I discovered about 9 months ago that an operator was drilling  unit (in Texas) that included a tract in which I have an undivided mineral interest.  I brought this to their attention and they said they had a mistake in the title that showed that we were already leased but said they were anxious to get us leased.  We began negotiating.  They dragged out the process, would not contact me for months at a time. And here we are 9 months later (major lease terms were agreed to months ago) and I finally have them saying they are ready to send me the lease BUT they will not pay any past production on the producing unit.  They will only pay from the time the lease is added to the unit. 

 

I don't think there is much leverage to get them to pay back payments considering we are not a drillsite tract.  Anyone have any other thoughts? Just irks me that I notified them 9 months ago about THEIR error and now I get penalized for their slow response.  I have never had it take 9 months to negotiate a lease.

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First... get a lawyer who is very knowledgeable in Texas Oil/Gas law because i hear in Texas there's a big giant picture of a screw where royalty owner should be.  HA!  I couldn't help it.  With my limited knowledge, i think they owe you for at least 3 years of past production... plus you might get damages for violating your property rights and maybe stealing from you!  Hopefully you saved all written communications and documented all telephone calls. And hopefully your lease didn't write you out of any settlement or past/future claims.  Good Luck...I hope you get justice.

 

  Neeky, Get a Lawyer, get a Lawyer ,if your land is in the unit ,as they permitted and sent in to RRC and have failed to pay you royalty you should have every thing on your side. I would not sign a lease they prepared without your lawyer looking at it, the lease most likely will not be in your favor. Good Luck

Neeky, first of all, if you raise a big fuss they might tell you to pound sand and not lease you at all.  At that point, since you are a nondrillsite tract, you will be cut out entirely.  There is no obligation in Texas for them to lease you.  So consider how much money you are talking about in comparison to how much you potentially have to lose if they decide not to lease you at all.  I would recommend treading lightly with them.  Having said that, I think you may have an argument that at least past payments are due from the time major lease terms were agreed to, and that it was simply their (arguably) purposeful delay that is the issue.  How much leverage this gives you versus how much leverage they think they have over you given that you are a non-drillsite tract is what you should seriously consider, because IMO, I think they still have the bigger hammer over you.  Again, before you go down the road of fighting them, seriously consider the amount of money you are talking about gaining versus potentially losing.
I agree with Ben, nondrillsite, no obligation. Force pooling might be a possibility, very expensive and doubtful in this situation due to requirements to be able to do it. See if you can reason with them on past royalty. My attitude would be that something is better than nothing and when gas prices improve they might drill more wells.

 is it possible to cut out an Undivided Mineral Interest?  What happens if 

there are 2 separate mineral owners with 50% Interest each, and one is leased, the

other is overlooked in error.   Is it possible to lease some Undivided interest and

not the other under the same tract of land?

Not only possible, but commonplace.  The NPRI owners have it even worse.

 

Best,

Buddy Cotten

Mineral Manager

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