I Inherited mineral rights and have questions

Landman contacted me. Saying I own mineral rights in Dimmit County Texas. I live in Indiana. I had no idea and have no experience. He sent a contract and again, I have no idea to what it all really means. Don’t know if I can trust him in what he is telling me? Have no idea where to start to even understand this lease. Don’t have money for a lawyer. Have researched but don’t understand a lot.

If you can post a legal description (Lot and Block, or survey and abstract number) for your mineral interest someone will be able to pull up a Texas Railroad Commission map showing the activity in that part of Dimmit County. The RRC which is the government body that regulates oil and gas activity in Texas is a great resource.

For some basic terminology and information on leasing click “Mineral Help” at the top of this page and use the pulldown menu to go to “Oil & Gas Leasing”. You might also try posting your questions under the Dimmit County section of the forum by clicking “Counties” at the top of this page, then selecting Texas and Dimmit County.

Before committing to anything I would try to pin down the actual mineral interest I owned. Do you have any information on how you inherited it, or is all that you know about it what you’ve been told by that lease agent?

That person’s objective is in getting you to sign a lease. What they tell you may be the truth, but you can’t assume they are looking out for your best interest. That’s not their job. Don’t let anyone rush you or push you to sign anything you don’t understand.

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Thank you so much for responding to my question! And he did tell me how it came down through my family, He was hired by Rosewood Resources. And its 5 acres,Lot 3, Block 8 of Taft, Catarina. $500.00 for 3 year lease with option of another 2 year lease when the 3 is up. 25% royalty. Apparently there are 5 of us that own the arces. So like an acre each. Weird thing is when he called he told me and my brother Denton county Texas. But contract says Dimmit?? And so far, I am the only one that has got a contract. I have researched. But when you don’t understand the language of mineral rights, it’s no good to me. Thank you again !!!

Most first oil and gas lease draft contracts are all in the operator’s favor, so they need some negotiation to get them more into the mineral owner’s favor. Most of us do not like the two year option. We only want the shortest first term option-generally three years or less.

The Mineral Help tab above is a good first read. A small book called “Look Before You Lease” by Jim Stafford-available at NARO (National Association of Royalty Owners) or Amazon is a bit out of date, but useful to learn the lingo. The Directories tab above lists some attorneys that may be able to help you. You will need one licensed in Texas.

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Thank you very much! Any help at all is much appreciated!!! I will continue to research, because I’m not signing ANYTHING I don’t understand!!! So if there is oil there…it may go dry before I can figure this out!!! LOL

The $500 you’re being offered is called a bonus. You can easily triple or quadruple that amount to get to adjust price. Bonuses in the Permian basin are running anywhere from three to $6000 per mineral acre. You need a lawyer who understands mineral royalties

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Thank you very much for that info!!! I know nothing about Texas or mineral rights!!!

Ann

A little additional information would be needed to pin down the specific location of your mineral interest. It looks like there were multiple Taft-Catarina Subdivisions (at least Subdivisions A through K) that covered a widen area each side of the town of Catarina. Does the description in the lease you received show which Taft-Catarina subdivision it’s in, or give a survey name or abstract number?

The person who talked to your brother may have been talking about Denton Colony, not Denton County. An old map shows an acreage subdivision called Denton Colony located within Dimmit County, but I doesn’t appear to show anything else that would connect with the description you posted.

Here’s a link to a chain of discussion in Sept-Oct of last year in the Dimmit County section of this forum talking about leasing activity and recent drilling permits in another part of the Taft-Catarina Subdivision (it’s also referred to sometimes as Catarina-Taft but it looks like the legal name is Taft Catarina Lands Company) https://www.mineralrightsforum.com/t/lot-2-7-block-4-subdivision-a-catarina-taft-leasing-activity/59038

You probably realize a one acre undividied mineral interest in a five acre tract, or even the whole five acre interest, is pretty small, considering the drilling units for many horizontal wells can include one or more fully 640 acre sections of land. But it looks like Rosewood has recorded a lot of five acre or smaller leases starting about September, 2020. If they are investing the time to block up that many small interest that seems to indicate they are pretty motivated. In any case I think it would be a good idea if the five owners in that same lot agreed to stick together and negotiate as a group.

A $500/acre bonus does sound low for an area that appears to have considerable drilling activity going on, but I think the earlier comment that was made referring to the bonus amounts being paid in the Permian Basin doesn’t fit your situation because Dimmit County is way south of the Permian area in deep South Texas.

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Thank you so much!!! This is very helpful!!! I do realize that the 5 acres is very small and that is why I’m hesitant to spend alot of money for a lawyer to explain all this to us. I have started reading this contract, but as I said before, I have no idea what I’m reading so it is taking me a long time because I have to research alot of the wording as to what it means!!! When I get home today from work I will go over it again to see if I can find more details!!! Thank you again so very much. All this is stressing me out!!!

ROSETTA RESOURCES OPERATING LP has wells in Dimmit County producing 1000s of gallons per month. Depending on where your minerals are located you may be in an area that is equal to production in the Permian Basin. I looked at

API # 127-37350

OP # 728883 - ROSETTA RESOURCES OPERATING LP

LASSETER & EPPRIGHT UNIT K - Well # 2 District 01 - DIMMIT County

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The University of Texas has land producing minerals in Texas. UT has their own OIL AND GAS LEASE form. UL Lease Form #48 Updated 08/2017. Look for the sentence that says you will not bear costs of production

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The moderator seems to be blocking me from providing legal advice. The UT lease has two definitions you want to include defining Costs and Expenses, and Produced Substances. When you find the line and the two definitions it will make sense.

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Texas A&M has a very good Texas Oil & Gas Leasing Handbook at https://cdn-ext.agnet.tamu.edu/wp-content/uploads/2016/03/Texas-Oil-Gas-Leasing-Handbook-web.pdf

Do not feel rushed to sign a lease. Their offer probably has an expiration date. Ignore it. Make the deal when you are satisfied with the terms. In reality, the bonus is the only money you will see for two to three years. Wells usually produce in quantity for 3 – 5 years, if at all.

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I might amend the statement above. The type of well that you have will determine its length of production. Yes, higher production in the early years due to higher pressure, but some wells can last for decades. And in many areas now, horizontal drilling with infill wells can add even a longer life to your acreage.

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Ann59

Based on what you’ve described I definitely agree with your comment about not spending a lot of money. But sorry to hear this is stressing you out. You may feel like you are under pressure to make decisions on something dropped on you and that takes learning a foreign language to deal with. Unfortunately the questions and free advice here may have added to that feeling, but I’ll risk another suggestion.

Considering the size mineral interest you are talking about, you might try viewing this more like you would an invitation to do a little genealogy on an unusual ancestor you just learned about. Maybe the process can be interesting, and if it results in a little found money that’s great too.

You are already ahead of the game because you know how to use the internet and are willing to dig into something new. I’m willing to bet if you surveyed a bunch of the folks who own the five acre tracts around your mineral interest, you would figure out even ones who live in that area don’t know as much about minerals or the leasing process as you’ve already uncovered by being willing to ask a few question.

I don’t know what kind of connection the folks you inherited that mineral interest from had with that area of Dimmit County but for what might be some of the fun part of this, here’s a link to what Taft and Catarina were all about. http://pacweb.alamo.edu/InteractiveHistory/projects/rhines/StudentProjects/2007/Catarina/sttemplate.html

Hope you can enjoy the ride and maybe down the road help someone looking for answers.

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Yours will be one of many leases governing the oil company’s drilling and production. It probably boils down to what you can control without a lawyer: the bonus and not paying the expenses of production. You can add an addendum to their document stating it supersedes the printed form. On a new sheet of paper start with paragraph number one more than the document. Write what you want. Do not sign the lease on the page provided by the oil company. Move your signature and notary to your addendum. The document is useless without your page. It won’t be the first time an addendum got lost and filed with the county.

Bottom line: let their lawyer do the work of correcting your document. Do not let them remove your paragraphs by saying we will cross out something in the printed form. All changes will be made in simple English where you can read and understand them.

I hope this helps

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Addendum: I think you can rewrite the lease to suit yourself. I may be wrong about this, but I recall someone at a NARO Conference saying this. And have a lawyer looking after your interests would be very helpful.

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I think the varied advice given you here is wise. I once signed a lease I did not understand and for which I did not seek legal advice. This lease was for less than two acres. I have regretted that decision for 30 years. Landmen for producers have only on entity’s interst in mind, their producer and their producer’s revenue. You can strike clauses you don’t like in a lease (I learned that at a NARO conference long after the fact). You need to know the going rate for leases and for the percentages of your interest, e.g. is $500 an acre or 25% share the best you can do? A competent oil and gas lawyer is worth the money and your time. Ask for referrals and do your due diligence in checking them out. You will not regret this. Look Before You Lease is a good source. Also, Oil and Gas Law in a Nutshell, John S. Lowe. NARO may have copies of these for sale.

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I want to thank everyone for taking their time and helping me out with this. Such good and helpful advise!!! There is so much to learn about this!!! Thank you again!

The contract says it is subdivision C of Catarina Taft. And so I’m assuming the $500.00 sign on bonus will be split 5 ways over 3 years which brings it actually to $30.00 a person???