I have a small interest (approx. 4 acre) in a 200 acre tract that I have not signed on because I felt like the lease was worth more. All other family members have signed. The surrounding properties are probably leased as well but I am not sure of that. Located roughly 5 mi. SW of Moulton and approx. 5.25 mi. NNW of Shiner. It is split by the Gonzales/Lavaca County line in what seems to be a good location. The southern part borders CR 540 in Gonzales Co. and is north of CR 351AA in Lavaca Co. Aside from accepting an offer I feel is less than adequate or not signing and ending up with a working interest, what would my options be? I am assuming no other company would want to lease such a small interest as this so my options are limited. Also comments on the pros and cons of the working interest are welcome. Thanks!
I believe you will simply be put in a “shared pool” where you will be paid compensation according to the shared pool rules of the state. I don’t know if this is better or worse than a negotiated mineral lease? I have no idea of what a “working interest” could possibly mean. I hope this helps a little…
Mr. Mullins,
Thank you for your reply. I will have to find out more about the term working interest as well. I used the term because I believed it to be the wording my attorney used. After reading another post on here it seems that I possibly would be a co-tenant rather than have a working interest. Of course I will need to get more clarification on this myself. Thanks again.
Thomas Mullins said:
I believe you will simply be put in a "shared pool" where you will be paid compensation according to the shared pool rules of the state. I don't know if this is better or worse than a negotiated mineral lease? I have no idea of what a "working interest" could possibly mean. I hope this helps a little.....
A working interest is a cost bearing interest. The working interest pays for the drilling, equipping, etc of the well. Typically, working interests are created under lease. The working interest is due a net revenue interest of production after landowners royalties, overriding royalties, production payments, etc have been paid.
As to Texas properties, unless WJS's property is the physical location of the wellbore, he cannot be included in a voluntary pool created under the terms of the lease, since he has signed no lease. He is, as they say, outside the wall, gnashing his teeth. If his property is part of the drillsite, he is a co-tenant of the well, subject to penalty, but not subject to dilution since he is not pooled.
Thomas Mullins said:
I believe you will simply be put in a "shared pool" where you will be paid compensation according to the shared pool rules of the state. I don't know if this is better or worse than a negotiated mineral lease? I have no idea of what a "working interest" could possibly mean. I hope this helps a little.....
In Texas your interest will simply be cut of the unit as you have not given permission to pool your interest, which is accomplished by executing a lease. Unless your interest is included in the drill site tract, your only way to be included in a well or wells in a unit that includes the tract or a portion of the tract under which you own an undivided interest is to pursue an action through the Texas Railroad Commission under the Mineral Interest Pooling Act (MIPA), which is an expensive and time consuming proposition. If you are in this situation, write the operator a letter and tell them you made a mistake and you really meant to lease.