Recently two wells were drilled on my mineral rights, with large productions starting last year. Due to a wording error in a transfer over 100 years ago, the valid title (Division Order) is being held up pending a Stipulation of Interest from all parties. Even though the error seems obvious, not all of the parties have signed this “release”. There are some really wicked and mean crooked people on the list to sign, and I suspect they are just being nasty to hold up royalty payments for everyone else. My question is this: How long can they hold up royalty payments by refusing to sign and return the Stipulation of Interest forms? It has been over 6 months now with no end in sight.
There is no legal obligation on people to sign a stipulation of interest as presented, particularly if they do not agree with or perhaps do not understand how the fractional interests were determined. And some will hope that by delaying, they may be able to negotiate an increased interest, with reduction of interest for other owners. It may take a lawsuit to settle the title issues.
Wow! That was NOT the answer i really wanted 
In this case, according to you it might go on for decades with only the operator being able to keep the royalty payments pending an agreement.
The first production month of only one well was 25,000 BBLS, with 5 more permitted in the same location. I guess at some time in the future the suspended royalties would make a lawsuit pay off, but the royalty owner still strikes out. Bad news.
I guess I am just too close to see the real problem, having personally known all involved and what their intensions were. Simple math error is all.
RECITALS WHEREAS, by Mineral Deed dated February 5, 1934, recorded in Volume 76, Page 137, Deed Records, Lea County, New Mexico, J. W. Brown was vested with an undivided 1/16 mineral interest in and to the following lands: Township 25 South, Range 36 East, Lea County, New Mexico: Section 18: N/2 NE/4 WHEREAS, by Warranty Deed dated May 29, 1963, recorded in Volume 293, Page 548, Deed Records, Lea County, New Mexico, J. W. Brown conveyed to Marguerite [sic] Brown Ridgway an undivided 1/16 mineral interest in the above-described lands. WHEREAS, by two Warranty Deeds, both dated Septembers 29, 1966, recorded in Volume 302, Page 935, and Volume 302, Page 475, Marguerite Brown Ridgway conveyed to Charlene Brown Clements and Blanchard W. Brown each an “undivided 1/3 interest” in the above-described lands. WHEREAS, Marguerite Brown Ridgway owned a 1/16th Mineral Interest at the time of the conveyances, and it was the intention to convey a 1/3 of 1/16th Mineral Interest each to Charlene Brown Clements, and Blanchard W. Brown, in the above described conveyances; WHEREAS, the current owners of the above described interest desire to remove all ambiguities and uncertainties, if any, and to set forth the ownership and the nature and character of the Subject Interest by, among, and between the undersigned; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree and stipulate by, between and among
Unfortunately, the answer is forever. If the royalties at stake are large enough, you could file a declaratory judgment suit and ask the court to establish ownership. If you know other royalty owners, you could get a group together to do this. In many such suits, the plaintiff can recover attorney’s fees. Sometimes, once the suit is filed, the recalcitrant owners get a bit more “reasonable”.
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This is the simple (to me) math error holding it all up:
The deed language as presented seems problematical. Interpretation is dependent on all of the deed language and on New Mexico statutes and case law. Many poorly worded deeds have caused headaches later for the mineral owners. This is the reason to use an attorney experienced in oil and gas title law to draft a deed. It is not the fault of the oil company which will hold the royalties until all the parties sort it out. And you correctly point out that this may not be resolved until there are sufficient funds in suspense to justify a lawsuit.
It does not matter if it is a “simple math error”. The oil company is entitled to suspense all royalties unless there is a stipulation or a court order.
ONLY a sixteenth is in question with 7 individuals. Does the oil company keep only a sixteenth in suspense, or the entire royalty payments? In the 7 in question, two have 1/48th, the rest only 1/240. I would imagine the 1/48 people would be far more excited about this, and if they are holding all royalties in suspense, I am sure there are many that would get it solved, right? In addition there is another well producing with permits for four more. That is a LOT of oil at 25,000 barrels a month per well!
I found out the single hold out person and have their name and address, he has been offered a stipulation of interest, and is a 1/48 share holder, but is hesitant to sign at this time. I guess it is now a waiting game until someone with deep pockets decides to take legal action and a judge decides to break the deadlock. Is there a track record of this type roadblock?
Consider having everyone else sign and then hiring an attorney to contact the hold out, send a copy to the hold out and explain that he/she is the only nonsigner (only if that is truly the case) and that you are considering a lawsuit to request a declaratory judgment and if that happens then you will request that the court order that the nonsigner pay all attorney’s fees.
Since Haskell Indian Institute is one of the 7 who need to sign the stipulation (they have already signed one) at 1/48 share, I am banking on their fleet of attorneys to take the matter to resolution and either buy the lone person out convince him to sign by some means available. I am told by some he is therefore in a position of power and is probably holding out for a nice cash incentive from one or all of the other 6. Haskell has deep pockets, let them fight!
Well it has been a while, the 1/48 interest owners have amassed over a million dollars each being held for them one is the Haskell Indian Institute. One would think that a cool million would make anyone reconsider holding out even longer but there is a lot I don’t know about greed in general and this in particular. One would think the Haskell Indian Institute would be going after their million dollars with warp speed, but I guess not.
And for anyone following this topic, I am told just last week that they have all the signatures, only awaiting the hard signed copies back, and that I can expect royalties to be paid in the September distributions probably towards the end of this month!
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