I just received a division order on a group of wells where I have title to the mineral rights but they are currently not under lease. The order has a decimal interest that was not negotiated by myself with the producer. Can I try and negotiate a better interest? Am I entitled to any bonus? The wells have been producing very well since February of this year. Thanks in advance for any advice.
Since you did not have a lease, I personally do not know how they arrive at your royalty rate. If no one else replies to your question you may have to hire a lawyer to help you with this. I am sure you are not entitled to a bonus as the bonus is your payment for agreeing to the terms of a lease. Sorry I can’t help you more and maybe someone more knowledgeable will reply to your question.
I would like to help you as much as I can, but need a little more information. How and when did you obtain your mineral Interest? What is the legal description of the land where you own a mineral interest?
I am an attorney, albeit a Texas attorney, who is also actively involved in the oil and gas business. Oil and gas law, like all property law, is a matter of state law. Therefore, I cannot offer any legal advice to you and consequently my thoughts and opinions should not be construed as such.
With that said, depending on your answers to the foregoing questions (as well as a few more), I might be interested in leasing your interest. As such, I would pay you a bonus based on your net mineral acres and pay you a royalty on your net mineral acres between 16.6666% and 20%. Ultimately I would have to contact the operator and sort this matter out with them. This may or may not require me to file a lawsuit. I have worked with operators in the past to sort out similar issues.
Alternatively, I would suggest that you hire an attorney to sort this matter out. You may or may not be able to ratify a co-tenant’s lease, in which case you would be entitled to a bonus and whatever royalty that co-tenant agreed to. Lease terms are just as important as the bonus and royalty.
If you would like to chat further, I can be contacted at brandon.herrmann@herrmannoil.com. Whatever path you choose, I wish you the best of luck.
Si, The first thing to do is contact the division order analyst from the company that sent the division order. Ask them for the equation that they used to calculate your interest. Ask them the net acres and the spacing acres and the royalty used. It is possible that you were force pooled and that you have the statutory lowest interest (but highest bonus). Or you may have been held by a very old lease if there was already production on the property. If so, they would still be able to give you the royalty amount and hopefully a copy of the old lease. Try the free route and collect as much information as possible before hiring an attorney.
If you would like to share the section, township and range, I can look up old production.
Thanks for the response. Good suggestions. There are actually six new wells, all began production in February of this year (I started a subscription with at dmr,com). Their production, as compared with others seems exceptional which is why they appear to have been drilled in the same area, at close to the same time. At this time I’d rather not give out the exact location. I think that the force pool is probably the most likely scenario, but I’ll be diligent in determining my rights and other relative’s interests. Again, thanks for the suggestion because I would like to avoid giving royalties to an attorney.
Si, I encourage you to be wary of signing whatever document the operator puts in front of you. I am not trying to be condescending, but I have no idea of what you may or may not know. This forum is littered with people who have signed enforceable contracts and now want inquire as to how they can “get out of” the contract. Generally speaking, they cannot.
You can always search for an attorney licensed in North Dakota who will take your matter on a contingency. This is just another option.
One way to look at it: You can pay an attorney once to resolve the matter or you can pay for the mistake every month by way of reduced revenue. What’s the better option of the two? That’s the $64,000 question.
Best wishes to you, my friend.
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Si, I’ve been acquiring working interest and minerals in the Williston Basin since 2008 and have worked both on the operated and non operated side. Since you are un leased and likely went non consent (elected not to participate in the drilling of the wells) when they sent you an AFE, you are getting the average weighted royalty in the unit or 16.66%, whichever is greater. I would also be interested in knowing where these minerals are located but if your name is any indication, I think I already know. You can send me an email to bahairston@gmail.com if you want to discuss further.