Another ornery question about division orders and inheritance


#1

Our story is this: My sister and I are receiving division orders for owned interest in the Tina and Ferguson horizontals, of which there are quite a few. They sent two copies to be signed, I assume one for each of the two heirs. After the listings (Newfield) there follows this clause:

 "***DOTO-This interest is subject to a title defect.  Execution of this Division Order is required for release of suspended funds and to waive need for additional documentation."

What the heck does this mean? The way I read it, (and as both of the heirs and a capable land man have not succeeded in finding written evidence of our continued ownership, or written evidence of sale of same)… am I to understand that just signing the Division Orders will magically make discrepancies disappear? What if my grandparents gifted these shares to someone in a drunken stupor one Saturday night decades ago? (Sorry grandma, its a figure of speech!) All of the interest types (which are QUITE small) are followed by the three red asterisks denoting the quoted statement above. Will my signature “waive need for additional documentation?” Our main inheritance was in Texas, where probate was needed. But in Oklahoma we did not do probate. The deed for the larger portion of producing mineral rights was quite clear. But these tiny fractions of contiguous sections are a mystery. What if, after years of receiving our little checks, someone claims that they are actually the owners, and they are correct?
We have been receiving a constant stream of offers to buy these tiny portions of Garvin County, as well as notifications of hearings before the Commission requesting various forms of relief for existing wells. If we don’t actually own the rights, why are all these other entities constantly notifying us?
In the interest of finishing my annoying questions I will stop. And I really appreciate anyone’s knowledge or, even better, similar experience!


#2

first off, that was actually a pretty witty and funny post (sorry that it was at grandma’s expense). you are getting all the offers because you are listed in the various regulatory filings the companies make when they are seeking to develop in the area where your assets are located. Where all the assets held by the revocable trust, or were there assets outside the trust that passed to you as well?

The title defect could simply be the missing ancillary of the probate you filed in Texas so that they have a complete chain. I guess by signing the DO you are more or less providing an affidavit of heirship.


#3

Let me start by saying that I am not an attorney and rarely stay in a Holiday Inn express.

DOTO Should be “Division Order Title Opinion”. I think you understand that you have non-marketable title because somewhere in the chain an estate was not probated in Oklahoma. Oklahoma is one of the many (actually most may be the better word) states that does not recognize foreign probates to convey property.

In my opinion, the operator is allowing this to waive the need for additional documentation to release the suspended funds on “this particular well only”. This does not cure the defect in the title. “QUITE small” is a relative term. But sometimes the operator is willing to take the risk and distribute funds to those were there appears to be little risk the funds being misdirected to the wrong person. That does not mean in the future another operator will accept that same risk on another well on the property. They may not even assume the risk on this same well bore if they buy the well from Newfield.

Two copies? Usually one is a file copy for you to keep. Whose name is on the form? That is who the division is for.

I glanced at the title trail and part of it “appears “ be clean. Lots of transfers but it looks straight forward in recent years. I’m assuming your sister is Karen, who sold a portion of her rights last year.
Based on all I have seen she should have her own division orders which should have less than half the Decimal interest than you have on yours. They should not be combining these interests on the same division order.

The offers to buy are recognizing you as an owner. They may not have ran the title and are blinding putting feelers out only based on you being listed in the various OCC (Oklahoma Corporation Commission) applications. The OCC does not scrutinize these, the info comes from the operator making the application. The landmen do their best (hopefully) to determine who has an interest in the property. The final title opinion comes later from an attorney. He will identify all of the defects. It is up to the operator to decide what they will do with them. I find that they are willing to overlook defects to be able obligate someone to a lease. However they sometimes will not place them in a pay status once production is established and the dollar amounts go up.

As part of the most division orders, you are agreeing to the decimal interest in the well and agreeing to pay back any over payments. You will usually find language such as these two lines below.

“The undersigned certifies the ownership of their decimal interest in production or proceeds as described above…”

“The undersigned agrees to indemnify and reimburse (company name) any amount attributable to an interest to which the undersigned is not entitled……”

They should be willing to tell you what the actual title defect is. Almost universally, Division Order Analysists are great to work with. See if you can get in touch with them as ask for that portion of the title opinion that creates the defect. Grand Pa’s estate was not probated but it is assumed Grandma got his share and that may be the only defect. Then you need to decide if you are willing to assume the risk and take the payment. Time could be on your side and allow you to prevail regardless.

The operator “want’s” to get you in pay status to avoid having to mess with suspended funds. And to avoid the possibility of paying interest when holding these funds.


#4

:grinning: good one Rick

While no one can be 100% certain, I tend to agree with Rick on this.

This is a good ‘qualifying statement’.

I’d bet money they have not actually run title. As Rick shows here, there are often title “issues” that are set to the side, not fully vetted, not even discovered, etc. up and until the point that $$ is produced from production, and must be dealt with and distributed properly. That’s the point at which real detail must be nailed down. And the more $$ at play, the more important and accurate this needs to be. And, as such, the less $$ at play, the more ‘loose’ this might be played.


#5

Thanks for your insights, Rick! You are a valuable resource indeed.
Here is the thing that makes this “sticky:” The division orders are addressed to my mother, who died in 2012. We have the legitimate passage of the main acreage rights (that would be the part that my sister sold last year) and all correspondence is addressed to my sister and me. But there is no clear passage of the rights in these persnickety fractions in other sections. One of these lies smack in the middle of the Purdy cemetery where my folks are buried, which makes it kind of ironic somehow…My mother’s family originally came out in the land rush and had various farmsteads over the years in Garvin county.
My mother was a geologist and she bought many tiny portions for less than a dollar back in the day, knowing that “some day” they would have value. Smart gal!! But then, (possibly out of remorse for having been smarter?) she later gifted them to various relatives. Again, the bigger chucks are easily traceable and have been easily identified. But again, not all, and the land man who did research for us during the Texas probate couldn’t find anything to clear things up. In his words, “I can find no evidence of your mother owning these rights.” (I am talking about section 23, 3N 4W.)
So what would you advise? We have been reluctant to do probate in Oklahoma mostly because of ignorance and distance. Do you have any advice on carrying this out and what is involved?
Thank you so much, again, for sharing your knowledge.


#6

Thanks, Jeffrey, for the insight. Please see my reply to Rick, and if you want to add anything please do!! This is all so aggravating because of our lack of experience in Oklahoma law, among other things.


#7

Thank you, Kenny. Every little bit of input helps! I agree with you, I think they are just pushing the orders through in hopes of having a cleaner cash flow.


#8

Sandra

I know several attorneys that may be able to help you. If you would like, PM me and I will forward their contact information to you. It may be simple to file the required forms to create the chain of title in Oklahoma.

regards
Jeff


#9

Thank you, yes! Please send me the info and my sister and I can get on this as soon as possible. I’ll let you know how it turns out; happy ending is a check or two!

Sandra


#10

Sandra. I just sold a lease in Garvin County, Section 23, SW4 to the Fractal Oil Company. This land is 5 miles west of Stratford OK and north of Highway 19. It borders Section 13 on the south. Hoping for a well. Did you have ancestors who lived around Stratford? Sammie Dykeman Kendall.


#11

My mother’s family were Cavitts, Horns, Grahams and Evans. They settled around the Purdy area in Garvin country. The Purdy cemetery pretty much tells the story…many relatives buried there, including my parents recently, and some are in the Greenhill cemetery, north of Lindsay. There are a whole bunch of Billingsleys who are distant cousins who still live around the area. Good luck with your well! We are awaiting news on our new ones, fingers crossed.