I finding two different answers when I search for this. So the lease was open in 1996. My grandpa died in 2006. Minerals were deeded to grandchildren. Life tenant under open doctrine will receive all the royalties bc the lease was holding barrels for 20+ years bc small well. New wells are being drilled. Landman said....money goes into a trust and she get the interest, then I found where lease was opened and still current and any new wells still will be hers 100%. Here are two of the quotes I found.
Quote 1 The Open Mines Doctrine is a crucial factor in any lease negotiations that involve life tenants or remaindermen. Simply put, the Open Mines Doctrine permits a life tenant to receive royalty payments for production wells that were already in existence at the moment of the tenancy's creation. Royalties from newer wells must be held in trust for the duration of the life tenancy and passed to the remaindermen upon the tenant's death. However, the life tenant does retain the right to receive any interest payments that the trust produces.
Quote 2
The Open Mine Doctrine relating to oil and gas production may be summarized as:
a. If there was a producing well or wells in existence when the life estate was created, the life tenant will continue to receive all of the royalty from the wells, and the remaindermen will take nothing until termination of the life estate.
b. If there was no producing well on the property, and it was not subject to an oil and gas lease when the life estate was created, the life tenant is not entitled to royalty on any new lease, but is allowed to “use” the royalty for life. This usually means the life tenant’s royalty share is held in trust and the tenant receives the interest earned from the royalty (“banking” interest). On the death of the life tenant, the remaindermen is entitled to all of the accrued royalty income.
c. If a lease was taken prior to the creation of a life estate, and production was developed after the creation of the life estate, the Open Mine Doctrine is applied. The life tenant gets all of the royalty for life.
So let me clarify some of this post as I was in a rush when I typed it. I want to know more what my "mom" life tenant will receive. The minerals were deeded to me, my brother, and my sister, in his' will in a life time estate. The original lease before the lifetime estate was still current. One old well that was left not plugged to hold acres. New wells being drilled does that fall in the open mine doctrine? or does the new wells being drilled hold up in a trust account where she can only touch the interest and not the principle?I would feel this being a waste law type concern of depleting inheritance. The Landman was the one that informed us that she technically cant spend it.
My thought is that someone is nervous about the validity of the old lease and us using Open Mine Doctrine to get the owners to ratify the old lease rather than write a new one in favor of the owners. Assuming you all want your Mom to continue getting her due under the life trust, clarify the trust provisions then negotiate a new lease in favor of the remainder-men. How the old lessee bent the rules shouldn't now have to fall on the shoulders of your Mother or her children after she passes. Remind the landman that life can not be brought back into a "technically" dead lease.
You should consult a trust and estate lawyer to make sure you understand all the terms and conditions of trust established under your grandfather's will. Lawyer will need to see the trust document. Who is the trustee - your mother or a third party? Are there tax returns being filed? Your mother and maybe remaindermen should be getting an accounting. Does the trust limit distributions? You also need to have the documents reviewed by an oil and gas attorney. Some trusts fail to include nevessary language to authorize the trustee to sign oil and gas leases and other documents which would go past the lifetime of the trust. The landman's reference to open mine doctrine is odd. Is it limited to particular law in the state where your miberals are located? None of you should sign any legal documents without understanding exactly what the provisions mean and how they affect your rights ling-term.
Me, my sister, brother are the grandkids (remainder men ) and my mother is the life estate holder (life tenant) . My grandpa deeded us three the minerals and in the will states she gets all the proceeds off the estate. There was land and different things. This lease like I said before was signed in 1996 and minerals bought in 1981. Well one well has been holding acres with hardly any production just gas for 20+ years. The lease is now with EOG and hasn't been through two other companys prior. They are drilling wells and we all just worry little about the inheritance being depleted in the next few years by our mom. I mean she clearly states she will split it but I just wanted to know what exactly options do we have incase something did go south and the family gets into it. We are seeing a lawyer Monday. I just see that the wells being drilled almost 10 years after the estate was set up and lease was held in the oil company interest to keep from having to sign new leases. Landman brought up she just gets the interest only. She argues she gets all the royalties. So its kind of a mess. We all want to divide it but then again her lawyer can advise her to not to and boom are inheritance to go to paying off her land and debts. .We just want know what her options are and are options. We sat down agreed to divide it all in 1/4s when royalties come in and EOG said they can set it up that way. But at a drop of hat with hard feelings that could change.
Cox , Energen had the lease now EOG has it. * We should want to know what legal format is in place if any. The original lease could bring in the open mine doctrine but I see cases where this could also void it since wells being drilled are after the life time estate was set up. I think maybe it would have to come down to a court decision this...maybe? Idk If she is entitle to it all then so be that's fine. I think she would divide it still anyways. On the other end If she is not entitle to it all we all agreed to still have it paid out in 4ths. We just want to know how it works. We don't want the family broke up and hard feelings.
So what deems the lease technically dead? This well was producing hardly any barrels for the last 20 years. I mean 8$ check a year my mom the life tenant was getting. Now they are drilling and wells are doing well and we just want to know the technicality of how the royalties are being paid. Will she be able to spend the body of the money or just the interest? Then after her life we the remaindermen get that? Or will she be able to use this how she wants?
You're on the right tract and you are fortunate that this matter is amongst family members, so don't over think this and don't get greedy. I've always said, "blood is thicker than water but it's not as thick as oil." I've seen too many instances where mineral rights disputes have torn families apart. The best way to resolve this matter, as you have done, is to sit down and decide what's best for your Mom and siblings and then have your attorney prepare the necessary documents to reflect your decisions.