We were contacted a week ago about mineral rights my wife would be due to inherit. A company wants to purchase those rights. She had 3.33 acres of a 60 acre tract. The company has sent over 2 separate contracts for the property. They are making the offer for 8-3N-4W 3.33 acres. The company said there is a long standing lease from the original owner of the land that is 1/8 share with no depth clause and that it hasn’t produced much so we should sell.
On 29-4N-4W they don’t know how many acres my wife owns and cant give us any more info until we sign contract and go through title to find out how many acres. Just have offered a $ per acre with the amount of land pending. I could use some help as I only found out about this a week ago.
Do not rush into anything!!!. Get the title completely sorted out first and the probate filed. There are a good many companies out there offering low ball prices to buy shallow production when they are fully aware that horizontals are pending. Personally, I would put those offers in my files and totally ignore them.
8-3N-4W is surrounded by sections with multiple horizontal wells. Marathon has an increased density order just approved for three more wells plus the current horizontal well that should be giving royalties in just a few weeks. Your wife will want the royalties from those wells. I am pretty sure the offering company did not tell you about the extra wells.
29-4N-4W Also has pending horizontal wells by Rimrock. They probably didn’t tell you about those either.
Get your affairs in order. Make sure the probate is filed in Garvin County. Make sure the estate has a proper engineering value done on the current and pending wells, so that your wife will get her step up value documented in case she ever does want to sell. The estate should pay for the evaluation. I am working on one of those myself right now.
If you have a major need to sell such as horrible medical bills, that is another situation which has other options besides selling. Please use caution here. Those pending wells are very valuable and the companies offering hope you do not know that.
How big of a process is it to get that into her name? I assume that any royalties should have been coming down the line and once in her name the estate should pay out any outstanding royalties? How do I go about the engineering value? What is step up value? I wasn’t aware this existed and have not yet been able to make myself familiar with the process of how this works. Will any existing lease at that 1/8th percent also include any horizontal drilling being done or will those terms need to be negotiated as new?
If there is a will, it must be probated. Richard Winblad is the expert on the forum on that sort of thing. If no will, then there are other proper ways to get it done. It is well worth the money to do it properly and establish her title.
Yes, if current royalties, then upon the probate documents being presented and filed in the courthouse, she will get the payments. You might want to go ahead and contact Marathon and Rimrock and find out what they will require to put her into pay status.
If there is an executor, then the executor should hire a licensed engineer to give an appraisal value as of the date of death. If the increased density cases were already at the OCC then my engineer says that should be included in the value. When a person dies, the asset values are “frozen” as of the date of death. If the original person had a very low cost basis, then they could pay high capital gains if they sell. If you don’t get the cost basis set, the IRS will say it is zero and have to pay capital gains on the whole amount (another reason not to rush right now).
Any existing lease may or may not control deeper drilling. If the lease had no depth clause, then it will control the deeper drilling. If the lease had a depth clause that released the lower zones, then a new lease will be needed. If included in a force pooling, that is another issue which I can clarify later.
You have weeks of work to do here, so don’t let anyone rush you or try to grab those royalties away from you. You have the potential for not only the currently known wells, but perhaps future ones. Just a note: I am a big believer in all members of a family getting up to speed on learning about their mineral rights. NARO (National Association of Royalty Owners) and the forum can be tremendous resources.
There was no will original owner passed, she had 7 kids, one 2 have passed. One of those children had 3 children one being my wifes father, he passed leaving his 3 33 acres to her. Is there a way to tell if there is an executor?
No. But you should tell the other heirs that chances are they are selling too cheap. If you want to sell, don’t jump at the first offer. Get many and then weigh your options.
If all of the heirs stick together, you will have more bargaining power. You may be part of the NE Purdy Hart unit and with more horizontals being drilled under that unit, it would be wise so slow down, get your title properly passed to the heirs and then decide what you want to do. Most buyers try to rush you before you really know what you own.
You might want to also check the OK mineral owners unclaimed funds (above) and the OK state treasurer’s unclaimed funds office. (And the treasurer’s office for unclaimed funds in any other state of domicile plus Delaware).
If there was no Will, then intestacy statutes would apply. Instead of an executor, an administrator would be appointed. Generally, for mineral probates there is not much for the representative of the estate to do. There is almost never a need to appear in court.
If there is an existing 1/8th lease, the property is HBP. If you sell you will get 1/8th of the $/acre they are offering. You won’t know that until you sign an assignment and get a check 1/8th the size you expected.
This property is well located on the up dip edge of the SCOOP play. Reading what M_Barnes said below, I would never sell those minerals. EVER!