Hi all. I'm hoping to get some guidance here.
My father’s grandmother left land (600 acres I believe) with mineral rights between each of her children. It then passed through generations. Some cousins sold to one cousin; the land in question is now owned undivided by many people; with one part of the family owning the majority of it. The land is part of the Eagle Ford Shale near Nixon/Gonzales, TX.
The first we knew was when an Oil Company recently contacted us to have us sign a ratification. They informed us that they leased 300 acres of this land (a portion of the total land inheritance) from this cousin in 2008. At that time I guess they did not realize that the cousin did not own all of it; they dealt only with the majority owning cousin. They then extended the lease with the cousin in 2011 through 2013; again with only the cousin signing it.
The company was ready to begin drilling this year, and as they were about to start it they checked ownership once more and this time the review uncovered the presence of the other owners (many of whom including myself didn’t realize they owned the property), totaling about 45 of the 300 acres. They then contacted me and wish to have me ratify the existing Oil and Gas lease and Consent to pool for my 5 acres.
The questions I have are: 1) the company paid a bonus for the original lease, and $150 an acre to extend it the last time; should we be due compensation or payments since our interests were effectively leased at those times without notification or consent? 2) it seems that there is a part of the contract dealing with surface use of the land; how does this work when the land is undivided; should money for property damage and pipelines be split; although this is in the original lease it is not explicitly mentioned in the ratification I have to sign? 3) the terms of the contract do not seem great given the location of the land and the apparent need for the company to get drilling in this region ($500 per acre and 20% royalties), and the major owner has a better deal ($1000, 20%), but still not the $1,500 and 25% that I see for some of these Eagle Ford interests; can I or perhaps should I try to negotiate a better deal? 4) According to what I now know there is another 4 acres in the same area; I now wonder there might be in a similar situation; what is the best way to find out if this is also leased or even perhaps producing? I don’t know any of these people so reaching out to them without knowing more about how all this works would be tough.
Any help much appreciated!
MJ
Also I wanted to add that in the initial lease the cousin is names and listed as the sole owner, so it is not the case that the company leased only a portion of the land. They leased it all, but only from one part (though major) owner. Thanks,
MJ
I wouldn't sign anything until i spoke with a lawyer. This could get messy.
In order for the situation stated above to be true and for you to need to sign a ratification, you (and the other family members that are not the majority owning cousin) would have to be either a Non-Participating Royalty Interest (NPRI) owner or a Non-Executive Mineral Interest owner. If you own an interest from the same reservation that your majority owning cousin does, you would be a regular mineral owner with executive rights and should be entitled to sign a lease just as the cousin did. You need to get a hold of the documents that created the reservation to verify what your ownership is. I agree with W Kornmayer, that talking to an attorney might be a really good idea. You could also try and post the documentation that you have here and others might be able to help. Good luck!
It depends what kind of mineral interest you have. You may be entitled to the bonuses you did not receive, and to your own lease. Visiting with an attorney should be priority. You and the other passed over cousins could probably go together on this.
Thanks folks. Texas tea; when you say "the documentation that created the reservation" do you mean the trail of docs from the original purchase/land grant from my great great grandparents through all the generations to today? So going to the county court house to find this trail of info? The only documentatation I have is a copy of the original lease noting cousin as sole property owner, a notice of his extension of primary term of oil and gas lease, a form to sign for ratification which states that the lessor is my cousin but I am the owner of part of the property covered in the original lease, and a letter explaining what they are offering in terms of bonus and royalty. Neither of those two terms you state NPRI or NEMI have been mentioned or listed in any of the documentation. A lawyer sounds expensive and I have no spare" cash.. : ). Let me see if I can scan it tomorrow. Thanks.
MJ
Thanks Wade. I had a question as to what you mean about the kind of mineral interest I have. The documentation only states it as "an undivided interest in minerals located in and under".. "covered by the Lease". As I understand it the minerals passed straight from generation to generation with subdivision by percentages based on the number of children inheriting, but with no other contracts or alterations. So; can I take that to mean that I own 100% of the minerals of my (little) share of the undivided interest (hoping I'm using the correct terminology there). Thanks all!
MJ
MJ,
Let me back up for a minute and ask a few questions before I can clarify what I meant. You said that your father's grandmother left the land with mineral rights.... Did she leave the land itself or just mineral rights? If she left the land, do you all still each own (portions of) the land? If the land has been sold, and the mineral rights reserved, I was talking about the reservation deed where the mineral rights were reserved where presumably your father, grandmother, you, your cousins, etc. all signed a deed. Having that document (if it exists) would help determine the nature of your interest. However, if you all still own undivided interests in the land itself, that would mean that there would be no reservation deed. Thus, unless there had been a conveyance of executive rights or something along those lines, you would own the same as your cousin.
And yes, hiring an attorney or landman or someone to help you out could be expensive (not as expensive if the cost was split between all of the left out owners), but could be a great investment.
Hi. Thanks Texas Tea; yes it is the land and the mineral rights remain as one with no splitting of the two. No other legal changes such as the conveyance you refer to. It seems that most of the other cousins have signed the ratification; I was about last to find out about it; just a few perhaps have not. I will look into attorneys/landmen. Thanks!
MJ
MJ,
I would definitely not sign the ratification and would advise others to do the same until you get further information. I have sent you a friend request and would be happy to talk to you more.