Replies to This Discussion

Permalink Reply by Ken Boone on October 7, 2012 at 7:44

I'm not sure I comprehend. Are you saying that the cost to do the succession can come out of the estate? Does that mean that the lawyer can agree to get paid on the back end?

As of right now, the only thing owned by the estate is the land and the royalties from it. There were old wells, where money has been put into escrow as well, and currently pumped ones too.

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Permalink Reply by GoshDarn on October 7, 2012 at 7:26

Ken:

I'm not a lawyer, so I'm only giving you a layman's opinion.  Please excuse my misinformation if I'm wrong.

First, if folks don't want to pay into the cost of a succession, then there is no way to make 'em do so.  Also, I don't think those monies can be recovered per their legal-fee portions, either, if they choose not to participate.

In other words, the main relative causing the problem more than likely wants to prevent a division of the estate by causing such roadblocks.

So it seems to me that it's actually an equation of return on investment, in that if the heirship is rewarding enough to those who are willing to pay their share, then they should just go ahead and divide up the whole succession cost and give up on the holdouts agreeing to pay.  Note:  Because there are so many on-board heirs, the cost to each probably won't be a great sum of money.

Plus, if you've done your due diligence, then you should have a rough feel for the inheritance payout (or at least have somewhat of a dollar figure on it).

Note also that if the main bad apple probably truly believes s/he is right in wanting to cut out so many of the other heirs, in that there might possibly eventually be some sort of court action taken to prevent the others from participating in the heirship.  And you need to be prepared for that if it happens.

Now, there is also yet another gambit to consider.  If there is someone in the family whom the holdout/s trusts or whom is well respected by most members of the extended family, then that "peacemaker" could possibly explain the benefits to all to proceed fairly (with all on the same page) so as to eventually attain the royalties due.  Yet, from your explanation, that gambit seems doubtful per the bad blood and the thinking of the problem relative and of those who are listening to his/her side of the issue.

Lastly, the operator won't care who pays what into the succession.  The operator's land office only wants to know who the legitimate heirs are.  That's all.  The family squabble isn't the operator's problem.  And until there is a clear line of succession -- if the operator's land office is probably doing its job -- then the royalties monies will stay in escrow until this legal issue is properly nailed down.  Yet to be sure, the operator -- if they don't know -- should be informed of the heirship dispute and as to the problem of succession so as to freeze the payout (just to be extra safe if the operator already hasn't been brought into the loop on this).

Finally, with so many heirs, $26k doesn't sound to be a tough amount to raise so as to clear all of this up.  Indeed, life ain't fair.  It never has been.  There will always be bad apples, and there will always be folks who don't agree with other family members or who don't want to pay their fair share.

Not uncommon.  When it comes to large sums of money (or perceived large sums of possible royalties) -- people want what they want.  Many times it's not about being fair.   It's about me-me-me greed.    

So try to make peace first, and if that doesn't work, try to wrangle enough heirs to pay for the succession without the bad apples.  And if that doesn't work, just wait for the main bad apple to eventually wake up and smell the frac fluid since that person won't be getting any royalties anytime soon, either (as best as I understand it) -- until the operator is satisfied with the legalities of the succession.

Oh, and maybe one of the GHS lawyers will chirp up with better advice or maybe one of the "pro" landmen will cough it up since they've seen such cases like this many times before in their careers (we can only assume).

In other words, when it comes to money and extended families, the rotten apple cider can hit the fan and cause awful smellin' woe, that's for sure.

Good luck.

GD

 

 

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Permalink Reply by Ken Boone on October 7, 2012 at 7:39

Thanks for the reply. I figured as much. Just trying to exhaust all the options.

Is there a way to request from the oil company the amount in escrow, to maybe show the other heirs who may be hesitant? Maybe that will put some fire under their butts.

Or will the gas company say they can't give out that info until they see the sucession complete?

Again thanks for all the help.

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Permalink Reply by GoshDarn on October 7, 2012 at 7:59

Ken:

Doubtful . . . since the succession is still not nailed down, which means that the operator might not be able to release such private info to someone who simply claims to be an heir (and might hopefully one day be a legitimate heir) -- but whom hasn't the court on their side as of yet.  It would be a case of privacy. 

Also, operators tend to keep such info tight (sometimes).

That said, if you know the amount of land involved and if you know the number of wells drilled and if you know the production volume and what the old lease/s stated as to royalty share, you could work up a very, very rough guesstimate based upon the length of production and the O&G volumes as stated on SONRIS.

Or, y'know, if you know a helpful landman or insider who's worked for that operator, they might be able to give you some ballpark idea of the generalities.

(Maybe or maybe not.)

Never easy.  I wouldn't hold your breath as to getting the amount from the operator.  Note:  There could be someone else in the family who is already in royalty pay and who has other productive acreage with the said operator, which means you might could get a feel for a per-acre royalty figure per a rough guessing.

Finally, unless it's a mineral estate of say maybe at least 5 acres -- on the low side -- with a decent lease in a Haynesville super well/s area that's been drilled . . . per the number of heirs, you might lower you expectation on monies due.  In other words, with such a large division and with few acres (if true) and with low NG prices, you might have a false sense of the monies involved.

Conversely, on say 100 acres and several HA wells with good IP's and strong long-term production -- you could be looking at a good bit of money in escrow and certainly some serious long-term payout per all of the future HA to come as alternates in the next ten to twenty years or so.

Good luck.

GD

 

 

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Permalink Reply by Ken Boone on October 7, 2012 at 8:34

For this particular land it is 40 acres and there has been a company pumping oil since 1977 all money is in escrow. do this sound like it would be alot

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Permalink Reply by Henry on October 7, 2012 at 13:40

Can you revise what you are saying the cost of the succession is?  Is that the size of the estate -- the $26000k that you quoted?  I think the cost of a basic succession shouldn't be more than several thousand dollars.  I had to pay for one a few years back and it was $3k. 

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Permalink Reply by Skip Peel - Mineral Consultant on October 7, 2012 at 13:53

Before making any decision regarding the value of past royalties held in escrow I suggest contacting an experienced O&G attorney.  In general LA mineral law limits the liability for payment of past royalties to three years.  Or you could just ask the operator.  Don't assume that there is a pile of money to be had with the filing of a succession.

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Permalink Reply by Ken Boone on October 7, 2012 at 14:29

ok. so on the well that has been pumping since 1977, they are only responsible to pay for the past three years? Is that correct?

Will the operator tell me the amount before the succession is done?

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Permalink Reply by Skip Peel - Mineral Consultant on October 7, 2012 at 14:44

Probably but may depend on specifics that's why you may need an attorney.  The operator should be able to tell you the amount of accrued royalties.

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Permalink Reply by Ken Boone on October 7, 2012 at 14:27

Yes that was quoted as the cost to do the succession, on a 40 acre property. This amount covered geology search,  succession and a title opinion.

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Permalink Reply by Hopeful About Natural Gas on October 7, 2012 at 20:43

over a quarter million dollars just for the legal paperwork?

that 40 acres should have gas, old and gold too!  That's a huge sum.  Please get a second bid!

Skip's idea of a real o&g lawyer is good - and you can often get a first meeting for free. I've read some names here, and maybe others can toss them out ...

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Permalink Reply by Ken Boone on October 8, 2012 at 1:07

that was $25,000

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