If five members of a family each own a percent of only the mineral rights to a small parcel (20 acres in California), and three sign a lease but the others do not, will the rights of the signer or the validity of the lease be affected?
Mary:
The rights of a mineral owner who owns a percentage of a mineral area along with others will be able to lease their share of the minerals as they want with no problem. One owner may lease to XYZ Company and it is possible for the others to lease to ABC Company. Only problem, the less acreage you have, the impact of getting optimal lease terms may be at risk.
Mary,
I hate for you to get confused. Here is the best answer. Say there are five brothers and sisters named Harry, Barry, Allison, Brooke and Darcy. They each own an undivided 1/5th interest each in the minerals inherited from their mother, Hortense. Allison, Brooke and Darcy are on one lease form, and they all sign it. Harry and Barry don't trust oil companies, and refuse to sign and they are not on the lease form with their sisters. Then the oil company will have a 3/5ths undivided interest under lease. That is legal. Allison, Brooke and Darcy are free to lease their interests, while Harry and Barry are free to NOT lease theirs.
Nowhere in your question does it say that all siblings were on the same lease form. I think that you just wanted to know if some siblings could lease, while others refused. The answer is yes. Anyone is free to lease their undivided interest, or free not to. Sorry for the confusion.
Just to prevent any further confusion, Allison, Brooke and Darcy may also sign separate leases with only their individual names on them. They each may also sign three separate leases with all three names on each lease, but with three different signatures (Allison, Brooke and Darcy) if counterpart language is added to the lease. However, I still believe that your original question was what if Harry and Barry do not want to lease? I hope that the combination or stacking of these replies answers your question.
I appreciate all the responses and clarifications. We all received separate leases, so you've confirmed that we're all treated as separate and independent entities. Thanks very much.
That is correct, and you are welcome.
Each mineral owner is free to sign or not sign, but the fewer that do sign, the less the chance that the oil-and-gas company will include the 20-acre tract in their drilling unit. And if your tract is not in the drilling unit, you don't get a royalty check, which is the ultimate goal (residual income in the form of royalty payments, hopefully over many years). So those that do sign should encourage the ones holding out to get the best deal they can but to eventually sign for the benefit of ALL. The good news is that the larger your tract is the greater the chances that it won't make sense for the oil-and-gas company to cut you out of the drilling unit. Twenty acres is a pretty good size acreage. Good luck.
The other thing that might happen is the oil company could “force pool” and those that did not sign will get what ever the judge feels is ample…which is normally less than what you can get from a oil company…oh yea and NO BONUS MONEY!! I would check in your are to find out what they are paying for bonus money and show that to the sibs as well. remind the sibs that they DO NOT have to sign the lease that is given to them from the oil company as it can be ammended to have what ever they are comfortable with…keep in mind that they oil company may say no, but the more they get into the thought of signing a lease the more they will see how it will benefit all of you.