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My two brothers and I are new to the Mineral Rights scene. During the week of July 31st, we received two separate offers (within a period of four days) from Oklahoma oil and gas-related companies to purchase our mineral rights in a 10-acre parcel in NW4 of Section 13 in Kingfisher County, Oklahoma. We had learned for the first time in these written offers that we (according to the research conducted by these companies) are the owners of said mineral rights, along with several other heirs. According to the offers, my brothers and I each own about 0.6 of an acre. One of our offers is $ 36,000 for the 10-acre parcel, which would amount to roughly $ 2,000 for each of us. Incidentally, we have taken no action on either of these offers.
Since these offers were received by us, we have done a good deal of research, most of which has been done on-line. As a result, we have quickly become aware of the complexity of the mineral rights business. We also have learned that there is a petition that will soon go before an Oklahoma court that will ask the court to approve the pooling of mineral rights in our section. So we have researched what pooling means, and as a result we have a few questions.
If pooling occurs, what kind of compensation are we likely to receive, and from whom? How will that compensation likely compare to the offer we already have to simply sell the mineral rights? In other words, is the compensation likely to be higher, lower, or about the same?
We just learned about our ownership of these mineral rights last week, the rights having been originally purchased by our great uncle in 1925 and having passed down through the ensuing generations for the last 92 years. Since we had no prior knowledge of our ownership status, therefore no formal transfer of ownership from previous records has been done by us. The question then becomes whether this transfer process can be accomplished in a reasonable period of time, for a reasonable cost for legal services, and within whatever time limits the pooling process might require. We have copies of or ancestors' wills and trusts (none of which mention mineral rights), so proving our family relationship to the original owner should not be a big issue. Any information, or advice, on this would be greatly appreciated.
Just to clarify- is the offer to purchase your mineral rights or to lease your acreage? Normally, in the pooling process, an Administrative Law Judge (ALJ) would issue a ruling establishing the fair lease bonus value for various royalty fractions (like 3/16 or 1/5). At $36,000 for 10 acres or $3600 per acre, in Kingfisher County, this sounds more like a lease bonus offer.
We have offers to purchase mineral rights. We believe that the hearing before the ALJ in Oklahoma City was scheduled on the initial hearing docket for August 7th (legal notice was published in the local Kingfisher newspaper a few weeks ago).
I can't speak to what the going rate is for leases or mineral sales in Kingfisher County. But I can say that given the very small size of your interests, and the problems you may have because of the lack of formal transfers, selling may be a good way to go for you. Owning mineral interests properly can be a lot of work and requires a lot of knowledge and experience to be done right. I don't see 0.6 acres being worth the time and headaches it would take to keep them. If you do decide to sell, you should solicit multiple offers to get the best value.
The pooling compensation would be smaller than the purchase price of selling the mineral interest. If one owns a mineral interest, then they can always lease. So, leasing, if a subset of ownership of a mineral interest. The pooling compensation, if you don't lease or sell in the interim, will come from the applicant in the pooling.
In other words, if Newfield or Marathon, or whomever, seeks to pool the section, they would send you the pooling bonus.