Several siblings and I just learned that my deceased mother had left us in heir, "own an interest in an oil and gas lease, commonly referred to as a working interest." Most of us have received a letter from a "Landman" asking to purchase our working interest in the lease. There is a total of 120 gross acres, and he is offering us "a signing bonus" of $2,260.00. This would mean we all would receive just shy of $300.00 each. I am unable to hire an attorney, I was in a major MVA and I am facing disability. What I am wondering is if this could possibly be something that could end up being financially beneficial for us to keep? They indicated in the letter they are going to drill and invest $12,000,000,00. in this location. The Landsman replied to an email supporting our sale to them with the following reason; "Please advise your one sibling that this is a Working Interest and not a mineral interest, thus there is no interest to lease. The tract is currently held by production (HBP) by an Oil and Gas Lease in the 1960's. If the OGL were to expire or invalid then the Working Interest goes away. Also, the interest that we are talking about here is a small interest to begin with and now has been divided up between your mother's eight children and thus is even much smaller still."
can you tell if this is something we should sell or hang on to? I have searched the internet, however it seems a bit cryptic to me, the lingo? Also, I wanted to know if someone has a "working interest" do they have to contribute to the cost up front? Or can they pay their portion after they have received any monies from the drilling? Area is in Dodd County. Thanks so much for your help!
It would help if we knew what state Dodd County is in? And also what the legal description of your minerals are in Dodd County. Abstract #, Section, Range, Township?
Jenny, paying up fron for drilling is customary most places. One question I have is if there is money held in suspense for you right now? HBP means production and production can mean income. They could be wanting to buy you out with your own money, happens all the time. Mr. Liles has a good point that the more information you give, the better information you will get. There are alot of members here and there is a chance that someone has some specific information for you or they are willing to look it up for you. Someone may even blurt out an offer, although they are not supposed to.
I would not sell with just a single offer. If the interest is really small, you may be able to afford to participate but if you can't or are very risk averse, I would recommend a farm out deal, which may not be possible if your interest is that small. In any case I would get more bids, or sell it at auction, your current offer may be very low.
Thank you kindly for your reply, I will look at my form and try to determine the appropriate info. to post. I may also attempt to try and locate the site info. myself if I can figure that out.
r w kennedy said:
Jenny, paying up fron for drilling is customary most places. One question I have is if there is money held in suspense for you right now? HBP means production and production can mean income. They could be wanting to buy you out with your own money, happens all the time. Mr. Liles has a good point that the more information you give, the better information you will get. There are alot of members here and there is a chance that someone has some specific information for you or they are willing to look it up for you. Someone may even blurt out an offer, although they are not supposed to.
I would not sell with just a single offer. If the interest is really small, you may be able to afford to participate but if you can't or are very risk averse, I would recommend a farm out deal, which may not be possible if your interest is that small. In any case I would get more bids, or sell it at auction, your current offer may be very low.
It may be worth a chance though I'm thinking, cuz if I sell it to them now they would have taken it all anyways? Thank you kindly for your guidance and words!
Clint Liles said:
Very true Robert.
Clint Liles
Robert P. Malone said:
Watch out for a working interest. You could get a big bill you cannot afford. They then take your ownership since you cannot pay.
Can you be a bit more specific about this? Take the ownership in the Working Interest, the Royalty Interest, or the Mineral Interest? I'm sure state law would impact much of this, but I'm only aware of them being able to take the Working Interest. Your statement seems to indicate more that the working interest would be lost.
Also the mention of a bonus leads to me believe there may be much more going on than a WI only ownership.
Robert P. Malone said:
Watch out for a working interest. You could get a big bill you cannot afford. They then take your ownership since you cannot pay.
Thanks, sorry, not great at this. What I meant is the Landman offered to buy it all out, the working interest, so what I meant is that I either sell it now or take a chance that it could bring me some income..was in response to if I ended up owing them a lot of money they could end up taking it anyway.. What information would be helpful for me to let you know? The Landman mailed us an offer, my brother said he would accept it right away, I convinced him not to sign anything so fast until we can research what this all means to us, luckily I got him to hold off. In the mean time, the Landman sent over the papers for us to sign to turn everything over to them. So do you know what information from the Landmans offer might be helpful for me to let you mknwo so this all makes more sense? Thanks so much again for all your time and help!
Jenny, are you or the estate receiving payments from this working interest?
You might as well tell where it is, nobody can give even an approximate value or comment on the wisdom of keeping this working interest if they don't know where it is. It's like I offered to sell a car and not telling what year, brand, milage and so forth. It could be a valuable classic or it could be an 87 Yugo up on blocks.
Jenny, do you happen to have paperwork as to how your Mother acquired this interest? Was someone in your family in the oil business. Also, record title at the courthouse may be helpful. It is possible that there is an assignment in the county records as to how your Mother (or predecessor) got into this well.
If there is currently a well on this property, then your Mother should have received working interest payments (and bills).
If, as the purchaser says, your Mother's interest was small in the first place, then your interest may not be worth much. It depends a lot on what the working interest is, i.e. 1% or 50%...