Is there anything I can do if the person with the executive rights on our mineral interest, will not sign an O&G lease because they want more than anyone is willing to pay for a lease bonus. I've been informed that the oil company is going to start drilling and once they start it will be too late to be included in the pool. If this happens, there is no other option for leasing with anyone else due to the fact that the property is now "land locked". I understand that they do have the right to all negotiations, but what if they held out too long and now have no other options and cost us, most likely, a huge amount of money (considering the location and production of surrounding wells). Is any kind of legal action an option?. Thank you.
State?
Koell -
I am not an Attorney and advise that you consult one experienced in Oil and Gas matters for something like this.
But, it is my understanding that anyone holding Executive Rights has a fiduciary responsibility to properly represent those who they represent. Anything they does contrary to your best interests would certainly place them in an actionable position.
One question: Do you own MINERAL RIGHTS or ROYALTY?
The reason I ask is that, from my experience, unless there is something in the paperwork that specifically states differently, if you own the MINERAL the Bonus Payment and Rentals come to you, not the party that holds the Executive Rights.
I know that Executive Rights are sometimes passed forward so that surface owners can protect their land and negotiate damage settlements, but it would be unusual to me to see the Bonus and Rental Payments severed from mineral ownership.
Hope this helps -
Charles
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
Texas
Wade Caldwell said:
State?
1/2 royalty interest. We will not receive any bonus money. Our problem is the person with the executive rights keeps turning down all offers and Im afraid if he holds out much longer, we will miss out on any kind of lease at all
Charles Emery Tooke III said:
Koell -
I am not an Attorney and advise that you consult one experienced in Oil and Gas matters for something like this.
But, it is my understanding that anyone holding Executive Rights has a fiduciary responsibility to properly represent those who they represent. Anything they does contrary to your best interests would certainly place them in an actionable position.
One question: Do you own MINERAL RIGHTS or ROYALTY?
The reason I ask is that, from my experience, unless there is something in the paperwork that specifically states differently, if you own the MINERAL the Bonus Payment and Rentals come to you, not the party that holds the Executive Rights.
I know that Executive Rights are sometimes passed forward so that surface owners can protect their land and negotiate damage settlements, but it would be unusual to me to see the Bonus and Rental Payments severed from mineral ownership.
Hope this helps -
Charles
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
There are some fiduciary responsibilities. You should see an attorney.
Koell -
I just noticed you live in Gonzales, Tx. Is your interest in the Eagle Ford Shale play?
If so, you most definitely do not want to be left out.
Thank you very much.
Wade Caldwell said:
There are some fiduciary responsibilities. You should see an attorney.
Dear Wade,
Although the turmoil of fiduciary and utmost good faith has been struggled with in the area of executive dealing, did not the Texas Supreme Court opinion, In re Bass 113 S.W.3d 735 (Tex. 2003), state that a duty is not owed by an executive to a non-executive if the executive does not first enter into an oil and gas lease?
Incidentally, a decade or so ago, I ran title to the Bass ranch and the Bass brothers owned all the minerals in the tracts involved less an NPRI. The Bass brothers had more money than they could burn and did not want an oil and gas lease to hamper their gentleman cattle ranch.
Wade Caldwell said:
There are some fiduciary responsibilities. You should see an attorney.
Ouch!
Buddy,
Correct. That is the problem with trying to err on the side of getting people who post questions on here to check out their rights carefully with competent help.
Whether fiduciary duties or an implied covenant exist depends on a number of factors, such as the wording of the reservation language, whether a lease has been signed, whether production exists, and other factors. However, if I put all these qualifications in a post, not only do I cramp my hands from typing so much, the posts are so long that people's eyes glaze over. Oil and gas law is very fact specific, and the courts look very hard at the wording of the deeds and other contracts. Here, even though Koell indicates a lease has not been signed, the wording of the reservation clause and other facts could lead to a different result than in the Bass case. In short, she should have someone knowledgeable look at it. Thanks for pointing this out and for all your invaluable contribution to this board!
What Wade said.
If you missed it, the devil is in the details.
You said that you have a "1/2 royalty interest." I have never seen a 1/2 NPRI, usually it's 1/32, 1/16, or 1/8. So I wonder if you don't actually have an undivided one-half (1/2) of 8/8 Non-Executive Mineral Interest (NEMI), which would include royalties? Also, look at the deed wherein the executive rights to your mineral interest were severed. In some cases, there will be an additional clause wherein the Grantor states that the Grantee will have those executive rights as long as they MUST sign an OGL for a certain base amount.