Recently, we were informed that we are on title to four new wells that have started production. We have been emailing back and forth with the operating company on this topic. The basic response, until now, was that title was not complete and we would have to wait. However, as noted, title is now complete. We are being told division orders are coming our way.
So, here are my questions:
Should we ask the operator for a copy of the title history?
Does this include the full title research as it relates to our interests?
Do they have to provide the title to the rights owner (complete history - their "title search information)?
What reasons would apply why a company may not want to send the full title search to a rights holder?
Does the operator have to show you how they calculated the ownership percentage or is that on you as the rights owner?
We have copies of the leases and some title history, but it is long and there are many documents / details we do not have. The point of the question is that we are looking to make sure the ownership interest is correct and there are no errors on interest/payment. I have read other posts and articles on "auditing’ the wells/information provided by operators and it seems like it is more than just an occasional situation where there are errors.
Any help provided would be greatly appreciated! Thank you!
Not an attorney but I’ll share some thoughts on your questions. For others who might have something to add, it would help if you’d provide where these wells are located, at least the State.
From my experience, most operators will provide a royalty owner the title opinion they had made before a well was drilled, but only the part that applies to that royalty owner’s individual interest, not the whole opinion. That opinion isn’t the kind of title history you referred to, and won’t include copies of the recorded documents the operator’s attorney reviewed in preparing their opinion.
Since the operator has the drilling, or division order, title opinion made for their benefit, and at their expense, some may refuse to provide it unless that was a special provision in your lease, like providing daily drilling reports. But you aren’t out of line to ask for it.
You should also be able to get the operator to provide the back up details on the calculation of the decimal interest on your division order. Depending on the size company involved, their Owner Relations Department is probably where to start.
You’re right errors can be made, and regardless what the operator provides you, if you haven’t done your own research, and have the documents to support your opinon, there may be no way to confirm a problem exists, or backup your position on correcting it. If other members of your family also own interest in these wells you might try to get advance agreement from them on working together, and dividing the potential expense if outside help from a landman or attorney is required.
A lessor can make a stipulation at the time the lease is to be signed and paid for that he receives the title run sheets. Have them emailed to you. It’s negotiable.
You can request a title run sheet from the company. I get them everytime I’ve leased in the past few year’s. Lease brokers don’t want to give them, but it is up to the company, not the lease brokers. I received a complete abstract of title from 1835 through 1981 on some of our tracts! At the end of the lease I got a call from the company landman offering it and I drove to Houston and got it! Landmen, companies, and law firms do make mistakes and there are sometimes differences of opinion!