I own mineral rights in 0807N03W. An oil co. sent me a lease; signed absent back. Now co. won’t pay bonus and wants to bow out because they claim they found my great-grandparents lease from 1942 and the well is still producing. They’re saying they can’t do anything with the section because don’t own it. Can they just drop the lease without paying. Seems like they should have found that out before I signed.
Actually that happens all the time. Sometimes a leasing agent is sent out to “lease everything” before the actual diligent title work is done. The agent is under a time line with a certain budget to get folks under lease asap. During that same time, an attorney is running title and comes up with what is called a “run sheet” which lists the folks that have owned the title of the property back to patent with the state and whether or not leases are still held by production. There have been quite a bit of discussion over whether an old well that is barely hanging on is paying in economic quantities, but the old leases often do not have that wording and they hold the property until the horizontal well is drilled. One section can have hundreds of mineral owners by the fifth or six generations later.
Wells might have been drilled back in the 40’s that have since stopped producing, but if a new well was drilled before the old one died and was under the term of the original lease, then it keeps the original lease held. I have quite a few of these old leases. The early wells were drilled with cable tool rigs and as technology advanced deeper wells were drilled. Early leases did not have depth clauses, so everything was leased. And no, you cannot generally renegotiate those old leases as the language is pretty clear.
I see at least two wells still online in that section, so your acreage must be in their spacing.
It is important to make sure they don’t record the OGL. If they do, it needs to be paid for or released.
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See if it has been filed, if not demand that it be returned. You don’t want it floating around. In the future do not deliver a check without payment up front.
M_Barnes gave you great details on why that sort of thing happens.
Unless something is different about leasing in Oklahoma than in Texas, you should be able to avoid that kind of problem in the future by having the lease terms you negotiate include that the lessor makes no warranty of title, and by requiring that you receive the bonus payment before you will give them the signed original lease. You can either email them a signed copy and provide the original after you receive the check, or by meeting to exchange the original for your check. In other words, require the lessee to accept the risk of a title problem if they haven’t taken the time to check the deed records. It also protects against situations where companies negotiate leases and then go bankrupt, or just fail to come up with the bonus payment, but record the signed ease clouding the owner’s title, which isn’t unusual in hot markets where lease flipping is taking place.
If the company making a lease offer won’t accept those terms then you can decide if you want to chance dealing with them.
Also check www.okcountryrecords.com to see if the lease has been filed. Look up your name. You can look for free, but pay to print.
For any lease I negotiate, my accountant or attorney holds the signed original lease. To the leasing agent, I send a scanned copy of the signed lease with big bold marker across every page (especially the signature block) COPY DO NOT FILE. When the check gets to the accountant/attorney and clears, then they overnight the original lease or the agent can come pick it up. Upstanding leasing companies have had no trouble with that arrangement.
https://okcountyrecords.com/results/name=smith:section=8:township=7n:range=3w:site=mcclain/page-1 It doesn’t look like the lease was filed.
My posts are not legal advice and does not create an attorney-client relationship.
omg thanks so so much hanks so so much, my dad has passed and i cant find his assetts or if he had a house, car , where is his assetts, he had alot of them. also the lease should be up soon, and i found out that the company was highland, but they have changed companies, i wish they would of let me known, so when lease is up should i not do a lease or do another? they said they were having problems with some state laws not allowing them do go in deep enough ?? i am 55 my life is half over, i probably wont be here to see if it drills oil, im thinking of selling it. Then on those minerals i was on a contract where it said william wheeler/ co traci phebus and it was the taxes from colorado in both our names , ( thats my great grandpa) so im trying to find out if we both owned these rights, he passed years ago, then wouldnt i be the full owner now? How can i find out what porton was his rights, or how many acres and maybe he has rights some other state? if we were both ownerssss he passed, then say if there were oil and he was getting checks, who is getting them if me and him are owners? can someone else do that? how do i find out what he owns and what i am cowner of ? thanks so much. For example they called me from colorado and said we have been looking for you , they said there was 180 acres in colorado and i was half owner of half , so how do i know what he had were acres that i dont have his? will they be mine since i am c/0 owner and pay the taxes? I so need help finding my dads assetts but have no money to hire anyone. im only child , rep of estate and the government knows where stocks and bonds, house,who bought it if i was rep of estate? no other children, heirs, and his wife passed yrs ago its just me
Condolences on the passing of your father.
It would be a good idea to start in each state where you think your father had lived and especially in the state where he resided at death. Check the unclaimed funds at the state treasurer site for each state. Make a list of everything that you find. Depending upon the state where your father lived when he died, you would need to hunt for a will that was filed or you may have to file an affidavit of inheritance under the intestate laws of that state. An attorney can help you. Also look under any other names of ancestors he may have inherited from and also your own name and perhaps the name of his wife just to find a trail of information. Check Delaware just in case. Some funds end up there. You can also check the property files online in the country where he lived to see if he is on the tax roles.
If someone called you from Colorado, then there is a chance that you may have something there. If you know you are the co-owner, then you have to follow the laws in that state to get the assets transferred to your name. If anyone calls you, ask for the description of the properties and ask how they tracked you down. Get their name and number. It may help you track more information down. It can take a while to find things. Write everything down.
Was there an executor or are you the representative of the estate?
If someone found you from HIghland, then what state was that in?
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