HI Everyone.
I’m new to the site. I’m a third generation owner, my family owns 1/5 undivided interest of land in Nolan County, Texas. In 2012 all five families were mailed a lease agreement. Strangely, consenting leases that were signed and mailed to the broker were immediately returned to the consenting families with a note saying it was too late to be included in that agreement. We all thought that was strange but let it go. I have recently obtained a copy of the 2012 recorded lease. One family member (of the five families) entered into the lease agreement. The lease included the entire acreage. The lease did not say he was leasing his 1/5 interest in 350 acres. However, the lease did specify his royalty interest at 20%.
So here is my question. Can a 1/5 undivided interest owner lease the oil/mineral rights to the entire tract of land, or should he have leased his rightful 1/5 rights to the land/minerals?
Thanks so much
A co-tenant can only lease their fractional interest, it would not be binding upon the others even if the lease does not specify his interest. This is not an unusual circumstance. I’m speaking as an Oklahoma attorney but I bet a dollar to a donuts that the same result in Texas. But be sure that an an informational affidavit is filed so that you are found to lease or for pooling.
A Texas lease describes the gross acres under the lease and does not state the lessor’s fractional interest in the minerals. The lease in question would only be effective as to the lessor’s fractional (1/5) interest in the minerals. If no well was drilled and is producing, then the 2012 lease will have expired by now. It may be that the oil company took the first lease and then decided to walk off from the acreage and that is why all the other leases were returned. If there is a producing well on the acreage or including the acreage, then the other owners are unleased mineral owners who will be paid once the well reaches payout (recovery of drilling and other costs). The oil company has an obligation to answer your questions about the payout status of the well and give you information.
Richard I have a question, I have 5 acres undivided in a 120 acres. I have not lease them. an oil company has drilled a horizontal well that includes the 120 acres. It includes a total of 640 acres. They now have contacted me and say the are going to pay me .0019531 [ I think this is (5/640) X.25 . Apparently they are going to pay me 1/4 royalty, can they do that. If so, is it until the drilling is paid off and if so how can I tell when it happens or am I screwed?
You need to decide what your goal is here. A well has been drilled on a 640 acre unit. You own 5 net mineral acres (NMA) in a 640 acre unit which are unleased. Do you want to sign a lease and receive 1/4 royalty or prefer to be an unleased mineral owner? As an unleased mineral owner, your rights and liabilities will depend on state law where your minerals are located. Do you understand what the oil company is offering? Is it treating you as unleased and offering to pay 1/4 of your 5 NMA as a royalty and charging your 5/640 share of drilling and operating costs against your other 3/4 of 5 acres? (I.e., treating you as having leased to yourself) Are you being asked to sign a document making you a working interest and personally liable for the expenses? Or is that automatic under your state law? Is the company suggesting that you now sign a lease? You need to research state law regarding unleased minerals and working interests and consult an attorney about the legal consequences of any document that you sign. This is not a simple matter and cannot be answered without a thorough review of all the documents by an an attorney who knows the state law.
Thank you very much for your help. I’m from Georgia. Our mineral rights generally extend to how much gravel is dumped on the side of the road by the county road crew. I am currently looking for an attorney in Texas to help with these issues.
Thank you very much for your help.
Tennis It is located in Ward County Texas. No, I haven’t be asked to sign a document. I did receive an Email showing the production and what my .0019531 would. They completed the well in November. As of today, I have not received anything. (money or papers to sign)