
Each of the recent leases I was provided listed a 20% royalty for the lease holder. If that impacts my royalty deed it would seem that I woiuld expect 1/5 of each of the 2 paths back to my royalty deed for a 40% multiplier. It also seems like the second well would have the same multiplier since both wells are drilled in the same lease area. It is the contradiction between the 2 wells that I do not understand.
You bring up this 1/5th multiplier numerous times. Division Order Title Opinions are quite expensive and rarely wrong. Companies safe guard them and dont send them out, so Im guessing they sent you the line equations of your interests and maybe a comment and requirement if you had one. If you provide, the line item equation they sent you, someone will be able to interpret it for you. Probably looks something like this, using generic round numbers to make it easier (1.0 x 0.50 (interest owned in the royalty) x 0.20 (1/5th royalty) x 160 (acres lease covers) /1280 (unit size) = interest owned
The royalty deed reads “.0326086 of 3.516818% of 1/8” which equals “.0326086 of .0043960225” which equals .0001433.
Blanche Margo Tract NPRI Well NPRI OGL (3.26087% x 0.0043960225 x 1/5) 0.00002867 0.00000484 L1 & L2
Blanche Margo (3.26087% x 0.0043960225 x 1/5) 0.00002867 0.00000434 L1 & L2
The above 2 lines are a direct quote from the drilling opinion. The 1/5 factor is never explained. Is this supposed to be the royalty figure in place of the 1/8, instead of in addition to the 1/8? Notice the two lines list all the same figures except for the well NPRI? How can these be different?
The well, according to the as drilled plat, is an allocation well. My holdings are 3538 feet of 11045 total feet of production which I calculate to be a participation factor of .3203. How come the well npri is .1678 of the tract npri?
The DO submitted to me listed the heirs DI as .00000918 (total of the above 2 well NPRIs with my interest being one half of that.
I have since received a second DO on another well in the same area. On the new well, the entire length of production is within my holdings which I believe gives me an allocation of 1. This DO has listed my DI as .00011407. That figure is over 25 times the first well with the only known difference being the allocation of .32 versus 1.
I hope this answers your question and helps explain my confusion. I was trained in oil and gas accounting about 40 years ago and used that knowledge while working for a computer service bureau that programmed oil and gas computations of decimal interests. One of my distinct memories of those days was being given an equation to program, producing the results, and then having the client instruct us to change individual decimal interests, which, of course we always did since the client is always right. Perhaps that experience has left me a little less trusting of the info presented to me, particularly when I observe the irregularities I have cited above.
So, after I posted the above, I received a DO for a third well. If I substitute 1/5 for the 1/8 royalty shown on the royalty deed, my calculation of both the second and third well DIs come out to a near match with the DI listed on the DO I was provided. The difference is easily explainable by my estimate of the well allocation compared to whatever the operator has but does not include. If I substitute 1/5 for 1/8 on the original well, I come up with a DI 8 times higher than what is on my DO. Based on the info provided, it appears that the 2 active leases reserved 1/5 royalty vs the traditional 1/8, but the original drilling opinion multiplied the 1/8 and the 1/5 in determining the DI.
Am I all wet on this? What should be my next step?
Jeff- As a suggestion, instead of investing in analysis paralysis, you should dig into the county records and find what Oil & Gas leases your non-participating royalty interests are subject to. Then you will know what royalty percentage to “plug-in” to your equations and leave the guess work behind. Unfortunately, not many operators will provide you that information so the onus is on the interest owner to dig that information up for themselves if they don’t believe the operator’s numbers are correct.
Many older reservations reserve 1/8 of 8/8ths and existing lease burdens. You need to nail down your allocation values on each well first. Then you need to look at the original leases to see what royalty they leased at, if they are the same royalty, it should be easy to back in to, if they are different than the equations get trickier as you have to factor in acres covered per royalty. And then the assignments leading up to yours to get a clear picture. Unfortunately that will likely take a couple hours, dont think many on here work for free, just give quick advice when the picture is clear and simple. Good luck sir!
TODD-M-BAKER,
One of the things I have learned in life is there are usually multiple solutions to any problem and the solution that fits one person may not fit another. As a very small NPRI interest owner, I simply cannot afford the services of an attorney, a landman, or the fees on Texas File. The fees would exceed my potential revenue. My posts on here are an attempt to become more knowledgeable about this subject and hopefully shed light on the subject that may benefit those in similar positions.
Here is what I can now prove about my Fisher County holdings:
1- I inherited 1/2 of a .0326086 participation in a 3.516818% of 1/8 royalty. 2-There are 2 active leases that comprise 100% of the production and withhold a 1/5 royalty. 3-If I substitute the 1/5 royalty for the 1/8 royalty cited in my royalty deed, multiply the factors (in 1) together, and then multiply the result by the calculated allocation for each well (based on as-drilled plat). I come up with a match to the DI listed on the DOs for wells 2 and 3. 4-On the SDOTO for well 1, instead of substituting the 1/5 royalty for the 1/8, the person left in both factors resulting in a DI 1/8 of what is expected (by me) when using the same calculations that result in agreement on the other 2 wells…
I have just mailed a certified letter to the DO analyst requesting a correction to the DI on well 1 and provided the proof listed above. I prepared that info in a way that might be presented to an attorney who would recognize a slam-dunk and be willing to pick up the case on contingency since it is highly likely the error was perpetuated on the holders of the other 98% of the NPRI. I don’t think it will come to that as I believe my case is so compelling as to result in the desired outcome of a corrected DO.
I hope you can see your way to not judging me (analysis paralysis) and accept that retirees with low revenue interests may find the investment of their time a better course of action for them.
Don’t judge. Simply pointed out facts and you asked for suggestions and I gave you one. I’ve been doing this a long time. Good luck on your quest.
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