I am the Personal Representative in Lea County, NM probate for a deceased relative and we have OGM rights in Lea County, NM. I have contacted the operating company of some of our leases. I have asked them about lease bonuses that I received in the last two years but I am pretty sure that my relative did not. They replied, “Lease bonuses are paid at the time the lease is taken so there should not be any outstanding lease bonus payments”. I am pretty sure that he did not sign those leases. Shouldn’t those lease payments still be due?
I had a situation where I discovered someone had drilled across one of my tracts without every contacting me for a lease. To make a long story short, it turns out that the grandparents’ records were incorrect; they did not have executive rights; they only owned an NPRI in the tract. In your case, if you and your relative are heirs of the same original owner, it’s unlikely that you have mineral interests with executive rights and your relative owns only an NPRI. Is it possible your relative was force-pooled? or that he or she took a WI?
If your relative owned minerals and did not sign a lease and there are now producing wells, then his interest would have been force pooled under the terms of the NM pooling order. NM usually sets a penalty for nonparticipating minerals and the minerals will not be in pay until after costs and penalty are satisfied. The oil company is unlikely to lease until payout starts and even then will not pay a bonus. You can get the pooling order from NMOCD. Ask the operator about the payout status.
Thank you for your responses. My relative and I have confirmed executive rights on these leases in Red Bud State Com 25-36-32 All of the leases and bonuses are for renewals. One of the leases does not appear to have any drilling permits. The other lease is in the process of being drilled or are already drilled. In that lease there were two wells that were pooled but they alternate with two other wells and they are only 30’ apart. Can I assume that they were pooled? There is one more well on this lease which is about .1 mile away. I have received division orders on all five of these wells. No bonuses? I signed one of the leases in May, 6 months after receiving the notice. Seems that my relative should also be eligible!
As I understand it, NM has a triple risk penalty for force pooling. So, a force-pooled RI owner wouldn’t begin receiving his fractional share of revenue until total revenue equals 3x total expenses. On the other hand, once that 3x point is reached, then the royalties are 100% of the person’s fractional share of the well, rather than 25% of the person’s fractional share (comparing to a lease specifying a 25% royalty).
If you post the exact legal descriptions of the tracts of land on your leases, I can look at DrillingInfo.com to see what wells are on your tracts.
On the issue of whether your deceased relative was leased and was he or she paid the bonuses that were due: Do you have all the records that he or she kept, e.g., photocopies of leases and related correspondence? You might consider using a third-part source like Basin Land Records to do a grantor name search for your relative, and/or a grantee name search for operator(s), to obtain the date/book/page of recording of every lease (or memorandum of lease) (or lease extension/renewal) that you find. You can order pdf’s of the documents by phone from the Lea County Clerk’s office. They typically send a pdf quickly at no charge if just one short document is ordered, but even if you order multiple documents the cost is minimal.
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Thanks for your response. I have the same OGM Rights as my relative, so I have my own records of wells, leases, bonus and royalties. I am requesting all 1099’s, records of lease bonus payments, royalty payments and signed leases from the operating company. I looked through the relative’s documentation a year ago but I do not have possession of them at this time (Several states away). His records were incomplete over the last few years of his life. Just trying to get the right deal for his children. I am also awaiting to hear from the probate lawyer on this question. One would think that the operating company would be forthcoming!
“The reports might be sitting in a box at the OCD office in Artesia. Artesians cannot be trusted.” NMOilBoy
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