I have been contacted by an energy company asking to sign a lease on the mineral rights. It is just a small inherited interest that was never divided among the heirs. They are trying to find the rest of the family to also sign leases, but they say the well has been producing since last year. It looks like they aren't going to send paperwork until they find everyone....and there's a lot of everyones that don't know each other.
The well is not actually on our family property, but is somehow included in a larger unit that is pooled together.
I'm not sure what to expect.
Can anyone tell me what I might expect to gain from signing a mineral rights lease? Is there a going rate for signing bonus? lease per acre?
I was contacted by phone about a lease found with my uncle/ grandfather's names on it. LOTS of descendants
to find. They already had a price fixed!! Each descendant would get about 250.00. I gave no more details
about the family and where some lived. I figured they could find them. Nomally, we ask from 1-2000.00
an acre. So far, our offers have been accepted. We have been successful in negotiating with the companies.
You said the price was fixed @$250 but that you negotiatied it to $1000-$2000? Is this per acre?
I know that different companies and production will have differing offers, but I was hoping to find out what offers others signed for to get an idea of what to inquire about.
I am told the wells affecting our mineral rights have been producing since early last year. Other than the lease amount, I am interested in personal experiences of how royalties are determined and how long it ususally takes for a company to recoupe their investments. Does a leasor not receive royalties until investment or production costs have been covered?
Any idea why they are so slow sending us paperwork? Is the gas company obligated to find all living descendants to an undivided heirship before any of the heirs can be compensated?
This price was fixed at 200.00-250. that is all. other leases we had negotiated
for the other amounts. this was per acre for the other amounts. There was no
negotiating at all for the 200.00-250. none. they had already set the price
for everyone involved. I doubt they will ever drill a well.
I believe that there are too many variables that can be involved to provide a simple answer to such a large question. Examples: proposed drilling depth, what depths a successful well will keep under lease, the royalty that you will be paid, duration of the initial lease, lease extension options, what are others near you getting for similar wells, how much activity, competition, and success have been happening with similar wells in your area, current market prices for gas, etc. etc.
A very large part of the discussion that has been going on on this board for years (most of it is still available for you to search and read) has revolved around issues concerning mineral rights valuation and contracts. You say that your family has a "small" interest. I don't know how small your "small" is, but in some locations fairly small interests can still mean fairly considerable money is potentially involved. You are ultimately looking at the possibility of mulitiple wells for every producing zone (depth) in that one piece of property being drilled over who knows how long? Decades? And the ultimate payout to you could be determined solely by this one contract that you are considering right now.
There are very knowledgeable folks who participate on this board who probably can give you better advice than I can about how to get started in learning how it all works, but my first recommendation would be to start talking to your neighbors or folks you trust in your area who may have experience in these matters. Be careful about relying on just one opinion, at least until you get some knowledge under you belt and have some basis for judging who is trustworthy and knows whereof they speak. Good luck.
The acreage has been undivided through many generations leaving no will. I don't know how many of the first generation had heirs to which it was divided or how many of the next generation left heirs. I don't know what my portion would be other than small. The wells affecting our property are Fightin Illini and Buckeye's Gas Units in Shelby county. Having no experience with any of this before, I'm just wondering about what to expect or propose in negotiating with a gas company.
I haven't seen any paperwork yet. They seem more interested in finding the rest of the heirs than in getting a lease to those of us they have contacted. The only relatives I know how to contact are waiting, as I am. I won't know the terms until I see a lease and was hoping to have a little background by then to decide if the offer is a fair one.
I see you started another Shelby County discussion about the 2 wells. I will make any further comments I can make in that discussion.
If the undivided interest spans multiple generations of the same family... the 200.00 to 250.00 per acre will result in a miniscule bonus payment whenever they decide what your actual ownership interest is... unless it turns out that you own a goodly portion of the tract. The smaller the tract and the more heirs involved... the smaller each individual interest will be.
Just as an example, I once looked at the title to 320 acres which had similar circumstances in that it had been in the same family for five generations but none had ever left a will so the land was not ever divided. They had an oral family history to depend on as to who owned what and at least one (present day) member sold their "undivided interest" in that 320 acres a few years ago.
The current owner of that interest was disturbed (putting it mildly) when an operator (producing well) sent them a division order, a lease and a $50.00 signing bonus check so they could begin receiving royalties already due from production. We stopped looking at the title when I uncovered a possible 83 heirs in the third generation who could possibly have living heirs today.
I told him he should accept their lease because the company had determined that he owned about 6/10 of an acre out of the 320 gross acres. That told me they had spent an enormous amount of time and capital on deciphering the lineage on that tract... to their satisfaction and to the best of their ability. They are not going to send out division orders unless they are satisfied that they know who is entitled to royalties and in what proportion.
I don't mean to discourage you but this type of situation gives you very little, if any, leverage to negotiate with them. It will mean a (probably) tiny royalty check once in awhile (mailbox money) if you sign their lease.
Wow!!! You guys are very helpful. I will be reading up as much as I can on GHS. It's a bit overwhelming trying to go through the site and pick out what is pertinent to my concerns.
Thank you for your input :)
Ima Dee, look on the NARO--TX website; call them & order the book "Look Before You Lease", pay for it on a card so it will arrive soon; it is inexpensive. Without membership it will be about ten or twelve dollars. You might want to consider an attorney. The lease is something you will have to live with forever most likely (if placed in unit). So, it needs to be written very carefully and by a knowledgable individual. Spending some now could means thousands more later. The book will provide you w/info where you can understand and communicate in an effective fashion.Where is the property and which company is calling?
I appear to have a portion of an acre in Shelby county. The company calling is XTO Energy