CINDY RINAUDO

EXCO wants our acreage for a well pad

EXCO wants to lease 6 acres of our family property on Bradshaw road in Desoto Parish. We already have leased 40 acres of this land for mineral rights but NO surface rights. Exco wants to put a pad on the 6 acres to drill 2 wells, one well for our property and one well to extract from the neighboring property. We would receive no royalties from the neighboring property. This 6 acres is  prime road frontage property. We have not decided if we want to lease our surface right. There are some trees on the 6 acres and a small storage building that would have to go. How much should we ask Exco to pay us for the 6 acres if we lease the surface rights??? Does anyone have any idea what we should negotiate for.

Tags: exco

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Permalink Reply by Joe Aldridge on February 11, 2014 at 7:11

I agree with Max. The family must get together and do this as a whole. I know some families have internal issues but you really need to try to get past any of those problems. The whole is by far greater than the parts.

I'm not sure you guys understand the position that you are in. You really have an unbelievable opportunity here. Please try to get together and get a "GOOD JUNKYARD DOG" lawyer. They will probably try to play "hardball" so be ready for it. You may have to go outside of your local area to find an attorney that will go against them. 

Whatever you do get an ORRI in any well or wells that are drilled and produce from your site.

Permalink Reply by Skip Peel - Mineral Consultant on February 11, 2014 at 9:09

Cindy~

Under LA law an "independent" executor would have the right to enter in the OG&M lease for the 40 acres and the 6 acre surface lease. Although your mother's will left fractional interests to all the heirs that does not necessarily give all those heirs the authority to execute a  lease.  It is possible that the executor has the sole authority to enter into both leases.  Regarding your statement that "All of the heirs were required to sign a lease to lease out the mineral rights when mom was alive, wouldn't all of the heirs have to sign to lease the surface rights?",  I think what you may be referring to is a "Ratification of Lease".  It is common practice for a lessee to offer a "naked owner" a ratification of the lease executed by the holder of the usufruct.  You are not "required" to sign it and the lessee's rights under the lease are not compromised if you do not.  The "lease" to the 6 acres could also be a "ratification".  If so there is no recourse against EXCO.  If however EXCO accepted leases executed by an executor not specifically empowered to enter into such an agreement and compounded the error by removing the trees and demolishing the storage building then you would have a cause of action against the company.  The number of heirs in agreement or not in agreement really doesn't matter if the executor is "independent".  IMO that's what you need to determine before taking any legal action.

Permalink Reply by Thomas C. McKowen, IV on February 11, 2014 at 9:25

According to Cindy's post on 11-12-13, her father owned 1/4 interest and left it to the children with a usufruct to her mother.  If such is correct, the children would have to sign the lease to encumber this 1/4 interest.  The Independent executors of the mother's succession could only lease her 3/4 interest.

Permalink Reply by Skip Peel - Mineral Consultant on February 11, 2014 at 9:34

Thomas,  Cindy's father could very well have owned a one quarter interest and left it to his children however that would not preclude him from giving usufruct over that one quarter to his wife.  There are owners and then there are naked owners.  Only the person holding the usufruct would have the authority to enter into an OG&M lease. 

Permalink Reply by Max on February 11, 2014 at 11:04

Skip, as I understood the estate matter, the father passed years ago, leaving the mother and four children.  One child died before mother died, and left four children.  Mother had usufruct and leased out the property.  Mother died. 

Two years later, the estate has not been settled, and the executor signs a 6 acre surface lease with only 3/4 control of that 6 acres.  I thought the usufruct, and it passing from the mother to the executor was not possible.  The whole matter is complicated and I don't think Cindy will ever find out anything unless she willing to hire the people who can.  The truth of the matter, it would be better to sign the papers and get things over with, then move on. 

Permalink Reply by Skip Peel - Mineral Consultant on February 11, 2014 at 11:34

Max, there are other "what ifs" involved..  If one heir (child) owned one third of the remaining one quarter interest not controlled by the executor they would effectively own an 8.3% interest.  Cindy states that, " One other heir signed to lease the 6 acres but the other heirs have not signed and are not going to sign for this amount."   The executor and that one heir represent 83.333% of the undivided interest in the 40 acre tract which includes the 6 acre location.  In certain circumstances regarding undivided interests in a tract and rights of exploration and development the state requires that 80% of the undivided ownership interests grant those rights.  It's tough to offer accurate advise without a clear knowledge of the salient facts.  Disclaimer:  IANAL.

Permalink Reply by Max on February 11, 2014 at 15:32

Skip, good point...would the executor's share of interest count, along with the other heir and the estate, totaling more controlling interest (3/4/estate + 2 heirs)?

Permalink Reply by Skip Peel - Mineral Consultant on February 11, 2014 at 15:48

Hard to say, Max.  Not enough information.  If the executor is independent and controls 75% it is possible that the one heir Cindy mentions may have an ownership interest that breaches the 80% threshold.  In the past the 80% minimum participation for undivided ownership interests was more common regarding "lease" wells.  I'm not sure if it relates to Cindy's situation regarding surface use of the 6 acres.  I'll reserve further judgment hoping she can provide more specifics.

Permalink Reply by Thomas C. McKowen, IV on February 11, 2014 at 11:15

Max is correct.  Usufruct terminates at death.  But, I would not agree that it is best to sign and move on.  Based on the facts as I understand them, EXCO has committed a serious trespass.

1kw6x71km1v37Permalink Reply by 1kw6x71km1v37 on February 11, 2014 at 14:14

The "executors" have absolutely no legal authority to lease the 1/4 undivided interest your father left behind. The landmen have screwed up big time and are attempting to cover their derrieres, possibly before the operator finds out and fires their lying derrieres. You are in a perfect position to demand a 50% royalty, or more.

Permalink Reply by Joe Aldridge on February 11, 2014 at 15:08

CS,

As I said before they are in the driver's seat. They need to go for damages, a commercial lease on the 6 acres and a ORRI in any production from any and all wells. That's in addition to the 50% royalty that you suggest from their acreage.

Permalink Reply by Max on February 11, 2014 at 15:49

cheap shot, "executors" come in all flavors...good, bad, and ugly.

They also come with a lot of power and can do many things, so choose wisely when you're picking one to take care of your estate.

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