Jim the other 30 acres are non-participating royalty interest. The participating party(s) get the bonus for the entire 60 acres & only 30 acres of royalty. The NP party(s) receive their royalty based on your lease royalty.
Todd. Thanks, but am I the participating party? And am I leasing all 60 nma or just the 30 where I own the mineral rights? And how do I treat this in the lease? Seems to me that I get no benefit from owning āleasing rightsā. That is, they are worthless insofar as I am concerned but may impute a duty of some sort. JimB
You can own minerals rights with or without the āExecutiveā right to make decisions on those rights. A father might have given a child half of the minerals rights, but kept the decision-making Executive rights for all of them. For example, I have an area where I have the mineral rights on 30 acres but only executive rights on 15 of them. I have received royalties on all 30 but have no say-so in what the lease royalty and bonus are on 15 of themā¦ The Executive rights in that case got the bonus on the NP 15, but not the royalties. They decided to lease at 3/16ths and a higher bonus. They kept the bonus (I was non-participating on that set.) I decided to lease my 15 at 1/5th. I received a smaller bonus at the time. When I get the royalty statement, it is for 15 acres at 3/16ths and 15 acres at 1/5th.
SWB, Jr., in your case, you may have only the executive rights, so get the bonus, but not the royalties. Depends upon what your title paperwork says.
Jim: You get the bonus for the 60 acres. You get the royalty for the 30 acres on the royalty you decided upon in the lease. The non-participating owner gets the royalty on their 30 acres on the royalty you decided upon on your lease. Yes, you are the participating party. You get 60 acres of bonus money. Tell me why that isnāt a good deal for you as you never owned the full 60 acres of royalty to begin with.
[quote=āM_Barnes, post:619, topic:28851ā] rmal paperwork that come before a well is drilled. Did you have a particular question? [/quote] Yes-- to date Iāve received offers to lease with either Citizens Energy or Camino. Both ask me return their letter indicating my āelectionā to accept one of their 3 proposals (1) pay my proportion of the cost of the well, or (2) accept a higher bonus/ lower royalty or (3) lower bonus/ higher royalty. There is no formal contract/lease as yet.
Q: Are decisions one makes when returning these āelection/ ballotsā in any way binding in lieu of a detailed lease? In other words, can negotiations continue until a lease is executed?
Q: Is there any advantage for a rights holder to hold out? I assume the risk is that oil & gas prices fall and the offer is rescinded.
Q: Where does one find a newbie-friendly map showing the location of their sections in relation to others as well as producing and planned wells in the area? Iām curious to know if our area is in a particularly promising neck of Grady Co
1-You do not have to reply to those letters. They are not binding and do not replace an actual lease. Waste of a stamp in my opinion. Yes, you can lease with either company or any other company that might contact you. Suggest that you get an oil and gas attorney to go over any draft lease. They are not usually in the mineral ownersā favor. Negotiations to get the best lease can continue until the final date in the pooling order. If not all of the minerals lease or can be found, a forced pooling will be held before the Corporation Commission. At that time a series of bonus/lease pairs will be offered which are comparable to those offered in the contiguous sections in the last year. Usually close to the amounts in the letters. Many of us prefer a pooling over the hassle of negotiating a lease.
2-The offers are not tied to the price of oil and gas. More about competition in the area.
- Read the various topics in Grady and you will pick up on the activity in Grady. Here is a map of Grady with section, township and ranges. Also, if this is where I think it is, there may already be some comments about it on the forum. If you post the section, township and range, we can help with a map. Since two companies want to drill, it is highly likely that this is a good area.
Grady County Map.pdf (434.4 KB)
Yup, well I guess I own more than I thought. So the leasing right does have some value as long as there is a lease bonus. Peculiar concept, in the will it is described as leasing rights āto entire 60 acresā. So in negotiating to increase royalty vs. decreasing bonus it poses the problem of how much am I willing to pay for an additional .05 % royalty. That is, with $1500 per nma bonus to be lost entirely, would I be willing to forego $45,000 in bonus payments, interesting conundrum. This O&G business is more complicated than I ever imagined.
Thanks, Martha. Straightens me out on the question. I am offered 1/5 royalty plus $1500/nma, and was considering negotiating for 1/4 with no bonus. But now I see a downside I did not recognize before. I know, itās only money, as I tell my wife when she shrinks at buying herself something or other. JimB
Martha, Todd, Thanks,guys. I think I am beginning to understand. Mainly, I understand that my JD provides me with no (NO) expertise in Oklahoma O&G law. But I struggle through! Any experience with O&G lawyers in the Chickasaw / Oklahoma area who could help me sort this out? And review the lease form. JimB
Darn autocorrect. Of course I meant Chickasha.
You can go to the OK Bar Association and look up attorneys with oil and gas expertise. They donāt have to live in Chickasha area.
Martha,
Hereās a question I keep meaning to ask. I often see two pieces of advice given here, and they seem to contradict each other. The first is that the Exhibit A clauses are more important than the lease bonus. I have long agreed with this, and generally focus on getting the more important clauses in our Exhibit A accepted. But the second is:
āMany of us prefer a pooling over the hassle of negotiating a lease.ā
Yet if you wait for pooling, you presumably lose the ability to negotiate those additional terms. For this reason (and frequent nonpayment of pooling bonuses), I have for a long time tried to avoid pooling. Am I missing something (such as, perhaps, some set of protective clauses built into the pooling orders)?
Rudy
Not giving legal adviceā¦ In general, the Ex A clauses that contradict the lease supercede the lease and did that for years, but my attorney suggests that there be no Ex A and all clauses be in the lease, so there is no confusion as to the intent or language and that the instrument be taken as a whole with no chance that an Ex A mysteriously disappear from being attached to a leaseā¦
If I cannot get favorable lease clauses that forbid post production charges, then frequently, I will go with a pooling. In general IN OK, the pooling has no post production charges unless they are specifically laid out. (Some debate on that). The pooling is only for certain reservoirs and has a very short time frame of six months to one year. So essentially a short lease with depth clauses above and below. I have had multiple times where the time frame has run out and I have been paid another bonus, and sometimes another bonus and once another bonus. Also, if I am pooled at one level, then I am free to lease or get pooled at other levels above and below, yet more bonus checks (or a higher royalty). My choice depends upon the operator and where the tract lies as to which tactic I prefer.
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[quote=āM_Barnes, post:631, topic:28851, full:trueā] You can go to the OK Bar Association and look up attorneys with oil and gas expertise. They donāt have to live in Chickasha area.[/quote]
Received notice of another āPoolingā hearing (Cause # 2-002932 by applicant Camino Natural Resources) on 8/16/22 affecting Sections 31-9N-7W and 6-8N-7W. We only have a few acres so Iām not sure if the cost of hiring an attorney makes economic sense. However, Iād be interested in hearing from those that do seek legal advice on this particular project. If thereās a board specific to this Iād appreciate a point in that direction. With few acres we are inclined to hold out for every inch of royalty possible. Thanks for your valuable time and expertise
Be aware that once a pooling order comes out, you only have 20 days in which to answer. I send mine by certified mail return receipt so that I have proof of mailing. Keep a copy of everything that you send, including that green return card.
I had my attorney review my family lease this year and recommend new updates. I can then use that lease in multiple counties if I choose to lease. If companies will not accept it, then I choose to pool.
When I received my email from Continental about my royalty check this month I noticed they had added a paragraph about buying my minerals. Anyone else notice that Continental has included this new paragraph in their email?
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They only offer to buy minerals when they are the operator. Makes me wonder if they charge themselves post production costs!
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Last day of the month and I had some views left to use on okcountyrecords.com so I used them to look at recent mineral deed sales where the consideration amount and number of acres involved were disclosed. There was a total of 86 mineral deed transactions for July 2022. These are just a few. Many of the mineral deeds do not disclose the consideration amount or the number of acres involved.
| Month | Section | Township | Range | Consideration Amount | NMA | Price Per Acre | Royalty Amount |
|---|---|---|---|---|---|---|---|
| July, 2022 | 12 | 6N | 7W | $870,000 | 58.00 | $15,000 | 20% |
| July, 2022 | 12 | 6N | 7W | $116,000 | 10.00 | $11,600 | 20% |
| July, 2022 | 22 | 6N | 7W | $69,000 | 11.50 | $6,000 | Unknown |
| July, 2022 | 12 | 6N | 8W | $55,179 | 24.52 | $2,250 | 3/16 |
| July, 2022 | 2 | 9N | 8W | $170,000 | 25.00 | $6,800 | 20% |
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I got that too, in June and July. It wasnāt there in May.
Good catch! I tend to focus on a different part of the message.
@Don_Mecoy lol 
I also tend to focus on other parts of the emails I get. Didnāt even notice it was in the June email.
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