Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on August 5, 2011 at 2:28

For a mineral owner considering a lease, there is no such thing as a "test well".  Every lease offer must be considered as legally binding for any period of production.  And that period could be for twenty or thirty or more years.  I would ask anyone using that line of approach if they are going to come back and make an amended offer if the well is productive.  I think you know the answer to that question.  I do not know New Dominion nor anything about the offer that would help me provide any further advise other than to look up New Dominion in the Secretary of State database to see if they are registered to do business in OK.  and to search the County Clerk's records for any leases they may have recorded.  If you give a description of the location of your minerals some other members may have an idea of what is occurring in that vicinity.

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Permalink Reply by Yogi Bear on August 5, 2011 at 4:19

You need to be very careful. Participation means that you will pay upfront the costs of drilling and possibly completion depending on whether you execute a joint operating agreement. That can be very costly depending on the amount of acreage you own in relation to the unit. Also, consider that when you do participate you are in all the way. You may have to participate in several wells, possibly all drilling at the same time. Also, you will be responsible for your proportionate share of any environmental damage or potential legal issues. I have worked on a number of legacy lawsuits and they can be quite costly. I believe that unless you have a stash of cash and a willingmess to assume great risk, you are better off to lease on the best terms you can or just ride the well down. Riding the well down may not be an option if you own a very large interest as this may kill the well. I am not familiar with Oklahoma laws specifically, so I am speaking in general terms.

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Permalink Reply by Sarah on August 5, 2011 at 17:08

I had to delete this post since it cut the last word off on every sentence. I reposted it below.

　Sorry it's so long.

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Permalink Reply by Sarah on August 5, 2011 at 17:16

Thank you so much Skip and Yogi for your replies. They were very helpful and I really appreciate that you took the time to read my post and offer your insights.

I should have said in my subject heading question," unleased mineral owner" rather then the term "participating". I don't think I have the guts to be an umo let alone "participate" in a well. No, I don't have that kind of money!

I'm thinking of hiring a landman because I'm really not managing my minerals very well. I don't know what I'm doing. I had a low offer a few months back from someone and since it was low, I just didn't respond. In fact I forgot about it until now. Is that what I should do? Just blow it off? I would think not.

And an offer I recieved back in 2008 in OK, was what very well may have been decent bonus and royalty but I didn't think I even owned any minerals at that point. My bil had told the funeral director when I was sitting there at the table that oil/gas royalties went to my aunt. I had no reason to think otherwise, I had not been given a will even a year after my father had passed away, so I told them they belonged to my aunt and forgot about it. That is until the second landman called me about other minerals here in Texas and sent me 3 family wills.

That's what brought me here to GHS. Thank God for GHS and the internet that levels out the playing field. Don't mean to get side tracked...all that is to say there have been 3 offers that I haven't done a thing about.

The one I did do something about, (Shelby Co.) because Devon's landman drove up here to Missouri to get their contract signed... I ended up spending 4k on an attorney only to have Devon back out. We didn't even get to counter offer. Also I was told I was owed 50k-60k back royalties from a well that was in that same field that turned out to be false.

So that was disappointing. My aunt has been recieving royalties on that well for over ten years. I am concerned that these other offers that I've not acted on may put me in the same situation of not getting paid royalties for wells which could be located where my minerals are.

I haven't been able to attend any mineral owners conventions and I feel like I am stumbling around in the dark.

The other offer in Sabine county, I think I did the right thing by not accepting as that area is in the process of being proved up.

I'm wondering will any of these previous offers in OK, come back around again? Or am I in the same situation as the well on my minerals in Shelby that is producing but I will never see royalties from?

I just paid a bill to an OK oil/gas firm. I have not dealt with them myself so I have no idea if they are on the side of the small mineral owner of the big gas company? They handled the transfer of minerals in to my name. I just got the second bill sent to me, because they had found more minerals that they were unaware of. I didn't hire them and have not had any contact with them other then this second bill that was sent to me not long ago.

I also recently just recived a big stack of division orders from an oil/gas company in Sugarland that needs to be sighend by an eyewitness so I can send them in. I have no idea if the back money they are holding until they get these division orders back is correct or not. I know this is a dumb question, but how do I verify that? In the past my method was to accept it on blind faith.

Do I hire an attorney in OK? A landman? Both?

These minerals that I started this discussion about are located in Baker-Hyden #1-25H Section 25-11 N-6E Okfuskee, Pottawatormie, and Seminole Counties, OK.

They just give the legal description and not where my minerals lie so I guess I need to ask them what percentage of the minerals are mine.

Thanks for reading and thanks for any opinions you have to offer.

Oh my gosh, just read the article from AP saying S&P just downgraded our sterling AAA credit rating. Totally off subject I know, but that is scary. 2012 can't get here soon enough.

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Permalink Reply by Skip Peel - Mineral Consultant on August 6, 2011 at 1:48

Sarah, you need to have the legal instruments (wills, successions, judgement of possessions, donations, etc.) filed in the county records where your mineral interests are located.  This will allow anyone searching the records to know what you own and how to find you.  You can do this yourself with little cost.  As to anything beyond that it becomes a question of cost versus the size of your mineral interest and therefore its value.  The well you mention catches my attention because of the "H" in the name.  That means it's a horizontal well and may have been drilled in the last few years.  It alone may be of sufficient value to invest in attorney's fees and a landman.  Good Luck.

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Permalink Reply by Joe Aldridge on August 6, 2011 at 2:20

Sarah,

Personally, I never hire an attorney in a leasing situation unless the Lessor/Operator will cover the attorney's charges and agrees to it upfront to me and my attorney. That is a given as far as I am concerned. I don't know anything about OK Mineral law so I can't help there. If it were me; I would sit back and let these lessor's come to me. If they wanted to deal with me then they agree to cover the legal expenses and I would put them in touch with my (your) attorney. I'm sure there are numerous O&G attorneys in OK. I would meet with several (until I felt comfortable with one)  and tell them my (your) situation. That first meeting should be free. I hope this helps. 

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Permalink Reply by Scott on August 6, 2011 at 4:59

Sarah, I'm very familiar with oil and gas law in Oklahoma. I'm an independent landman here in Oklahoma and I buy leases, minerals and participate in wells. I will look into your legal description and I will find out if this is a fair offer. By the way, New Dominion is a very capable operator with tons of cash. 

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Permalink Reply by Scott on August 6, 2011 at 5:35

Sarah, it appears that is the going bonus and royalty rate in your area according to numerous poolings that are located in that general area.

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Permalink Reply by Sarah on August 6, 2011 at 16:15

Thanks you everyone for your replies. They are very much appreciated.  

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Permalink Reply by Skip Peel - Mineral Consultant on August 7, 2011 at 3:36

Sarah, I would always consult an experienced O&G attorney even though I am a landman.  Experience in my field has taught me that every situation is different and that mineral codes are complex and generalizations are often not applicable.  The key for me is the term, "experienced".  I would want someone with ten or more years experience in a practice that included a good percentage of O&G work.   Experienced and reputable O&G attorneys charge by the hour and often allow a cost free first meeting to establish the facts and lay out options.  A good example, available her on GHS, of what happens to those who do not consult an experienced O&G attorney can be found in the numerous discussion threads contained in the archive under the key words, "no cost royalty" or "cost free royalty".

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Permalink Reply by Scott on August 7, 2011 at 6:47

Skip, I have a tough time believing you would consult an attorney before signing your own lease. It would be a waste of money in my opinion if your familiar with this biz as I know you are.

 

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Permalink Reply by Skip Peel - Mineral Consultant on August 7, 2011 at 7:00

Scott, the example I give above is exactly why I would consult my O&G attorney.  One read through of Henry's discussion about royalty deductions will reveal that not all "no cost royalty" language gets the job done.  And the difference in income is significant.  I would have never imagined that some operators would charge for transportation and treatment costs that shouldn't exist with the average HA horizontal well.  The gas is so dry and under such extreme pressure that it doesn't require compression nor dehydration.  Those who consider a few hundred dollars to be wasted money are welcome to their opinion.  I could go into the differences in the wording of depth limitation or vertical Pugh clauses but I don't wish to get into compiling a list.  I do wish to make the point that experienced O&G attorneys provide an important service for a more than reasonable cost.  I can get my O&G legal work done quite reasonably because I am capable of doing all the requisite research and can provide all the salient facts and documents.  Mineral owners can do the same with a little help from GHS.

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