Totally lost. Inherited mineral rights with brother covering about 37 percent of 160 acres. Owners of 50 percent won't talk with me. (They are angry that my cousin sold 100 percent surface rights and only half of mineral rights.)
Lease offer made for 5 years at 50 dollars an acre and 1/6th royalties. (Section 24/Township 24S/Range 22E) By the time I investigated, the offer was dropped. Half of the 50 percent owners (sister) signed a lease. Don't know if her brother and his wife signed a lease. Can leases be secured without everyone on board?
What should my next step be?
Hi Mark,
Leases can be taken separately from undivided mineral owners in the same parcel. Your combined 37%, however, would likely discourage an oil company from drilling on that parcel, as the oil company would be required to treat you as a working interest owner, meaning that you share in profits (after they obtain their full return on initial investment).
There are a lot of speculators out there right now. We're seeing offers come and go in Kings County. Hold on and someone should show back up with another lease offer.
Good luck!
Thanks for the response. I don't understand "undivided mineral owners." I own a specific parcel rather than 37 percent of the total 160 acres? Sorry, but I am very naive about this matter. It seems that different owners can sign leases but not all need to before exploring the 160 acres? If I own a very specific partial, then it makes sense, but how can a company define a return on specific partials. Your response is very welcomed! I will wait for another offer.
Sorry for the confusion. I presume, without knowing, that the 160 acres is a single parcel. Making that assumption, your ownership of 37% in that parcel is an undivided interest with all of the other 63% owners. An oil company can, and usually does, take a separate lease with each owner in a parcel. So, the oil company could have leased up to 63% of the minerals in that parcel. Undivided simply means that you all have a right to explore for and produce the oil in the parcel, but the oil that is produced belongs to those owners in their individual percentage. This is why I believe that an oil company would not drill on a parcel with leases only totaling 63%, since you would own 37% of all of the oil that is produced (minus costs and after the oil company gets back its investment costs).
Thank You! Is there a means/method to find out if the land has been explored? It seems I missed out on the $ for leasing if the other owners signed a lease and the company was able to go forward to explore without me. I only stand to gain if there is a gain on the oil. Oh, but you said you don't believe they would proceed if only having 63%. So, maybe I am okay.
Why do you think the other owners were not willing to talk with me about the lease offer? (Wouldn't it make sense to collaborate for the best offer?) Maybe they are just angry that they bought the land not knowing that half of the mineral rights were not theirs. (They bought from my cousin who I am not close with what so ever. If fact, he never let me know that my brother and I had ANY ownership of the land he inherited from our grandmother.) It still would be in everyone's interest to communicate on the offer.
It may be that the other owners were asked not to discuss the terms of their lease by the oil company. This is done explicitly so that the oil company can attempt to obtain better terms with as many owners as it can. Other than this, I could not speculate as to why they are not communicating with you on the lease.
Again, good luck on leasing your mineral rights!
Dear Jean,
Thank you so much for all your timely response! It is greatly appreciated. I was afraid to lose you asking so many questions! Some day this all will get sorted out. Again, thanks so much!
Hi Jean!
I am one of your past clients that you helped tremendously!
Is there any news about how Kings County is doing with going forward on oil in general? I can't find a
thread of "new" news! I own mineral rights in Kings County,240 acres...wish something was happening!
It's been nearly a year since my last post. Nothing has transpired. Is there a means and method to discover if there is any activity on my parcel? As an owner of mineral rights it seems odd to be in the dark so completely without any particular direction to take. Does Kings County have information of the parcel?
Hello!
I haven't heard much recently on Kings County activity. Some exploratory wells have been drilled and while the oil companies keep the results confidential there have been mixed results from what I hear.
As a mineral owner you will be informed when the oil company intends to go onto the property to conduct certain work, as this is a requirement pursuant to statute, but other than that you won't know how things are going unless and until they have drilled a well that is producing and therefore they begin paying royalties.
The price of oil has impacted some exploration since these wells can cost millions of dollars without certainty that they will produce sufficient oil to make it worth while, but the information that they receive from drilling is helpful as well so they are still moving forward.
The Division of Oil and Gas's website sometimes will show what is occurring on your parcel, but again if the oil company has requested that it remain confidential (and most of the companies drilling exploratory wells do request this) then even the Division's website won't list anything.
Large oil companies have public affairs officers that you can contact to see what is occurring, but they may be limited as to what they can tell you for the reasons stated above.
I know it is frustrating not knowing but in the highly competitive area of exploration, the oil companies invest significant sums and want to attempt to keep the advantage by withholding information on their discoveries until they are required to go public with the information.