[I’m sure I’ll have to talk to a lawyer about this at some point, but for now I was hoping to get a general idea of what’s required.]
I’m helping with an estate which has a small working interest in a lease in NM. The costs are low, but they are still more than 10x what the royalties have been. None of the heirs are interested in taking ownership of this working interest. With traditional assets the estate could file a “Disclaimer of Inheritance” to state that no one was willing to take on the asset. How does that work for a working interest in an oil lease?
I’m not sure if you can do that (if someone ever has I’ve never heard of it). If you could share some general information (i.e. legal description, name of wells, interest level) maybe there is the possibility of someone taking it over from you for no consideration and the assumption of plugging liability.
I suppose the question is whether the WI owners are personally liable for expenses. You should visit with a NM O&G attorney. I suspect that someone inheriting would not become personally liable for expenses. Instead, they would not be entitled to revenues until the costs + (costs X factor )have been recouped from sales. But like I said, visit with a NM attorney.
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We get JIB invoices that have to be paid. It’s not too much, but the royalty is a lot lower than what is paid for the JIB. The heirs aren’t really interested in taking this over. It’s just a small fractional interest. I’m not sure we could get very much for it. The estate has a few of these tiny interests and it’s been more of a hassle and more costly to deal with them than they seem to be worth.
I’ll see if I can track down the operating agreement and see if there are details in there. Thanks.