I am a landman; I don't know Texas law, haven't seen the original lease, and don't know the status of the well. But you are not required to ratify anything, as you describe it. You are being asked to ratify participation in a unit, but signing the ratification apparently does not benefit you. Ask the landman why you should, what is in it for you? If he can't give you a good reason, why do they need your signature? If they do, it is worth something to them, so they should make it worth your while.
Ask the landman to put the request to ratify in writing, along with the reason why they need your signature.
Tell him you will then decide what to do, maybe consult with an attorney, maybe not.
If you only have executive rights, and if he can't give you a good reason to sign, I wouldn't waste any money on having an attorney look at it.
They may well be hiding their reason for asking for your signature, or maybe the lawyers are being cautious and simply think it would be nice to have you sign.
You should never sign a legal document without a reason to do so.
The executive right is a "stand alone" right covering one of the 5 elements of the mineral estate. There was a time in Texas where the executive right was a power coupled with an interest (meaning you had to have a mineral interest to have an executive right). That is no more. It used to be that the executive right expired with life of the holder of the executive right. Not so now.
Buddy Cotten
Joe Aldridge said:
First, Spend the $200.00 and see an attorney. Now it has always been my understanding as a land and mineral owner that if you owned mineral rights and sold or transferred a portion that you as the person selling or transferring them could retain Executive Rights (ER). To have ER I would think you would still own some interest in the minerals. Therefore, I don't understand you having ER on this property and not getting royalty from past production. You really need to find out what you own and who owns the rest of the minerals.
Ken G.
I’m sure within the next few days I will receive the documents by mail and get a better sense of what they are asking us to do. Your idea of asking to have their request to ratify put in writing , including the reason why they need this done is a good one. You probably said it best, “you should never sign a legal document without a reason to do so”. Thanks for your advice. Tony
Ken G. said:
Tony,
I am a landman; I don’t know Texas law, haven’t seen the original lease, and don’t know the status of the well. But you are not required to ratify anything, as you describe it. You are being asked to ratify participation in a unit, but signing the ratification apparently does not benefit you. Ask the landman why you should, what is in it for you? If he can’t give you a good reason, why do they need your signature? If they do, it is worth something to them, so they should make it worth your while.
Ask the landman to put the request to ratify in writing, along with the reason why they need your signature.
Tell him you will then decide what to do, maybe consult with an attorney, maybe not.
If you only have executive rights, and if he can’t give you a good reason to sign, I wouldn’t waste any money on having an attorney look at it.
They may well be hiding their reason for asking for your signature, or maybe the lawyers are being cautious and simply think it would be nice to have you sign.
You should never sign a legal document without a reason to do so.
I have seen the production data for the only gas well we are seemigly connecetd to. 8 months in a row in 2013 there was no as in "0" production. Q; Does this mean that our lease has expired due to lack of production? Or could there be other mitigating circumstances that could keep the the lease HBP that we arent aware of?
Since this is a gas well, you probably are governed by a shut-in clause in the lease. The shut-in clause typically allows the lessee to shut in a gas well for a period of time (sometimes many years), if production is not commercially feasible, if they pay the Lessor a nominal annual shut-in fee. If they do that, the well is still considered to be in production, and the lease is not terminated. They may be able to continue to extend the lease for a long, long time, by treating the well as shut-in.
Most leases do contain shut-in clauses like I described above.
But to determine whether the lease allows what they are doing to extend the lease term, you should consult with an attorney. If the Lessee/Operator reports the well as shut-in, they are very likely going to claim that the lease is still producing, and that your lands are HBP.
Thank you for your answers gentlemen. Your input is appreciated. Tony, it appears we will be seeing an oil and gas attorney to really settle this once and for all. That seems to be a recurring theme here.
And if they have not paid the shut in royalty, not produced in 8 months, the lease could have terminated. Possibly they have no intention to produce that well further but would like to keep the minerals in reserve for future use or to assign to someone else for profit.
I wonder if a copy of the lease will come with the ratification papers, as I really think it should. I would pay careful attention to the shut in clause. I would also be very suspicious about the reason to pool my well that is not producing with others that are. In that case I might suggest that the ratification and pooling should be made retroactive to first production of the other wells. Maybe I would get a Christmas card from the royalty owners, but I think it more likely that the answer to that would be no from the landman, in which case the lease may have expired. Much to think on.
Mr Kennedy,
For what it’s worth as to their intentions, the landman indicated to me in our phone conversation they planned to drill another well within the year. The title opinion he sent referencing our ownership was a Division Order Title Opinion prepared very recently dated June 23, 2013. I’d think they would only need that if they were planning a new drill site? Don’t know? The leases we signed in 2000 were a Producers 88 (7-69) with 640 acre pooling provision. Not sure if knowing any of that makes any difference. As to paying any shut in royalty, we have not ever been contacted by anyone since October 2000.
The royalty owner would be the one to receive the shut in payments. You would have to check with them. There is usually a grace period in a lease of 90 to 180 days for the operator to get production or be able to show they are actively working to get more or resumed production. If they claim the well was shut in so they did not need to produce or work to resume production or achieve new production then they should have paid shut in royalty.
Oil companies are not good at keeping their eye on the ball, that is why they like paid up leases because they can't then make the mistake of not making a delay rental payment and thereby lose the lease.
The lease may well have expired. If they really are going to drill a well soon, you can just wait til after they do it because as they tell you, it changes nothing right? You might end up with a well without a lease. More likely they will not drill and may start some checkbook diplomacy.
If you really are getting a new well, I wouldn't want to dilute my interest by pooling in a larger unit. Where was this pooling when the other land was getting it's wells? They were not asking then for all to share in production, were they? Nobody was in favor of diluting the royalty back then, but they are now? Your royalty owner didn't get part of them I'm sure, so why should this larger pool dilute the royalty and share in this well?
Once again we go back to making the pooling effective to the date of first production of the other well/s so the royalty owner can collect royalty from them, and then all can share in the new well. Or some other agreement that all can agree to via some checkbook diplomacy. Or possibly the lease has expired by it's own terms. You just need to know what the true situation is.
Thank you Mr Kennedy. I’m sure we will learn very soon what the true situation is. This forum has been an excellent way to learn and attempt to answer some complicated questions. There really is here a group of knowledgable and experienced oil and gas people who are willing to help by adding their 2 cents to the discussion. Thanks again!
Mr Kennedy
At the outset , let me assure you we plan to have an attorney review this request for ratification. For the benefit of any who have followed this thread and might be interested here is what we are being asked to do:
" the undersigned adopts, ratifies and confirms the terms of the lease and the unit designation and agrees that the lease is subject to all of the terms and provisions of the unit designation. This ratification is executed for the express purpose of allowing the lease to be pooled in the same manner and on the same terms and basis as provided for in the unit designation. This ratification is executed as of the date of acknowledgment of the signature below, but shall be effective as of the date of first production"
Do you get a sense of what they are really asking? Would the language lead you to think that by our signing this ratification we would in effect be renewing or reviving our lease of 2000? And why on earth would we ever want to do that? And finally, why do they need our help making this pooling retroactive to the date of first production when the well is now about done ? Isn’t it a little late to worry about these issues now? Unless, as it appears in the lease this was to be done in writing and put of record during the primary term which in our case was 3 years? That was a long time ago and just could be the problem. Hmmmm
Hi, I am joining in. I saw many wise comments and felt no need to jump in before. However, their need for you to sign may be due to pooling or unit formation or changes to the existing unit. As the Executive Rights owner only YOU can make adjustments in the lease.
I had hoped (for you) that the lease had the old 160-acre limitation, and you would have had a stronger position. However, you recently commented that it is 640 acres. Still, oil companies, who drill horizontally, encounter many strange shapes and dimensions for them to optimize the path(s) from a single well pad. Maybe this can give you some leverage. Be sure to review the original lease and any attachments.
John,
The pooling of our acres during the primary term of 3 years is what would have kept our lease intact because of the production, leading our lease to be held into the secondary term. Today it is still HBP. If though it had never been recorded within the primary term (or anytime during the lease as evidently it never has been )) then it never really was of record as a pooled Unit and thus the production which held the lease wasn’t really recognized either.
Am I way out on this? It would seem that it may be why they want it recorded as of the date of first production ( 2001 ). Nice try.
At this point, you have raised too many questions and too many possibilities. I don't think your questions can be answered unless you find a competent lawyer and show him the lease and let him investigate. But I can't tell you the money spent on a lawyer will be well spent. It may be you have nothing to lose or gain by ratifying their agreement, but you won't know unless you pay someone to study the question.
Ken G.
I agree with all that you just said. We’re about to put it to rest here and in the hands of a competent attorney. I do appreciate your point about too many questions and possibilities, guess my conspiracy theory imagination is running wild. It all just seems very unusual. I suppose one tactic other than hiring an attorney would be to sit back, do nothing, and wait to see how badly they want or need those ratifications signed. It’d be a whole lot cheaper that’s for sure. Thanks for your comments.
Tony, I just skimmed your other thread where you were being offered $1,500 per acre for your rights, if it's the same acres, that was part of the checkbook diplomacy.
Mr Kenedy,
If you’ve been following my threads and you read my most recent question under the law forum, I think you can put together what may have happened and where we are today. It’s all very unusual. I believe our operator has a real problem.
Everyone can guess what is going on or what the oil company's intent is and every other possibility in the world but until the documents have been sent and and an oil and gas attorney reviews them then it is a guessing game--
Best advise for large majority of situations on this web site is for the mineral owners/land owners to take their questions and documents to a competent oil and gas attorney---