We are unleased mineral owners (not by choice as it was UNO when we purchased property) and need a lease. 3 new wells permitted to be drilled. Any advice
Thank you Skip
Jay, I wish a lease hound would buy this Unleased acre. They all want leased acres and some want NO COST ROYALTY leases. Picky buyers. On top of that THREE NEW WELLS were permitted and drilling just started so it will have a great return. I have been receiving checks for about 3 yrs. with monthly documentation
I view a small mineral interest very differently...at one acre, your interest is nothing more than a rounding error to the operator. When EOG was pursuing the potential Goodland Lime play here in East Texas, I had a small mineral interest in their leasing area and held out for a 25% royalty, emphasizing that a 25% royalty was a long-established standard, and they agreed relatively quickly.
You don't need leverage when your interest is small in the great scheme of things...
full name, you have an interesting definition of "light". :-) Thanks.
Never heard of an "implied" Most Favored Nation right. Did the other operator explain how that might work?
The royalty fraction is never implied in a lease, it is clearly stated. Some mineral lessors with large acreage interests had most favored nation clauses. And some had to file suit to get operating companies to honor them. Most favored nation clauses are about as rare as hen's teeth. The average lessor would not get one.
Maybe the Operator did that for public relations reasons. It would be very unlikely that a Favored Nation clause would be involved. I was in a similar situation involving a servitude for an electric power line. An elderly and uninformed distant relative took the original offer. Subsequently after suit was filed, all the other landowners in the area negotiated a much higher payment. The power company paid him the same amount. Obviously, it had no legal obligation to do so.
under most state laws, Favored Nation clauses are rarely, maybe never, implied. If it is in writing, and from an authorized agent, then you have a good case. There have been cases (and my knowledge in this area is VERY dated) where a verbal promise of bringing payments up to meet those paid later to another nearby owner can be sufficient leverage to get increased payments for prior contracts. But, of course, the verbal promise may boil down to “he said, she said” cases. The other issue, and courts like to ignore this one, is did the person making that promise (landman) have the authority to do so on behalf of the company they are representing.
I shouldn't have used the word "implied." There are a couple of cases I am aware of from 2008. Individuals leased with a group representing what would eventually become the Operator of that section. Later on a group of mineral owners in that section organized and got a better lease. The Operator went back and offered the ones with the original lease a lease equal to what the group got. Yes I think it was public relations and it did work as those people still think this Operator is great. (Public Notice --this Operator WAS NOT CHESAPEAKE). I too have worked with this "good" Operator and they are great to deal with. In fact I have had really good interactions with all the other operators I have worked with. Most don't want an unleased mineral owner (at least from my experience). If a mineral owner is willing to work with them they usually will work with the mineral owner. One of my best interactions was with Exco.