My brother and I inherited oil and mineral rights, and have within the last few months received offers twice from a Land Company. We are new to this and after doing a little research, learned that some people had received much more than the Land Company offer. Is it possible to deal directly with oil companies, or are there other options that we might pursue? Thank you for any information you can give us.
Consider listening to this interview. (I have no financial interest in the company.)
Thank you AJ for your reply. I listened to the interview and found it quite helpful. When you receive these offers, you do feel pressured to make a decision, which I’m sure is usually not beneficial. I realize we need to further explore our options. Thanks again.
You're welcome, Judi Claborn. Some time ago, a project fell through while I was negotiating better terms. This was a rude awakening. I would have certainly benefited from the bonus money.
If you do sign a lease, remember that it is a binding legal document, not an affirmation of the humanity of the landman with whom you are dealing: have an attorney go over it to make sure that you will not be taken to the cleaners.
It might also help to go the the RRC's map viewer and see what production and permitted wells are near your minerals.
Your ability to negotiate the terms of the lease vary based upon the size of the parcel and the percentage of interest that you hold in that parcel. Landmen generally have some leeway for negotiations but again won't negotiate much with small percentage mineral owners.
It is typically unlikely that an oil company will deal directly with you on the leasing of your minerals when they have hired a landman to obtain such leases. Again, the key is the size and percentage of interest you hold.
I presume that the minerals are in California and perhaps even in Kern or Tulare County. There is not much leasing going on right now so you may have some negotiating power simply because this is an area that the oil company remains interested in despite the current oil prices. Your best bet is to make the best deal you can with the landman. And, remember, if you own the surface you may have an interest in protecting that interest especially if you are farming it, etc.
In my opinion, once you sign without doing your research/due diligence and without seeking good advice from an O&G attorney, it's too late. What I mean by "good advice" is someone who will negotiate in YOUR best behalf and puts YOUR interests FIRST. Otherwise, if you sign without doing your homework, you have signed your life and land away and no longer have ANY control ... at least for as long as the lease is effective. But, in that time, they can "rape" your land, take your water, and leave you nothing in exchange expect a few bonus dollars and a small royalty percentage.
Good luck,
Pat
It is important to remember that the landman's job is to secure your mineral rights for the least amount of money and the most unfavorable lease terms (to you). Some of them are freelancers who will try to get your lease cheaply and then flip it for a quick profit. Some are outsourced contract landmen who may or may not represent a particular oil company and have authorization to negotiate on the company's behalf. Many of them are very hungry right now as a result of the crash in oil prices and activity. It would be a good idea to go slow and don't be too eager to grab the money. If other people in your area received better offers, try to find out why. Also, find out what companies are operating in your area, what is their reputation, do they have active wells, what is the output of the wells and who buys the production. If you know which company is the well operator, it can't hurt to call them and ask if they do their own leasing. If they don't, they can at least verify whether or not a given landman represents them and is acting in their interest. Depending on the size of your acreage, you may need to do a LOT of research before you will be able to make a reasonably informed decision. Another thing to think about is the laws of your state. If your minerals are in a state like North Dakota, the government changes the laws, rules and definitions of everything to suit themselves and they will steal you blind, so you need a very tight and detailed lease with clear explanation of terms, etc.
Your journey has just begun, the best advice I can give you is to go slow, do your homework and if you choose to lease, pay a qualified attorney to go over your lease before you sign.
Good Luck
my 6 siblings and i own mineral rights in woodward, ok. the new driller as of 2014 is a co called danic corp/resources. i've spoken to a mr lane, their ceo. he said if we could afford to hold off, not to sell the mineral rights. a co called rockwell minerals, a brand new co as of may 2015, has offered to buy our mineral rights, and offering $750 per net mineral acre. each one of us has 14.33 acres. we used to own the land but sold it in 2008, retained mineral rights. my youngest sister sold, get her ck yesterday for 10,000.00. now the rest of us are wondering if we've done the right thing by not selling. another one of our sisters called 2 independent mineral co that were recommended to us by plains marketing, and they told us that's a damn generous offer from rockwell minerals, and to take the money and run. does anyone know of danic corp? how do we know if it looks like there's anything there? our land description is sec 4, township 20 n, range 20 w. i'm tempted to sell, but would hate to sell only to find out there really was anything there after all. i did ask the ceo mr lane of danic if they bought mineral rights, and he said yes. i asked him if his co would be interested in buying, he said he'd ck and get back with me. 2 days later i called him back, and he said he'd love to buy, but his money's tied up in another project. seems to me if the driller is not wanting to buy, he doesn't have much confidence in there being enough oil there to make it worth his while? anyone on this site can help me make a decision? any help would be appreciated. thanks, linda adams jacobson . email is holein1one12003@yahoo.com if you'd rather answer that way.
AJ, i could sure use some advice if you can help me. my 6 siblings and i own mineral rights in woodward, ok sec 4 township 20 n, range 20 w. danic corp currently drilling one / two wells, the freedom, but haven't rec anything for 3 mo now, and i know a lot has to do with what opec's doing. another co rockwell minerals offering to buy our mineral rights for 750/net mineral acre. one sister sold to them and got her ck yesterday for 10,000. i asked danic if they'd be willing to buy our rights, (he told us to hold off on selling if poss), and after checking he said his money was tied up in another project so would not be able to do so. he also told us another of the mineral owners in the area was offered 1,000/acre, but when i was talking to rockwell minerals, they said absolutely untrue, would not offer more. my siblings and i are all older, i just retired last yr, and not sure what we should do. we don't know even where to turn. one sister contacted 2 separate minerals rights co and they told us if were getting over 10,000 for 14.33 acres to take the money and run. i just don't know what to do. can you tell me where to get help? thanks, linda adams jacobson. email is holein1one12003@yahoo.com if you'd rather reply that way.
Thank you for asking my opinion, Linda: If you do not absolutely need the money, do not sell! I am not so familiar with OK state commission website which deals with oil and gas. Maybe someone on this forum can elaborate if the wells being drilled on your property are horizontal, deep, etc.
Why not call the OK corporate commission
| Division Main Phone Number |
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Linda,
I just saw that someone was making an offer to purchases your minerals. If you don't need the money, keep them. I think we will see some drilling in the area when oil/gas goes back up. We have been buying minerals as they are a lot cheaper now than a few years ago.
Some people are getting about $600+ just for leases in the area, not minerals right now. Some are leasing for $100. because the oil companies can get the lease cheap right now. So, if you don't need the money, hold tight. Things will change, this is oil business, it's either boom or gloom. If you don't know a lot about leasing, always get a good oil & gas attorney to look at the lease and sometimes it pays to let them even do the negotiation. I have seen people get twice what was offered.
AJ,
You aren't the only one that had a lease fall through. And it probably didn't have anything to do with time it took to negotiate. When the bottom dropped out, several oil companies pulled everything off the table. But, they will be back. So hold tight.
Virginia, My uncle leased his minerals in the same parcel by accepting a less protective less. He wanted the bonus money. This was more than ten years ago. I have since learned that other mineral owners in the parcel may have been somewhat contrary. One, an attorney, told me that he tore up the lease sent to him and that he never bothered with a counter offer.
AJ,
I am not saying that you can't lose a lease bonus by not signing. But, sometimes it best to work with the oil company to get the best deal for both you and the oil company. Some companies I wouldn't sign with no matter what they offered. I have had other companies that I went down on the bonus to get a better lease. I never sign a lease that I can't live with as I have had some wells for over 30 years. If it's a bad lease, you could live with it most of your life. Deduction can eat an oil check up if you aren't careful. Some people need the money worst than others and will sign anything.
Virginia, I agree with you. My uncle was not hurting for money. He did alter the initial lease, but he was willing to make some concessions because he was of the mind that even if the land were leased, an oil well might not be drilled.
AJ,
I have found over the years you can work with oil companies and do O K. I have about 3 pages of addendum that I put on the back because I own the surface on most of my minerals and don't want the surfaces ruined. I have only had one company that didn't like my addendum and I was glad I didn't least to them as a week later I had a good oil company give me a couple hundred more. I have found that most companies do start out on the low side when giving lease bonus, and may come up a little, but they don't plan on giving someone a couple hundred more either. Right now, lease bonus are low because no one can stay in business with oil in the lower $40 or even the $30. This is the time to buy leases, minerals and oil stock. It's not selling or leasing time. I keep thinking it will turn around within the next year to two, so I just keep buying minerals and stocks.