Hi All,
My family has about 800 acres of mineral rights in Mississippi. A group recently tried to lease it from us. We decline their offer. They told us that they had everything around us leased. My question is in the day of horizontal drilling, what would stop someone from drilling under our property without a lease?
Thanks for any help.
Not exactly along your line sir, but after we had leased our land in ND and started receiving royalty checks I started mucking around on the ND maps. I found “our” well but it wasn’t on our land, instead it was a mile or so to the NW. I checked and found that yes, the well was indeed not on our land but was drilled horizontally under our land so that the revenue went to us. To this simple-minded person that’s honorable, ethical and honest business.
Dear Mr. Espensen,
The oil and gas commission for one thing.
If you own 100% of the minerals and no surface, you could have a horizontal wellbore under your property and the operator does not frac your lands where your unleased minerals lie. That is the way that it works in another common law state.
Mr. Cotten;
Am I reading your response correctly? They can bore (horizontal) under your property but cannot frac the portion under you property? Is this true as well in Texas? How would the mineral owner know this?
And the other question, what if only 50% of the minerals are owned? No surface owned. How does this change the scenario?
Thanks in advance.
f.o.
Dear FO,
Since we are both Texas, let's talk about Texas.
If you own no surface and 1/2 of the minerals and the other 1/2 is leased (or any percentage, really), the operator can horizontally drill under your lands and produce the minerals. However, every tract on a horizontal well is a drillsite tract and you are able to get into the well as a co-tenant.
The more common scenario with a 1/2 MI not leased is to horizontally drill under the tract and buffer out the take points (frac zones or stages) to keep out of Rule 37 implications. For example, you have a 10 acre tract between two other tracts. 1/2 minerals is leased,which gives the operator the right to drill under the tract, they buffer out the 10 ac tract and drain you. Your recourse is MIPA or drill your own well.
If no interests under our 10 acre tract is leased, they get a subsurface easement and buffer out the tract and drain you again.
This is another great example of the non-equitable pooling in Texas. See here for the tragic effect:
http://www.mineralrightsforum.com/profiles/blogs/pooling-in-texas-part-3
Mr. Cotten;
Thank you for the information. Actually, I have an interest in the answer based on Mississippi law. I am fortunate enough to own 100% minerals and surface on my Texas property. I assume Texas and Miss. have similar laws regarding this example; if you know of specific differences I would appreciate your thoughts and any recommendations you might have for Mr. Espensen's situation since I kind of hijacked his thread.
f.o.
Brian,
I, too, am a Mississippi mineral holder on a couple hundred acres. I was interested in the conversation between you and Mr. Cotten because I have the same concerns in a lease being negotiated in Wilkerson County as we speak.
The language of the lease clearly takes away our right to profit from horizontal drilling if they so choose.
They are unwilling to change it which leaves us in a Mexican standoff.
Mr Cotten surely appears to have a broad knowledge of the industry, huh?
Any activity, especially that in the Tuscaloosa Shale that you run across, I
would appreciate you posting it for my viewing. Information has been so
hard to come by especially when you are a layman in this business.
Thanks!
Hi Robert,
Unfortunately, everything that has been said is posted above. We are in the same situation as you. They offered a lease and we said no thanks. Their terms were not even interesting. That is where it stands now. We have had some discussions with a person in the oil business whom we consider to be knowledgable enough to trust, and he agreed with us that the offered lease was a farce. I know nothing about the oil business, but intuition asks the question if they could drain you without a lease in place, why would they even be willing to offer one! I will say that they approached us twice. The first time was with a "this is our terms, they are not negotible" attitude. The second time, they doubled the offer on the upfront money. I expect we will eventually have to hire an attorney to represent us.
Sorry I could be of no more help.
Brian
Robert E. Buie said:
Brian,
I, too, am a Mississippi mineral holder on a couple hundred acres. I was interested in the conversation between you and Mr. Cotten because I have the same concerns in a lease being negotiated in Wilkerson County as we speak.
The language of the lease clearly takes away our right to profit from horizontal drilling if they so choose.
They are unwilling to change it which leaves us in a Mexican standoff.
Mr Cotten surely appears to have a broad knowledge of the industry, huh?
Any activity, especially that in the Tuscaloosa Shale that you run across, I
would appreciate you posting it for my viewing. Information has been so
hard to come by especially when you are a layman in this business.
Thanks!
