Please help as I’m a newbie. I inherited several mineral rights in West Texas from my father. I have one lease that has expired. On several others, I have Division Orders but no apparent leases. Then on another one I receive JIBS and lately the expenses are far more than what is being produced. As an owner why am I paying them to produce it? I continually receive offers to purchase the mineral interests but it is a HUGE amount different than the revenue I receive.
I’m SO confused! What am I missing? I have searched and searched to no avail on what the differences are. If you can shed some light I would be very grateful. Or point me in the direction to learn more.
@Glittergirl_TX I will try to help with some general information based on what you have posted.
Several mineral rights - If I inherited several mineral rights, my first step would be to have a professional in the industry help understand what exactly is owned and make well-informed decisions since it seems offers to purchase rights are involved.
Having DOs without leases - these could be covering producing wells drilled from old leases possibly.
Receiving JIBs implies to me you own a working interest - an interest where you pay your portion of the well costs and get a revenue associated with your working interest. Because your interest shares in the costs/expenses you are getting billed your share and it sounds like costs are more than the revenue which is the risk in owning working interest. Another point where a professional could help understand if its better for you to sell your working interest, keep it or assign it and keep an interest, or something else. There are many variables here.
With offers to purchase mineral interest, those offers may be much larger for a variety of reasons.
I think understanding what you own on a per property basis would be your best action here.
I hope this helps… and be sure to consult with an attorney well versed in the oil and gas industry and in the area your property is located before signing any leases, or other rights away.
I see many people post disclaimers so here is mine- this is not legal advice, I am not trying to give legal advice - my only advice here is to educate yourself before signing or committing to anything in writing as there seem to be many people willing to act against your better interest.
Several steps for you to take. First, gather the deeds or estate distribution filed of record in the county or counties which should provide a description of what was assigned to you in your name. Go through your father’s estate records and files to see what you find that will have a legal description (such as a deed or oil and gas lease in his name). Division orders should identify wells or units and perhaps include a legal description of acreage covered. You can search your father’s name on the on-line deed records for deeds, assignments, leases, etc. which will give you a point of reference. Look at the county appraisal / tax records under your father’s name, at least to see if any property taxes are outstanding. As to the JIB, it means that you are a working interest in a well. That could be because your father was an oil man who took leases from minerals owners and participated in wells (i.e. he paid his share of expenses and received his share of revenues). Or it could be because your father owned the minerals and chose not to sign a lease and instead participated in the well as an “unleased mineral owner”. You want to put together as much information as you can to take to anyone you hire as that will provide a starting point and save money. You do not want to sell any minerals or interests without knowing exactly you own and if there is new planned wells which will add to the value. The value should be at least 5 years of income, and more if it is an active area. Take your time and do not rush. There is a learning process and you will benefit by being careful.
You’ve already gotten some valuable advice, but to give you a ‘for instance’ why care and legal guidance is imporatnat in considering purchase offers…some folks hoping to buy producing interests may talk about buying the royalty you have in a certain well or unit but the deed they want you to sign turn out to have wording conveying any mineral interests you own in the County. Unsolicited offers can also be just a bait and switch, trying to get you interested and then talk you down on price.
TexasFile can be a great research tool for property records. Try looking up your father’s properties using their search tools. This will allow you to start gathering documents. Receiving JIB’s may indicate a working/leasehold interest or an unleased mineral interest. No leases may indicate that your father purchased non-participating royalty interests, but require DO’s for payment. Hold off on the sale of any properties until you have a solid understanding of what you own and the related value. I had several clients over the years that found themselves in your situation. Things work out with time and effort. Good luck.
What am I missing? I have searched and searched to no avail on what the differences are. If you can shed some light I would be very grateful. Or point me in the direction to learn more.