YellowSubmarine
Thinks s/he gets paid by the post
How much land is involved in your contract?
It took these folks over a year to complete. Lots of noise over night and large truck traffic was the down side.
Oil & Gas Leases - What a complicated thing
- Thread starter PaunchyPirate
- Start date
It took these folks over a year to complete. Lots of noise over night and large truck traffic was the down side.
OP
OP
PaunchyPirate
Thinks s/he gets paid by the post
She has mineral rights from two surface parcels that total 61 acres of land. But her fractional ownership is just over 5 net mineral acres.
Winemaker
Thinks s/he gets paid by the post
You won't receive any royalties until after the gas is sold. Is there a nearby operating pipeline network? Gas prices are lower now than a few years ago. Everyone got into the business early and resulted in a glut. Some wells have been drilled but capped until prices go up. Some wells were drilled in anticipation of energy trade deals like the one with the EU yesterday, and new AI power plants.
OP
OP
PaunchyPirate
Thinks s/he gets paid by the post
I'm the original poster of this thread. An Update: My mother just received the "Division Order" document which is the final step in the process to start receiving royalties from oil and gas that is extracted from her mineral rights. A well has been drilled and it is now producing. After I send the signed Division Order back to them, they should start issuing her royalties via direct deposit pretty quickly. She will get a monthly payment if the amount due is over $25. At this point, we have no idea how much will come to her. They pooled her mineral rights with others in the area and have drilled a horizontal well across the parcels. The pool area just barely includes the corner of one of her parcels. And the pool of money is allocated out based on the percentage of area included in the pool. But hopefully, it will provide some play money for a while. Time will tell.
Crewer
Recycles dryer sheets
I'm dealing with something like this - mineral rights in Oklahoma while I live in Ohio. DH's grandfather bought the rights and no wells were ever put in. The were held in trust until the last of DH's mother's generation died and then DH got a transfer deed for the acreage to be split among the 22 cousins. DH died 2 years ago and I was told the mineral rights had no value so I just left them hanging when his estate was cleared up. Now some operator has filed with the state to drill, and frack, the land. So all the cousins get real offers and the rights are no longer worthless. I need to go through probate in OK to get the deed transferred to me. Fortunately I still have DH's original well since in OH a simple estate was done to transfer the few non-beneficiaried or joint assets to me. No will was filed in Ohio.
But the well hasn't been drilled yet so the offers are from speculators. I finally found a probate attorney in the county in question and found out the cost to have the property transferred to me should leave me $4k or more to the good. But it will take maybe 5 months.
In that time the well may come in dry so I'm going to wait until I know there is a producing well to do anything. I talked with probably 8 or so attorneys in OK and TX before I found the right guy for the probate. He is the one who suggested I wait. Along the way I also learned the offers are probably low ball by 33 - 50% and how much a good well produces in terms of $/acre of rights. I can also get the thing as a transfer on death deed so my kids won't have to go through OK probate again, thank goodness.
Turns out DH also had TX mineral rights that were producing but haven't been for at least 4 years. No value per a couple companies in TX two years ago. Not sure what I'll do if that produces again. Probably have to reopen OK probate and do something with TX probate as well.
But the well hasn't been drilled yet so the offers are from speculators. I finally found a probate attorney in the county in question and found out the cost to have the property transferred to me should leave me $4k or more to the good. But it will take maybe 5 months.
In that time the well may come in dry so I'm going to wait until I know there is a producing well to do anything. I talked with probably 8 or so attorneys in OK and TX before I found the right guy for the probate. He is the one who suggested I wait. Along the way I also learned the offers are probably low ball by 33 - 50% and how much a good well produces in terms of $/acre of rights. I can also get the thing as a transfer on death deed so my kids won't have to go through OK probate again, thank goodness.
Turns out DH also had TX mineral rights that were producing but haven't been for at least 4 years. No value per a couple companies in TX two years ago. Not sure what I'll do if that produces again. Probably have to reopen OK probate and do something with TX probate as well.
djsander
Thinks s/he gets paid by the post
If you wait until after the well is drilled you will recieve 100% of your royalty payment after the drilling costs are paid off rather than what percentage they have in a lease agreement. The initial bonus payment is made to secure production rights by giving you some amount per net acre. Then you get a percentage royalty. It does get complicated. Sign an agreement and get a bonus check for rights then a percentage royalty on production or don’t sign anything and when it produces you receive 100% of your share after costs are paid off instead of that reduced percentage. If you don’t sign before production then don’t sign after as you’ll receive the money. Unless you just plan on completely selling your rights.
This may be long, but it is entertaining.
In 2007, we bought a brand new manufactured home in a +55 MHP. The previous home was either moved or destroyed.
We started getting mail addressed to the previous owner (deceased) with royalties for some mineral rights. I searched the CA abandoned property lists and found 3 files for these payments.
I found an obituary for his brother in San Diego and finally got the name of the former owner's son from one of his cousins.
I found his e-mail address on a search site and contacted him. It turns out his dad had been married 3 times, and he had a half sister. I e-mailed him the reference numbers from the CA abandoned property website.
At that point I backed out and let him deal with everything.
In 2007, we bought a brand new manufactured home in a +55 MHP. The previous home was either moved or destroyed.
We started getting mail addressed to the previous owner (deceased) with royalties for some mineral rights. I searched the CA abandoned property lists and found 3 files for these payments.
I found an obituary for his brother in San Diego and finally got the name of the former owner's son from one of his cousins.
I found his e-mail address on a search site and contacted him. It turns out his dad had been married 3 times, and he had a half sister. I e-mailed him the reference numbers from the CA abandoned property website.
At that point I backed out and let him deal with everything.
We own mineral rights on a small parcel of land. Actually only under the land to 2500' I believe?
It's been 20ish years since they drilled it.
It was for methan and supposedly after the methane was pumped we were to have a good producing water well. That didn't happen.
The land man lied and said we'd be getting about $14k a year? That didn't happen.
I think a couple years we made maybe $1200 ish at the high point.
Several years after they capped the well, we'd get litigation papers where very large land owners sued the mineral Co for shorting them.
Think we may have gotten a couple $150 reimbursement checks out of those deals.
We still have the rights and several companies have contacted us over the years trying to buy the rights but we just hang on to it.
It's been 20ish years since they drilled it.
It was for methan and supposedly after the methane was pumped we were to have a good producing water well. That didn't happen.
The land man lied and said we'd be getting about $14k a year? That didn't happen.
I think a couple years we made maybe $1200 ish at the high point.
Several years after they capped the well, we'd get litigation papers where very large land owners sued the mineral Co for shorting them.
Think we may have gotten a couple $150 reimbursement checks out of those deals.
We still have the rights and several companies have contacted us over the years trying to buy the rights but we just hang on to it.
OP
OP
PaunchyPirate
Thinks s/he gets paid by the post
I'm the OP of this thread. I thought I'd update it now that a very significant thing has happened to my mother's mineral rights. As mentioned in earlier posts, she was contacted by a gas production company in 2024 and told that she owned mineral rights for 3 parcels of land in West Virginia. We hired an attorney to negotiate the lease and he successfully added several clauses to the contract to better protect my mother and got about $5000 more of a signing bonus than was originally offered. This summer, we started to get document from the production company indicating that drilling had commenced in March 2025 and they would soon be paying my mother royalties. Yippee! I sort of expected payments on the last day of August and then the last day of September, but it can take some time, so I was not worried. Well, yesterday, the production company sent me an email indicating that they had recently discovered more documents that indicate my mother (and all the other family heirs) did not actually own the mineral rights any longer. They were actually sold in 2002 due to unpaid taxes to the county government.
In WV, mineral rights are taxed (a small amount) even if they remain in the ground. As it turns out, no one was paying those taxes for many years in the late 20th century. So they were sold in 2002. The production company sent me the info needed to find the tax sale documents in the county's online records website. Sure enough they were sold to a company that specializes in doing this sort of thing. Part of the tax sale process was to attempt to notify the owners of the rights. But the information they had was woefully out of date. They sent a letter to my grandfather in 2001, but my grandfather died in the mid-1960s. The address they sent it to was probably one used by someone in the family at one time, but not in 2001. So the letters were returned as undeliverable. The county is not responsible for tracking down family lineages so since no one was paying, they sold the rights.
Mom is disappointed, but that is life. This was for mineral rights we never knew we had until we were contacted in 2024. So we will just go on without the added income. The good news is that one of the clauses that our attorney added was to protect her should something like this happen. The original lease indicated she would have to pay back any bonus money if later it was revealed the mineral rights deed was inaccurate. But our signed lease indicates she will not have to pay it back. I do feel sorry for my cousins who I believe chose to not involve an attorney and probably signed the original lease that favored the production company. They also received a bonus and may have to pay it back. I doubt any of them have the money to send it back.
In WV, mineral rights are taxed (a small amount) even if they remain in the ground. As it turns out, no one was paying those taxes for many years in the late 20th century. So they were sold in 2002. The production company sent me the info needed to find the tax sale documents in the county's online records website. Sure enough they were sold to a company that specializes in doing this sort of thing. Part of the tax sale process was to attempt to notify the owners of the rights. But the information they had was woefully out of date. They sent a letter to my grandfather in 2001, but my grandfather died in the mid-1960s. The address they sent it to was probably one used by someone in the family at one time, but not in 2001. So the letters were returned as undeliverable. The county is not responsible for tracking down family lineages so since no one was paying, they sold the rights.
Mom is disappointed, but that is life. This was for mineral rights we never knew we had until we were contacted in 2024. So we will just go on without the added income. The good news is that one of the clauses that our attorney added was to protect her should something like this happen. The original lease indicated she would have to pay back any bonus money if later it was revealed the mineral rights deed was inaccurate. But our signed lease indicates she will not have to pay it back. I do feel sorry for my cousins who I believe chose to not involve an attorney and probably signed the original lease that favored the production company. They also received a bonus and may have to pay it back. I doubt any of them have the money to send it back.
djsander
Thinks s/he gets paid by the post
That’s too bad. But at least she got a check. We had a small city lot in La. And received a draft that was valid only after 30 days and the due diligence for ownership was done. We kept it, but it was never drilled and produced. My wife has a small royalty interest in Texas that were her grandmothers. They also, have taxes every year. It’s been producing so long DW gets only one or two checks a year now, usually totaling under $200. Got one a week or so ago which was a surprise and she usually just puts it in the savings account. She decided we would go wild and cash it and eat out. We do check the county tax office each year to ensure no taxes are due. They do know where we live and in the past would send us a tax bill.
street
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Lots of oil and gas in my neck of the woods. My wife has minerals on two oil wells. Her share is very small and we get a very small check from one well we have together.
I never got the oil mineral right to any land I ever bought. The ranch has oil under it and there is no wells on my land but they extract oil from under my place.
The land I bought three years back I told the guy I bought from he could have all oil minerals and I wanted water, gravel, rock timber etc. If a well does go on the land then a person can negotiate for some minerals from the owners or negotiate with oil company.
I don't want one on my land. Oil lease make private land public land and I would most likely sell out if that happens. I told one oil company some years back when they wanted to drill on my land. I told him he would have to buy me out he said we do that sometimes. I told him he wouldn't have enough in the world to buy me out. They left and never seen them since.
I never got the oil mineral right to any land I ever bought. The ranch has oil under it and there is no wells on my land but they extract oil from under my place.
The land I bought three years back I told the guy I bought from he could have all oil minerals and I wanted water, gravel, rock timber etc. If a well does go on the land then a person can negotiate for some minerals from the owners or negotiate with oil company.
I don't want one on my land. Oil lease make private land public land and I would most likely sell out if that happens. I told one oil company some years back when they wanted to drill on my land. I told him he would have to buy me out he said we do that sometimes. I told him he wouldn't have enough in the world to buy me out. They left and never seen them since.
dobig
Thinks s/he gets paid by the post
Street, can you explain what you mean by, "Oil lease make private land public land"?
I've owned numerous tracts in Pa and a couple in Ohio as well as one in NY. I've gotten the leased mineral rights on the majority of properties I've bought and besides having to allow access to the oil and gas company of record I'm under no obligation to allow the general public on my property and the same trespass laws applies to my properties as they would any privately held property. If I'm not mistaken the only time I would have to allow general access to my property would be in the case of enrolling in a state program to reduce property taxes in exchange for allowing access to the public. And even in those cases I generally would still be able to post my property and it would be up to my discretion who I gave written permission to enter.
street
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
"Private land to public land" is that when you sign all these easements for roads, pipeline, site lease, power company etc., you will have everybody and their dog accessing your land. Road make easy access to go in and out of your private land. Not saying the land becomes public land but it is the next closest thing with people in and out three or four times a day. Truck traffic and people wandering around on your place isn't what I want. It is a bad thing and decreases the value of your land and you have to put up with all the BS.
Some good replies on this thread. Petroleum engineer here with 40 years in the industry. Horizontal wells which are typical for shale reservoirs come with the caution that initial rates are high and are followed by very high decline. However, once they shallow out the declines become quite low. Meaning
Long term consistent royalty checks. A pooling unit combines multiple leases into one which are then used to create a royalty interest for each property owner tha is proportional to the acreage they contribute. The standard royalty for federal leases is 1/8th or 12.5%. If you get between 18 and 25% you’re doing well. 20% is pretty common. Surface leases are where you collect money for renting a road (which they build) or drilling pad. Only the affected acreage receives this. Don’t sign a long term lease like 5 years. 1 to 3 years is reasonable. Using an oil and gas attorney will save you time and money.
Long term consistent royalty checks. A pooling unit combines multiple leases into one which are then used to create a royalty interest for each property owner tha is proportional to the acreage they contribute. The standard royalty for federal leases is 1/8th or 12.5%. If you get between 18 and 25% you’re doing well. 20% is pretty common. Surface leases are where you collect money for renting a road (which they build) or drilling pad. Only the affected acreage receives this. Don’t sign a long term lease like 5 years. 1 to 3 years is reasonable. Using an oil and gas attorney will save you time and money.
With any luck you might eventually end up like the installations in downtown Ft Worth. Oil and NGL require constant drilling and pumping to prop open cracks. Marcellus is so generous that once the rock is fractured, gas generally keeps flowing without interruption. Once well/pipeline is finished to deliver the gas, the noise and footprint of the facility can be quite small. It all depends on the rock and product flow.My second home in Guernsey Co. OH has 2 acres. A fracking company took a five-year lease on it for <$6000 with royalties to follow. It's been a year of local infrastructure improvements and drilling. Looking forward to our first royalty check. I've been told (hearsay) these checks will be greater than the lease. We'll see sometime this year. btw...the drilling is a mile away but I can hear it overnight, beautiful countryside ruined to some degree by the industrial noises. I only signed on since all the neighbors did; and they have large plots of land. No escape, i.e. damn if you do and damn if you don't.
mailbagman
Recycles dryer sheets
From recent past experiences with gas lease. Have them limited to certain level's. I.E. Marcellus, Utica. No deductions.
mailbagman
Recycles dryer sheets
Agreed with you about Chesapeake. Now called Expand. They have a bad history of taking a lot of deductions for various reasons. Transportation of gas, drying of gas. processing of gas. I have seen a few monthly statements, where in the end you owned them money.
I toured hundreds of cell tower installations across NC for a few years. I only saw the leases for the tower access/telco, not the land itself. Tower leases are based on % of tower capacity taken by antenna installs, which varies structurally with wind loads and elevation, so it can scale faster than square of antenna elevation. Generally speaking, a tower breaks even with 2 users and earns a profit with 3. Farmers love having them since they don't use much land and you can plant right to the fence and access road. Steady cash flow helps with feast/famine ag revenue.
Koolau
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
A hundred years ago, when I was considering a j*b in the Pittsburgh area, a couple of people I interacted with warned me to be certain I owned the mineral rights to any land/house I purchased. Otherwise, the "minerals" could be extracted under said house - with no recourse for damage. Not sure all that is true, but I'm guessing it was at the time. YMMV
mailbagman
Recycles dryer sheets
Each state has laws regarding this. In PA, where I am from. The gas company can drill right up to your property line. Some states have a setback of about 300 feet.
djsander
Thinks s/he gets paid by the post
The damages part is probably not exactly true. However, even if you retain 100% of the mineral rights that doesn’t prevent extraction. Typically, oil and gas are in pooled acreage which will include minerals in your property and your acreage. You can sign a lease and get a bonus and percentage of production or not sign. Everywhere I’ve lived if you didn’t sign and retained the rights then when they are produced you get 100% royalty after the drilling and production costs are paid.
dobig
Thinks s/he gets paid by the post
Unless you signed with Chesapeake. As someone mentioned there were instances where they were charging the landowner for the gas the company was extracting. It got so ridiculous there was a big lawsuit a dozen or so years back here in Pa. From what I know Chesapeake was the exception and the majority of oil and gas companies paid the royalties as they should.
street
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I wouldn't do one thing with any oil or gas company without a high end council reviewing everything to a T. I'm usually the most positive person about everything but I would not trust one of these companies without the best advise from an attorney. I have known people that got totally taken advantage of trusting what they were signing. The lay person that can't afford paying an attorney just sign the papers.
You need to tell them what you want not the other way around.
You need to tell them what you want not the other way around.
dobig
Thinks s/he gets paid by the post
Absolutely!
And there's a big difference between a family practice attorney and an attorney who has a focus on oil and gas leases and knows all the nuances of these type agreements.
Like others here, I am also an Oil Baron. I've yet to be invited to the Oil Baron's Ball. Probably due my .000079564 Royalty. When my dad owned it, he would get around $10 every 5th year. Now that my brother and I had to split the inheritance, well, it could take a while.
I keep hoping that some new formation will be found and I'll be rich.
I keep hoping that some new formation will be found and I'll be rich.
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