Foreclosure, No bank subrogation, now an unleased mineral owner
Foreclose, Commercial property, no bank subrogation (they didn't sign off on the oil and gas lease). I purchased the minerals from the bank so I am now an unleased mineral owner. At the time of drilling and for a few years after the minerals were under lease executed by the borrower.
So am I, as an unleased mineral owner, responsible for the costs of the well? (aka, do I have to wait for the well to payoff before i start receiving a royalty). Assuming I shouldn't have to pay for the drilling costs what do I do?
I appreciate any help/advice.
Thanks. Ron
Skip Peel - Mineral Consultant
Ron, FYI, the blog section of the website is hardly ever used. It is for long form, informational posts. Your question is best posted on the Main Page. Scroll down and find Add a Discussion. Your question, here, does not specify location. The rules governing unleased mineral owners varies state to state. Since you are here on GHS, you are likely a Texas or Louisiana mineral owner so please include that.
The short answer for Louisiana is that no you don't have to pay well costs. The well operator withholds production payments until the well reaches payout (100% recover of drilling and completing expense). After payout an unleased mineral owner will receive production payments equal to their acreage as a percent of the unit acres (100% as opposed to say 25% for someone with a lease) less Lease Operating Expense (LOE).
Oct 22, 2019
Ron Hance
My minerals are in Louisiana.
I will post my question on the Main Page too, if that is ok?
thank you for your help. This is complicated.
Oct 22, 2019
Skip Peel - Mineral Consultant
Yes, okay to post on Main Page. In our parlance, you are a UMI (Un-leased Mineral Interest) and as such you have rights and protections under the Louisiana Mineral Code.
Oct 22, 2019