It Is Time To Dig Deeper

Ownership and Title
1

Hello All!

I have been researching some of this stuff for about a year now and it appears we are getting closer to a real possibility of future royalties. Been studying more as entire process is advancing.

My dad is the trustee for a family trust that owns 50% of 320 acres of mineral rights in Section 28 / Township 141 / Range 97 Dunn County. 1280 spacing unit which includes Section 33. Grandparents had it probated circa 1995 or even possibly in 1955 when they moved off the farm. I will find that out upon reviewing the original trust. I am listed as the next trustee in line and therefore need to assist in making some of the right decisions.

From my observations on these discussion groups and following the NDIC (premium service) website I can provide a relatively accurate chronological timeline of activities.

Pooling Order July 2012

Permit 24692 Dec. 31, 2012 (it was the only one listed for that day and the last one for 2012)

Spud date Jan. 16

According to the map server updated 2-4-13, it looks like they may have reached total depth.

Can someone advise if the next activity following fracing will be the operator issuing a division order? And if it would be wise to consult with an attorney before signing?

There has been very little activity in the St. Anthony field. Although Dutch Henry Butte which it borders, appears to be very active. I have been following with interest 24071 which is a mile to the east as also a stand up horizontal. This was permitted around Sept., Spud on 12-9-2012. We took a road trip to the rig site on Jan. 27 and were surprised to see this well being fraced already. We are assuming this is a good sign as this well is the same operator (Whiting).

Sorry for the long post. I appreciate any input.

2

Since by ND law they can’t withhold your royalty because you did not return a division order, I never return division orders for ND. The only advantage I could see to returning a division order in ND is if you were curing a title problem that was holding up your royalty by stipulating your interest. Since you have clean title or are cleaning up your title, I see no benefit to you in returning the division order.

3

I just had a chance to look at your area and it’s pretty busy. The producing well closest to you was a very early well when they didn’t know how to get the best from the Bakken. The latest close well where they are already drilling 2 additional wells has done 78k+ bbl oil in 8 months with barely 25k bbl water. There seems to be good gas pressure in the area. If they do a good job drilling I think you will get a good well.

4

Thx RW I do not expect any title problems due to the probate being done. You caught my attention on not returning the division order. Please advise if you have the time. We have not received a division order notice but expect it will be coming soon.

On a side note, it is apparent that you are very forthright and harsh. LOL :slight_smile: That is good, I prefer that over sunshine and BS.

Thanks Again.

5

Oil is tough business. The only way you will ever hold your own is with information. Mineral rights could be the most valuable thing people own and I want everyone to have the opportunity to make the most of it.

6

ARGH! 24071 was put on confidential tonight.

7

Most wells are on the confidential list after they are drilled. The well had to go on the confidential list before it could come off the list. At least now you know that the calendar is running on the 6-month period. Two of my wells had been off the confidential list for 3 months before they were ever fracked. That was a long wait for me, with the price of oil falling $20 per barrel in that time. That which cannot be changed must be endured. Hopefully, you should have some actual information when your well is off the confidential list, possibly earlier if you dig through the monthly production reports in general statistics of the NDIC site.

K J Ktytor said:

ARGH! 24071 was put on confidential tonight.

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I am wondering why you would not return a division order? What is the advantage?

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Rick, if you are absolutely certain of what your interest is, if you have already paid thousands of dollars to run your title and you want to return a division order, I’d say go right ahead. If you are not certain, as most people aren’t and you want to agree to be underpaid, I’d say you have that right too. I don’t know why anyone would be in a hurry to put their name on a document they were not sure was accurate. Personally, I don’t sign anything I don’t have to. Why agree to be paid for a lesser amount than they might actually owe you? Have you read the language that you can find on division orders? Something as simple as you agree to return any overpayment. The statute of limitations could run on the overpayment and you would not have to repay, unless you signed a division order that had such language on it and returned it, then you agreed to it and there would be no statute of limitations. Look at your division orders and see if they don’t contain anything other than we think you own this much and we want your agreement, see if they don’t want you to agree to a few other things while they have your attention, or inattention as the case may be.

Don’t sign ratifications just because they want you to either. I have had two friends in the last six months sign ratifications for leases entered into by people who had no right to lease the minerals in the first place. They are receiving no bonus and don’t get to negotiate royalty or terms. If the lease is valid, they don’t need a ratification. If the lease is not valid, they need to lease it again, it’s that simple. If it’s an NPRI, get professional advice.

Rick Tatum said:

I am wondering why you would not return a division order? What is the advantage?

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I have started putting that lessee will not require a signed division order in the lease.

What if your brother-in-law sues because he thinks the minerals are his? Everyone I’ve seen has me paying attorney fees to defend title.

Never sign a division order! They are just giving you liabilities.

11

Hey RW and Fred, those are pretty bold statements! It is very obvious one can get schnookered due to lack of experience and being complacently passive to the industry.

12

Hi R. W.,

I recently probated my mineral interests and had received Division Orders even before probate. I just received another one after I probated. Initially, when I received a D.O., I asked about their statement that I had 1/8 interest in the property as opposed to my stated 1/4 interest in the property. Well, naturally, I received an answer that I did not understand at all. Long story short, I was told that if I did not sign the D.O., that none of the other mineral owners in the pool would be able to receive their share of the royalties. Is this true? But, my real question is; now that I am probated, can I just call the oil companies and tell them to send me my money and not sign that D.O.? That is, if I agree that their calculations are correct?

r w kennedy said:

Rick, if you are absolutely certain of what your interest is, if you have already paid thousands of dollars to run your title and you want to return a division order, I’d say go right ahead. If you are not certain, as most people aren’t and you want to agree to be underpaid, I’d say you have that right too. I don’t know why anyone would be in a hurry to put their name on a document they were not sure was accurate. Personally, I don’t sign anything I don’t have to. Why agree to be paid for a lesser amount than they might actually owe you? Have you read the language that you can find on division orders? Something as simple as you agree to return any overpayment. The statute of limitations could run on the overpayment and you would not have to repay, unless you signed a division order that had such language on it and returned it, then you agreed to it and there would be no statute of limitations. Look at your division orders and see if they don’t contain anything other than we think you own this much and we want your agreement, see if they don’t want you to agree to a few other things while they have your attention, or inattention as the case may be.

Don’t sign ratifications just because they want you to either. I have had two friends in the last six months sign ratifications for leases entered into by people who had no right to lease the minerals in the first place. They are receiving no bonus and don’t get to negotiate royalty or terms. If the lease is valid, they don’t need a ratification. If the lease is not valid, they need to lease it again, it’s that simple. If it’s an NPRI, get professional advice.

Rick Tatum said:

I am wondering why you would not return a division order? What is the advantage?

13

Hi R. W.,

I recently probated my mineral interests and had received Division Orders even before probate. I just received another one after I probated. Initially, when I received a D.O., I asked about their statement that I had 1/8 interest in the property as opposed to my stated 1/4 interest in the property. Well, naturally, I received an answer that I did not understand at all. Long story short, I was told that if I did not sign the D.O., that none of the other mineral owners in the pool would be able to receive their share of the royalties. Is this true? But, my real question is; now that I am probated, can I just call the oil companies and tell them to send me my money and not sign that D.O.? That is, if I agree that their calculations are correct?

14

Hello Sharon.

If you have probated and have deeds recorded in your name, you can just tell the operator to pay you. The operator needs to pay you or come up with a good reason not to pay you at that point. By law you do not have to return division orders to be paid in ND.

Sharon, your title has not a thing to do with everyone else’s title. Someone is telling you a STORY when they tell you that you’re not stipulating your interest or not signing a division order is holding everyone up. If you consider that a well spacing is like a jigsaw puzzle and your interest is just one of the pieces, they are saying that they can’t even begin the puzzle until they have your piece. If they don’t want to pay anyone until you have stipulated your interest, I think it means they are unsure of many interests.

If the operator is unsure of several interests, they had better get cracking because for everyone who has good, marketable title, interest will accrue. If anyone in the spacing does not have marketable title, it’s pretty unlikely the operator will pay them anyway until they fix/cure their title.

Sharon, you are doing all the right things with the probates and I’m sure you are getting deeds in your name, or else why probate?

Don’t let them suck you into solving their problems. The operator is composed of big boys and big girls, they can solve their own problems, without you signing a division order or stipulating your interest.

Sharon, I have one caveat to the above, if it’s other family members who have title problems, I probably would want to help them, in that case we could all get together and stipulate our interests in the family interests but this would not involve a unilateral stipulation at the operator’s request.

Sharon, if you agree to their calculations, just contact them to make sure they have your correct address and ask them to pay you. Kodiak once told me that they use the returned division orders to confirm address and they were not going to pay me, not for not returning the division order which would be illegal but for not confirming my address. A simple phone call got me and my brother in pay status. Just contact the operator making sure they have your correct address. If they don’t pay, the interest accrues from 150 days after first sales. I hope this helps and let me know how it goes. If they want to tell you more STORIES tell them I would be interested in hearing them, but they have to listen to my stories too, I have a great one about the fish that I caught that was [this-------big] and believe me that my story will have just as much to do with your being paid as their story. I will PM you my number Sharon.

Sharon Davis said:

Hi R. W.,

I recently probated my mineral interests and had received Division Orders even before probate. I just received another one after I probated. Initially, when I received a D.O., I asked about their statement that I had 1/8 interest in the property as opposed to my stated 1/4 interest in the property. Well, naturally, I received an answer that I did not understand at all. Long story short, I was told that if I did not sign the D.O., that none of the other mineral owners in the pool would be able to receive their share of the royalties. Is this true? But, my real question is; now that I am probated, can I just call the oil companies and tell them to send me my money and not sign that D.O.? That is, if I agree that their calculations are correct?

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R W K - Your statement about "Stories" was priceless.