Maybe someone can shed more light on how to approach this…
The Facts
We purchased multiple sections of minerals and have been cleaning up the title to said lands. The lands were held by an individual and is since deceased. The individual also had a trust, but no minerals were ever conveyed to the trust. An Affidavit of Heirship has been filed. Widow and 3 siblings. All involved have deeded their minerals to us.
After contacting the operator of a well for a change of ownership,
they show a lease was taken in the Mr. X Trust’s (name of deceased individual) and not Mr. X individually.
Fact 1: A trust letter agreement was never filed of record with the courthouse to begin with until we filed it in hopes of uncovering mineral deed from Mr. X to Mr. X’s Trust just a few weeks ago.
Fact 2: There is NO MINERAL CONVEYANCE of record anywhere out of Mr. X’s name.
Fact 3: Throughout the years multiple companies have leased the trust in error and had corrected the lease with an Assignment of Heirs and Ratification of the lease signed by children of Mr. X and Mr. X’s wife.
The other changes in ownership have been a breeze. We provided the operator with a copy of the recorded deeds and Affidavit of Heirship.
So to sum it up… Are we open to lease in this section that’s held by production? What do we need to do?
Brian:
In the Section which is held by production, a lot depends on the terms of the existing lease. Was there a pugh clause in the lease? You might want to think about hiring an oil and gas attorney who can read the lease in order to make a determination as to where you stand regarding this matter.
Charles Thanks for the reply. The Pugh Clause is not going to matter as this is a 640-acre spaced location with multiple wells operating. My main concern is not the lease itself but who signed the lease. I have not run into this problem before (i.e., a lease being recorded in the trust’s name (the trust does not own minerals) then a well drilled and payout going to the trust who has no mineral ownership). As I can see it, I have purchased minerals that are unleased in a HBP Section.
My concern now is in regards to what my options are going to be from the operator. A simple Change of Ownership and start collecting checks or do I argue and fight for a new lease and/or Participation?
I have seen trusts that had catch-alls to convey other property into it even if not specifically listed. I have heard of these being successfully argued to bring something into the trust as that was the intentions of trust. That is what I would expect the operator to argue. If successful, then the ownership would be then in question but could be fixed.
I’m not sure what to suggest. It could get sticky, expensive, and the operators usually have deeper pockets to go to court. I’m afraid the courts would side with what the original intention was of the Mr X.
I feel for you. I have a mess with one that was not deeded correctly (mineral and surface) into two entities. It would have worked correctly had they filed them in a specific order. However they filed them in the order to allow the screw-up to happen. Since the attorney drafted the deeds and took care of filing them….. all well
Good luck to you! Let us know what the end solution/result is.