I, and 3 relatives, have received ‘an offer to lease or purchase Oil and Gas interest’ in Tyler and Wetzel Counties, from Antero Resources. They say we are heirs. But none of has a deed or proof we are co-owners of any Mineral Rights. Two have signed the lease. 1.Is it legal to sign a lease like this if I am not the owner of it? 2. If so, must I pursue ownership of the Mineral Rights to receive royalty payments?
Thanks for any comments you may have.
Since Antero initiated the offer it is legal for you to sign it. If it turns out they were wrong they will let you know.
@tabletalk Warning if you do sign a lease and the company is wrong about you owning the rights, they can require you to pay back any signing bonuses and/or royalties they pay you. The best thing to do is to contact the County Records where they say you own mineral rights and confirm if you actually do or do not have interests there. Sadly my Mother found out the hard way companies can be so eager to get a lease signed they make mistakes on researching ownership and heirs.
John, At what point do I have to become the owner of the Mineral Rights?
Can I receive royalty payments if I don’t own them?
Just guessing, but there may be an ancestor who died, so it passed down to the next generation. Real property must be owned 100% by somebody. Therefore, at the moment the ancestor died, the next generation owned the interest, subject to probate or estate proceedings, etc. You can always ask them why they believe you own the interest.
I appreciate your response, and will not be signing this lease. I find no record of Mineral ownership for me, or the other 3 relatives who have been offered a lease. Two have signed, though. Thanks. P.S. Since West Virgina considers Mineral Rights ‘property’, wouldn’t it be taxed? And if so, who has been paying the taxes?
I wouldn’t just refuse to sign it and walk away. . Have Antero explain how they arrived at your ownership. It may be invaluable.
I have several leases with NNE and got 15 producing wells…1 with EQT…nobody knew of any of this and found out our family lines as heirs…years after my grandma passed. They had a great landman Steve…who spent quite a while searching our family history to find us all the companies do their research. Most we are all partial owners in kind. They have to record your lease and affidavits of heirship with the county…and so on. Just a few months ago I received another lease as they are progressing on the Pheonix project. My advice is self-educate on being a lessor of your minerals. I first signed in 2017 and only started getting royalties regularly mid last year and they aren’t much at all and are dependent on market…seen $1500 months and $100 months. You can go on the website for the county your minerals are in and see the actual lease they signed with you on file. I also found they had filed heirship rights for me under my grandmas name. Welcome to being a mineral owner…good luck!!
Many taxing jurisdictions do not tax minerals until production starts.
You can sign a lease with the oil and gas company. You aren’t the legal owner of the mineral rights, but you are (probably) the equitable owner of the mineral rights. There’s quite a lot written about equitable/legal ownership online so I won’t go deep here, but essentially it means you are the owner, there’s just no paper trail. If you wanted to do anything other than sign a lease and receive royalties, it would be important to create that paper trail.
Before signing an oil and gas lease you should ask for some basic things. First, get more bonus money and a higher royalty. Also get gross proceeds, which means they won’t be able to deduct costs (pipeline, compression, dehydrations, etc.) from your royalty. Get a No Warranty of Title clause, a No Recoupments clause, an Indemnification clause, and language that says you have no knowledge regarding old wells or leases. Request that the lease only apply to the Marcellus shale. These are the absolute basics. There are lots of other things you could ask for, depending on what the lease says (each company has their own unique lease), what you want or need, and how large your ownership is. Good luck, and have fun!
Many thanks for your advice! There are 3 parcels in Tyler Co. near Sistersville, and one parcel in Wetzel Co. near Paden City. The lease shows 30 Gross acres, with Net acres (my interest) of .27778 . Since I did not sign the lease with Antero, can I contact another oil/gas company for a possible lease? Any thoughts on the gas production possibilities of that area? Would the laws about pooling apply with only 4 people with mineral interests in the parcels; would I be forced to pool?
Again, thanks to you and the other responders on this forum.
Bob
You’ll want to get on https://tagis.dep.wv.gov/oog/ to look up the location of your property in relation to any existing wells and any permitted wells. That will give you an idea of whether production is in your area or moving toward you.
You can contact other companies. EQT, JayBee, Tug Hill, and SWN would be your best bet in that area. If they’re not interested, try CNX, HG Energy, NNE, and Arsenal. They don’t work in that area, but they may be willing to take a lease that they can then trade to Antero for some other property they do want.
Your net acreage is about 1/4 of an acre in a 30 acre tract, so unless I’m missing something either forced pooling or co-tenancy could apply. I’ll be surprised if there are only four owners when you have 1/4 acre yourself. I could be wrong, though. They have to lease up 75% of the acreage first, of course.
I sent an e-mail to Tom Rundle, landman for Antero, but he did not respond to me and we are well past the 30 day deadline to sign the lease. I’m assuming that if production begins the mineral interest would have more value at that time, so I’ll wait and see what happens. Thanks for your response.
So, with forced pooling or co-tenancy in West Virginia do I receive royalties without signing a lease?
The lease, which at least 2 of my relatives signed, allows for 15% royalty on gross proceeds, less 12.5% of all Post Production Costs and less 12.5% of certain taxes.
Might not see much of a royalty I’m guessing.
Anyway, thanks again for your advice!
Yes. Also, the lease that is forced on you through either process is a pretty decent lease. The only thing you usually lose out on is the signing bonus, but even there you get paid a bonus, it’s just not as big a bonus as what you could negotiate for.
The old rule of thumb, which is a very rough rule of thumb, is that you’ll get $100-$500/acre/month once all the wells in the unit are producing. Now, I’ve seen people get more, but I’ve also seen people get less. You really can’t say what royalties will be until you start seeing checks. That said, you’ll probably get somewhere around $25-$125/month in the beginning. Not a lot, but better than a swift kick in the pants. Keep in mind that the royalties will usually go down each month because the amount of gas that comes out of the ground goes down most months. The exception is when natural gas prices climb like they did last summer.
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