On some of the minerals I own I do not have the executive rights. Does that leave me to the mercy of the executor? I guess what I am basically asking is, if they sign a lease will I be able to negotiate with the company? Or will I just be stuck with whatever they agreed to?
Dear Dustin,
You are stuck.
One of the major issues that has developed in executive rights over the past years is that the executor is under no duty to grant a lease. Take for example, a mineral owner who owns all the executive rights who wants to develop a subdivision in Dallas. He may feel that his subdivision profit is more important than the oil lease. You have no recourse against him. His duty (which may be fiduciary, I can't remember right now) only kicks in when he grants a lease.
However, he cannot bind you to pooling. The pooling transaction is a cross conveyance of property and the executive has no right to convey your property, so you have input (limited) in that aspect of exploitation of your minerals.
Try to purchase or otherwise reclaim your share of the executive rights from the executive holder.
Thanks for the quick response. Purchasing them back is not an option, as in they would never agree to it. What I’m really wanting to know is, if they sign for $x/acre and y% royalty, does the oil company have to offer me the same?
Buddy Cotten said:
Dear Dustin,
You are stuck.
One of the major issues that has developed in executive rights over the past years is that the executor is under no duty to grant a lease. Take for example, a mineral owner who owns all the executive rights who wants to develop a subdivision in Dallas. He may feel that his subdivision profit is more important than the oil lease. You have no recourse against him. His duty (which may be fiduciary, I can’t remember right now) only kicks in when he grants a lease.
However, he cannot bind you to pooling. The pooling transaction is a cross conveyance of property and the executive has no right to convey your property, so you have input (limited) in that aspect of exploitation of your minerals.
Try to purchase or otherwise reclaim your share of the executive rights from the executive holder.
Best,
Buddy Cotten
They are not offering you anything. You are bound by the lease. You will just receive a check in the mail. You can request a copy of the lease for your records.
Buddy,
Does the Executive Rights holder usually (or always?) hold the majority of mineral interest in a specific tract of land i.e. 3/8ths verses 1/4 ? Reading your post above it sounds like Executive Rights can be split/fractioned just like Mineral Interest, is that correct? If yes, is the Leasee obligated to lease (or at least offer a lease) the majority Executive Rights holder if they are also leasing the minor Executive Rights holder?
Thanks,
John
On this particular ranch the executor has the least of the minerals
JMH said:
Buddy,
Does the Executive Rights holder usually (or always?) hold the majority of mineral interest in a specific tract of land i.e. 3/8ths verses 1/4 ? Reading your post above it sounds like Executive Rights can be split/fractioned just like Mineral Interest, is that correct? If yes, is the Leasee obligated to lease (or at least offer a lease) the majority Executive Rights holder if they are also leasing the minor Executive Rights holder?
Thanks,
John
It is my understanding that if you own half the mineral interest, the oil and gas company must
pay you half the signing bonus. If signing bonus is $1,000 per acre, you get $500 per acre for
your land. If the royalty interest is 25%, oil and gas company must pay you 12.5% royalty.
Division order should reflect that.
If the size of the unit is 200 acres, and your land is 20 acres, and royalty interest is 25%,
the division order would be:
20 acres divided by 200 acres, multiplied by 12.5%. Your division order would be 0.0125.
This is my understanding.
Dear John,
Years ago, the executive rights were a power, coupled with an interest. So, you had to have a mineral interest to have the power (the executive interest). The executive rights also COULD expire with the holder of the rights.
Not so anymore. The executive right is a singular right in the elements of the mineral estate and capable of being owned, transferred, sold, inherited, etc., with no underlying interest in any other element of the mineral estate. Bad idea, in my opinion.
However, the oil company cannot just lease the executive owner - they must lease (read that as pay the non-executives their pro-rata share of the bonus) the non-executive interest. Once the executive rights have signed a lease, the non-executives are bound.
JMH said:
Buddy,
Does the Executive Rights holder usually (or always?) hold the majority of mineral interest in a specific tract of land i.e. 3/8ths verses 1/4 ? Reading your post above it sounds like Executive Rights can be split/fractioned just like Mineral Interest, is that correct? If yes, is the Leasee obligated to lease (or at least offer a lease) the majority Executive Rights holder if they are also leasing the minor Executive Rights holder?
Thanks,
John
Buddy,
Thanks for the insight. I cant imagine a benefit of seperating out the rights like that.
Regarding your last paragraph, would those unleased/unbonused mineralsowners have a legal right of recovery against the oil company and/or the mineral owners who did receive leases & bonuses? It sounds difficult to prove as the oil company would likely say "we tried but were unable to locate them, your Honor" This very situation has happened to my family in the recent past. I have proof (stamped copies of leases) and i am not sure where to go from here. Involving an attorney would likely cost more than the unpaid bonus consideration.
John