New to the Mineral Rights Game

Utah Mineral Rights Duchesne County, UT
1

I have recently inherited several mineral rights all leased with 4 different companies. I have many questions as this is all new to me.

  1. Why isn’t there a maturity date on the leases? My wife is a commercial banker and she has never seen a lease or a loan without a maturity date. We both find this curious and a little disconcerting.

  2. Who decides on the percentage of royalty that the Lessor will receive? The percentage stated on one of the leases is far more than what is currently being received.

  3. When a lease is taken over by another company, why isn’t the lease ratified or a new lease signed with the Lessor?

  4. How can a Lessee collect mortgage, taxes or liens from me if I only have mineral rights not property rights?

5a) I do not have a copy of all the leases with the various companies. When I asked one of the Lessees for a copy of the lease, I was ignored. What rights do I have as a Lessor when dealing with the Lessee?

5b) Is there a way to find and obtain a copy of the lease?

I appreciate any help that you can give me.

Bill

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2

@Bill_Lim

  1. The “primary term” will be the term of the lease from the effective date, usually listed in years (commonly 3 years).
  2. The Lessor and the Lessee negotiate the Royalty before signing the lease. Your percentage of the total production will be reduced to its Net Mineral Acres’ percentage of the unitized or producing acreage. So if it’s a 25% royalty and you own 5 NMA out of the entire 640-acre unit, then you don’t receive 25% of ALL production, only 25% of 5/640.
  3. The lease is binding for the primary term regardless of who owns the working interest (or leasehold). It may be assigned, transferred, or sold.
  4. Taxes and Liens can be assessed on the production from a well—consider it an asset like any other item having a taxable value. Sometimes a subordination of Lien can be signed to assure that the owner is paid before a Lien or other item is collected from that production.
  5. Copies of the Leases should be filed at the County Clerk’s Office. If Memorandum, you can obtain a copy from the Lessee, who will have the original on file.
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