I hold executive rights on a sizable mineral estate, but own a minimal mineral interest in same. In negotiating a lease, I understand my responsibilities to the mineral owners, but I am curious to know what, if any, benefits I could ask for from the Lessor. Is there any customary or acceptable deals made with executors in order to obtain the lease rights?
Self dealing is the quickest way to a suit I can think of.
You may not acquire ANY benefit for yourself that is not equal, to the non-executive. One guy was the agent for the state of teas and granted a lease, then accepted an override on the project. The exxon guy was fired, the lease seized and a contract operator was brought in until it was straightened out. Oh, the Agent for the State was in deep do-do.
As a surface owner, negotiate surface issurs separately from the oil and gas lease.
Darn it, Buddy! You weren’t supposed to tell me THAT! Let me see if we can explore this a little further. My grandfather owned land and minerals and years ago, he traded a sizable portion of those minerals but retained the Executive Rights and a small interest in the mineral estate. Later, he sold the land. He was sort of an expert on land and oil and gas law, so I know that what he did was all in order…anyway, as his heir, I believe that I am correct in saying that the Executive Rights have passed to me (and a few cousins). So, I look at this situation, and that is where I came up with the idea of perhaps gaining some benefit for us. I can see why the State of Texas and Exxon representatives would be in BIG trouble for what they did. But as a private individual dealing with a Lessor, would I still have that liability? I am not trying to subvert the law or do anything dishonest, just thinking of options that might benefit us. I would of course, negotiate in good faith for the majority mineral owners. Any comments or ADVISEMENT you might have would be appreciated. Also, when is it accepted practice to take an override in this business?
Sorry, Laura, the law is clear on the matter. I have opined in the past on how I disagree with the nature of executive being a property right rather than a power coupled with an interest.
For some cheap advice, see if the non-executives want to purchase the executive rights to their portion of the minerals. That is about the only way that I can see to commercialize the executive right when no surface is owned. Now, it certainly may be possible to have an agreement for sharing of costs or research, consultants, attorneys, etc to protect their interest as well as your own.
Well, that is an interesting concept, to sell the executive rights to them. What would be considered FMV for Executive Rights?
Hi Buddy.
How does one acquire Executive Rights/privileges?
Thank you.
Pat
Buddy Cotten said:
Sorry, Laura, the law is clear on the matter. I have opined in the past on how I disagree with the nature of executive being a property right rather than a power coupled with an interest.
For some cheap advice, see if the non-executives want to purchase the executive rights to their portion of the minerals. That is about the only way that I can see to commercialize the executive right when no surface is owned. Now, it certainly may be possible to have an agreement for sharing of costs or research, consultants, attorneys, etc to protect their interest as well as your own.
Best
Mineral Management
Ms. Pat Malone said:
Hi Buddy.
How does one acquire Executive Rights/privileges?
Thank you.
Pat
Buddy Cotten said:Sorry, Laura, the law is clear on the matter. I have opined in the past on how I disagree with the nature of executive being a property right rather than a power coupled with an interest.
For some cheap advice, see if the non-executives want to purchase the executive rights to their portion of the minerals. That is about the only way that I can see to commercialize the executive right when no surface is owned. Now, it certainly may be possible to have an agreement for sharing of costs or research, consultants, attorneys, etc to protect their interest as well as your own.
Best
Mineral Management