DIL inherited property and is asked to sign on the dotted line

California Mineral Rights Kings County, CA
1

Hi all,

I am hoping you can help. My daughter-in-law inherited land in King County that was left to her now deceased mother. It is just over 100 acres in Sections 26 and 35. As I understand from her father, my daughter-in-law has mineral rights only. Her father thinks the land was sold at some point.

She has been approached by Lone Star to lease the property. They have offered her $75 per acre for the first five years and after that she would receive $75 per acre annually. They also offered her about 1/6 royalties (17.5%). There is also something about taking it into a 20-year lease at some point.

We are across the country in Michigan and have no idea whether there has ever been drilling on this land. There could be wells there already, for all we know. So we have some questions:

  1. Does anyone know if the land in Sections 26 and 35 has been profitable?

  2. Is this 5-year lease at $75 an acre a decent deal?

  3. Is the 17.5% royalty sufficient for this area?

  4. The lease talks about paying the royalty when the company gets saleable product, or something like that. Who decides what is saleable?

  5. Can this company be trusted? They went through a lot to find my daughter-in-law and her grandmother to sort out who had rights to the property after her grandfather died. Makes me a little leery to just see her jump at the first offer.

  6. Is the 20-year lease clause reasonable?

Anything you can let me know that I can pass on to her would be appreciated!

Thanks!

2

Earlier I posted my interest in Section 35 and where it is. Sounds like we are in the same Section. I’m not familiar with those family names but we could be related? The landmen don’t want us to know each other. That is what my fight with them is over, who owns the rest and how do I contact them. I am right here, contact me and let’s see if we have relations. Our family originated in Stockton and the grandfathers purchased the leases. My cousins are part of this and a few others that I can’t find. I am on email notification here, so we can communicate.

3

Hi. I am an oil and gas lawyer in Bakersfield, California. Your questions are good ones. You say that your daughter-in-law has 100 acres but what percentage of interest does she have in that acreage? This is key to knowing whether she has a lot or just a little negotiating power.

The location is important. We need to locate the land by Township and Range in addition to Section.

Lone Star is a leasing agent. I believe that they are solely leasing on behalf of Hess Corporation. This is a very reputable oil company based in Houston, Texas.

The percentage and royalties may be reasonable depending on the area and the percentage that she owns. A 20-year lease is no longer one that we would agree to. A five-year lease, with an option for some additional time is typical, with the additional time being paid at a slightly higher rental rate.

Hope this helps.

4

Jean Pledger said:

Hi. I am an oil and gas lawyer in Bakersfield, California. Your questions are good ones. You say that your daughter-in-law has 100 acres but what percentage of interest does she have in that acreage? This is key to knowing whether she has a lot or just a little negotiating power.

The location is important. We need to locate the land by Township and Range in addition to section.

Lone Star is a leasing agent. I believe that they are solely leasing on behalf of Hess Corporation. This is a very reputable oil company based in Houston, Texas.

The percentage and royalties may be reasonable depending on the area and the percentage that she owns. A 20 year lease is no longer one that we would agree to. A five year lease, with an option for some additional time is typical, with the additional time being paid at a slightly higher rental rate.

Hope this helps.

Jean M. Pledger EHRLICH-PLEDGER LAW, LLP 661.323.9000

5

Can you tell me why Lone Tree refuses to give me the information on my relatives? I am not dealing with them until this is cleared up. I have an undivided interest in 100 acres on Section 35. My share is about 11 acres. I can’t get the information from Kings because I don’t live close and can’t go down to the recorder’s office and look it up myself. I know about my cousins and myself. I have the names of everybody but no contact information. I might call you if that is okay with you. I would like to have a contract with amendments as this is all new to me. I don’t trust them. The contract they sent makes me responsible for finding out who owns what and they won’t share that information which they obviously have.