So, can anyone tell me how this might work. There are several cousins that have inherited the rights to the same acreage as me. Mine was give to me and my two sisters through our mother’s will, which has been probated in Daniels Cty. The rest of the cousins, to my belief have not done anything.
So does the oil company have to chase down each one of them before they can make an offer?
Would it be vigilant for me to give names and addresses of who to contact?
Thank you so much, I love this forum and people like you who are so willing to help those of us who are so new to this…
I believe you offer very good advice!
Oh don’t worry about me, I may need some schoolin’ but I have learned not be in a hurry to sign anything. I also plan to have an attorney who is schooled in this subject to look it over.
Sharlie, to answer your questions;
An oil company will try to reach & lease each owner (you & cousins).
To drill it, they’ll need a majority of the leased acres.
Giving them names & contact info would expedite this.
Yet they can lease you (or anyone) without all leasing with them.
Ultimately your cousins will need to Probate theirs too.
So don’t worry about the cousins. Just make sure you get the best deal and terms possible before you sign anything. Then don’t deliver the lease until payment is in hand! Good Luck
I myself am still in the schoolin’ stage, I found MINERAL HELP up above next to the groups to be very helpful, at first all I knew was that when you get a lease offer you just sign it and wait. WHOA … farther from the truth … its just when you made the comment, about re-negotiate, Red flags went up. It is all good and I am glad you will have a attorney look at it when you get a lease offer… but be careful there too, attorney fees can add up especially if you involve them to soon, I just threw one out from shale bevause it was for five years primary, and the royaltys was 1/8 , that is really where the long term money is, it would at least have to be 1/6 or if possible better to even be considered, a well can last a very long time. the sign up money and bonus money is really nothing unless you need the money bad, I have just touched on some of the things to consider, check out the MINERAL HELP for a lot more info… we b schoolin’ girl
Sharlie, thanks for the nice words below.
A lease is a binding contract. The lease terms are mutually agreed to (including the amount of royalty) and they continue in force for the life of the lease. A lease is usually for 3 or 5 years. However, once production begins the lease continues in effect as long as the production continues. So if you sign a lease with 1/8th (12.5%) royalty that is what you’ll receive for the life of that lease. You cannot renegotiate anything.
Once production begins your 3 or 5 year lease may easily be extended into 30 or 50 years. All those original lease terms remain in effect until the lease expires, or production ceases. This is why it is so important to carefully read all of the lease terms, and negotiate any changes, before signing.
Thanks that explains very clearly to me about that subject.
Can I test your patience a little further and ask just one more question?
If the original landowners left their mineral rights to 6 of their children, 1/6 to each, what happens when some of them die. What happens to the 1/6 that was willed to them. Does it then increase what the others get?
Dear Ms. Moore,
The answer to your question lies in 1.) was there a will for the deceased child, and 2.) what state was the property located?
The 1/6th owner who dies without a will is said to die intestate and the property h will be distributed according to the Descent and Distribution Statutes of the State’s Probate Code. In some instances, the interest could go to the surviving parent, or surviving siblings, if the deceased had no issue.
So I have another question… Say you sign a lease, I assume that is just for drilling rights. Then they strike oil on your land, do you renegotiate how much you get for the oil?
Sharlie, I AM NOT A MT ATTORNEY so realize this answer is worth precisely what you paid for it…
I believe what you’re asking is as follows; “Ole & Lena” pass on and leave their minerals to their six kids; Each of those six kids now own 1/6th of Ole & Lena’s interest. Your Mom and her five siblings are those six kids.
If Mom’s siblings are deceased their 1/6th interest goes to their own heirs, or to whomever they bequeathed it to in their wills.
However, if her brother “Bob” died without kids, heirs, or a will… then Bob’s 1/6th interest will revert to his siblings. In other words, your Mom’s interest would now be increased an additional 1/5th of 1/6th.
In this case, you and your sisters would each own the original 1/3rd of 1/6th from Mom’s. Plus an additional 1/3rd of 1/5th of 1/6th from Uncle “Bob” via your Mom.
If any of this looks similar to your family’s situation consult a Montana attorney to determine if you may own some additional interest. If your aunts and uncles each had heirs then those heirs (not you) inherit those interests.
Sharlie, If you get a lease offer in the mail, please please please let us know about it, you need some schoolin’ there girl and I’m sure we would be more than happy to give you our oppinions… A lease is some what complicated and I am in a hurry right now, I will let the pros tell you about it or I can add some later,
Wow you guys are priceless. Thanks so much for taking the time to explain it to me and in such a manner that it is easy to understand.
Just wanted to let anyone know, that if you are interested in leasing your mineral rights, I think you might want to talk to Summit Exploration. They drill themselves, and are not interested in flipping. Might be worth your time to call. Many have found that to be true. 406-253-1137. Thanks
Big Daddy, in order to drill an oil co. must TRY to lease all the mineral owners. Yet they don’t need to have every mineral owner leased.
As an example, say a company leased 600 net acres (in a 640 acre section). Then one (or more) owner of the remaining 40 net acres refuse to sign. The company can proceed with drilling. The unleased owner would then be deemed “non-consent”. From there it gets a little complicated.
Obviously since they never leased, that party does not get a lease signing bonus payment. Though they would receive a portion (12.5%) of any future royalty (if anything is produced). However, this is reduced by their proportional share of the well drilling & operating expenses (their 40 net in 640 = 6.25%). Plus they are also charged a penalty payable to the driller from future production, which in MT I believe is 100%. After the penalty and costs are paid you’d be considered a Working Interest Owner receive 100% of your share, less the ongoing well operating expenses.
So no you don’t get paid “what the rest get”. If a well cost $5 million… 6.25% is $312,500, plus a $312,500 penalty, which means your “share” must generate $625,000 before you reach the W.I. Owner status. Until that amount has been generated you’d be paid the 12.5% royalty.
Hope that is clear. If not, type in “Non-Consent” in the site’s search engine and look for R.W. Kennedy’s description of it. He spells it out quite well in several posts.
Actually from my recent reading of forced pooling law in Montana, there appears to be no risk penalty. The 12.5% does not bear drilling or operating costs although it may bear transport cost just as a lease may. The other 87.5% goes to paying for the well and operating costs. Read the Montana law on force pooling 82-11-202 section C and don’t confuse your ownership with the language of risk penalty for those who hold mineral rights by lease. Those who hold minerals by lease do pay a penalty if they don’t participate.
Thanks for the feedback, it is appreciated.
Personally I’ve never gone non-consent. So I’ll defer to Mr. Kennedy. He has certainly become our de facto forced pooling expert around here! Though I’d encourage everyone to seek legal advice, or at the least carefully read the appropriate State statutes, before making any decision.
Lease funded…Now the “Wait” to see what happens!
What happens when all mineral owners sign for a particular price and there is one hold-out? will they offer more to the hold out to get them to sign or will they drill and only pay you what the rest get?
Big Daddy, I forgot to include your answer if they’ll offer more. Perhaps they will if you own a large enough piece of the minerals. Though as described below if you have a smaller interest they don’t necessarily need to. So if you’re asking double the amount they may balk. If you’re asking something more reasonable they will probably sign you just to get it done.