Replies to This Discussion

Permalink Reply by Bacon on October 16, 2010 at 0:35

Have you considered getting an attorney involved on your behalf?

• ▶ Reply

Permalink Reply by Jack Blake on October 16, 2010 at 2:25

Lester G,
As much as Jack Blake does not like dealing with lawyers Jack would still have to say he'd get one involved in this deal. Your attorney may add a few clauses or scratch some out for you. For the future royalties on 20 acres of HS it is in your best interest to get professional help if you do not feel completely comfortable with the document.
Jack Blake

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on October 16, 2010 at 3:32

As the number of producing wells increases, more lessors will experience this type of situation. Only cursory title work with little or no curative is involved in leasing. Comprehensive title review and curative is performed prior to the payment of royalty. Even the most experienced title attorneys and landmen can not always perfect a mineral title owing to a number of possible problems. I am currently involved in one of those situations where there are numerous heirs, a long history of transfers of fractional, undivided interests and missing conveyance documents. When situations like this occur, it's not some unusual or nefarious ploy on the part of a lessee to require a declaration of interest. It's standard business practice. And anyone finding themselves in this situation should have an experienced O&G attorney review and approve any such legal instrument.

• ▶ Reply

Permalink Reply by LesterG on October 16, 2010 at 12:07

To
Bacon, Jack, and Skip,

Thank you all for your input. I have considered an attorney. Finding one has been tough. So Bacon thanks a lot for your input and Jack to have some clauses added or redacted would be good, and Skip your input on when and how titles get settled makes a lot of sense. Thanks all, I will contact a lawyer from Shreveport who assisted me some months back with a different issue she may be able to give me a referral.

• ▶ Reply

Permalink Reply by Jack Blake on October 16, 2010 at 15:29

Jack would refer you to his O & G attorney, but Jack is not that impressed with his. If you find a good one please let Jack(and others) know the name and number. Jack needs a good O & G attorney he likes and is comfortable with.
Good luck,
Jack Blake

• ▶ Reply

Permalink Reply by drilltheshale on October 18, 2010 at 6:39

So if they're that uncertain about ownership for royalty payment, how are they so sure that it was leased properly with the correct heirs signing?

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on October 18, 2010 at 6:53

Leasing companies often take "protective" leases without researching complex ownership interests. Anyone suspected as having an interest in a tract can be leased. When full title review is complete for division order purposes, any ownership interest that can not be satisfactorily "cured" will have the royalties placed in a suspense account. Then it will be up to those of believe that they have an ownership interest in a producing tract to have a court settle the matter.

• ▶ Reply

Permalink Reply by The_Baron on October 18, 2010 at 7:25

There are times when some issues creep up in the leaseing phase that we make a concious desision to handle later. When things are close to the wire and time is short, maybe the lack of proper fillings in an estate just aren't as important as getting ink.

Some title attourneys will want to do a good deal of curative before signing off on a tract, some are more conservative than others.

• ▶ Reply

Permalink Reply by lars bly on October 18, 2010 at 13:56

Jack,does attorney need to talk 3rd person also?

• ▶ Reply

Permalink Reply by drilltheshale on October 19, 2010 at 8:42

Skip and Baron, good explanation, thanks for the insight.

• ▶ Reply

Permalink Reply by Dion Warr, CPL on October 19, 2010 at 9:05

Lester:

Agree with the other pros here. There is no nefarious plot. Your money does not disappear if you do not sign. Royalties on the 300 acres will generally be held in suspense until the company has some sort of confirmatory document as to who to pay and how much, signed by each and every owner in the tract, if there is any question as to the true ownership of the property.

In many cases, and as certainly happened during the leasing frenzy, landmen may not have had an ability (nor the title attorney, by the looks of it) to determine full and/or clear and proper ownership. In such a situation, landmen will commonly be instructed to lease anyone and everyone who may have an interest, as best as they can, and allow the problem of royalty payment to be solved by title opinion, title curative, or until the owners themselves can stipulate as to their interest in the property. If the various owners move to sue the lessee / operator based upon breach of lease(s) in order to force the lessee / operator to pay or break the lease(s), the operator will generally file for a concursus proceeding with the court stating the facts, the basis of the title confusion, and basically plead ignorance and general befuddlement and pray for the assistance of the court to determine who to pay and how much. Any monies due to the owner(s) of the property will be deposited with the registry of the court and will continue to accrue until owners either prove their ownership, or stipulate amongst themselves who gets what.

Such a declaration or stipulation of interest does not need to be translative of title (where each party agrees and stipulates to their benefit and the benefit of all other owners and third parties as to their actual ownership in the property). The owners may merely stipulate that for the payment of royalties or other payments due under the terms of the lease, that they agree that payment under the stipulated regime is deemed to adhere to the terms and provisions of the lease(s), and considered sufficient to maintain the lease. In many cases, co-owners may actually agree to this in the lease instrument (particularly when ownership may differ from the intended payment structure; this type of stipulation is known as a directed monies provision). The most important thing is that all owners who may claim to have an interest in the property must agree and sign off on such a contract. Otherwise, it solves nothing.

Speaking VERY generally, the company isn't really concerned with who owns what in your tract; they are more concerned with paying what is collectively due under the leases so that they do not lose their lease(s). However, these types of problems originate in the fact that the ownership of the property is unclear to begin with, and to be frank, this will continue to come up in further dealings with this property unless the owners (or heirs) deal with it and act to set forth a clear record of ownership of the property.

My personal (non legal) advice (IANAL) would be that you and your co-owners are about to come into some money; set aside some to clear the cloud(s) on your title. Open successions, obtain judgments of possession, execute stipulations of interest, and do what is necessary to resolve your title snafus. Just because you and family 'know' who owns your property is not enough evidence for those who may want to do business with you (look no further than your current issue as evidence of that), and I guarantee you, if you put it off until the next generation, it will just get worse, with more people having to fight with it (or over it) than today.

Good luck with your predicament.

• ▶ Reply

Permalink Reply by shelby on October 20, 2010 at 13:46

Dion Warr,
Very well said, and thank you for your insights; I will share this discussion.
Thanks.
Shelby

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page