It turns out I have inherited mineral rights (that I was unaware of) on a very small piece of property in Garfield County, Colorado. There are several wells near and I (along with other heirs) am being asked to sign a lease beginning in 1988! That is how long the gas wells have been producing. The proposed royalty is 18% and I will get a few thousand dollars from the suspense fund and small continuing royalties. A few questions:
1. Should interest be paid on these suspended funds?
2. How can I verify the funds held in suspense are accurately calculated?
3. Is 18% a fair royalty?
4. Am I even obligated to sign a lease starting back in 1988 (a three year lease, continuing past 3 years as long as gas is produced) or can I demand a working interest share?
Thanks
Hey Steve -
It may be that you and the other heirs you wrote of have a claim to a substantially higher amount of money beyond "a few thousand dollars".
I would advise that NONE OF YOU SIGN ANYTHING until you have consulted a qualified, experienced Oil and Gas Atorney. It may cost you a little, but could save you a lot over the years.
If you don't know of any Oil and Gas Attorneys, the Colorado State Bar Association may be able to help you.
Charles
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
I can’t see where you would be obligated to sign a lease. It seems to me the well must be paid for by now. That would include your interest in the well and any penalty. You need to find out exactly how much is being held in suspense right now. Step 1 get a lawyer. Step 2 record the minerals in your name. Step 3 demand payment. If you sign a lease they might just be paying you 25% of the money they are holding for you right now. They will keep the other 75%. You don’t need a lease to get paid. You need a lawyer. Good luck Steve. RWK
Thanks for the replies. To be more clear: the total acreage is about 6 acres, most of the heirs (I believe) have already signed leases. I just found out about it because I was the son of a deceased heir. The wells are not on the property directly, but near enough to affect the mineral rights. Pertaining to just this 6 acres there is approx $1.6 M in suspense of which approx $290 K will be paid to the heirs if you simply go by the proposed lease rate of 18% (Since there are perhaps close to 100 heirs the individual amounts are small). Organizing this many heirs, almost all of whom I don’t know and are not relatives, would be an arduous task. Unfortunately the heirs I know simply signed their leases and returned them because the individual amounts are small and they didn’t want to spend money on attorneys.
Still not clear. Is 290k to be divided between the 100 of you after you sign leases for 18% ? If so we are talking about the difference between $2900 and probably $14,000 or more for your share. I bet they will send you a thank you card for the $11,000. Good luck Steve.
Steve Creek said:
Thanks for the replies. To be more clear: the total acreage is about 6 acres, most of the heirs (I believe) have already signed leases. I just found out about it because I was the son of a deceased heir. The wells are not on the property directly, but near enough to affect the mineral rights. Pertaining to just this 6 acres there is approx $1.6 M in suspense of which approx $290 K will be paid to the heirs if you simply go by the proposed lease rate of 18% (Since there are perhaps close to 100 heirs the individual amounts are small). Organizing this many heirs, almost all of whom I don't know and are not relatives, would be an arduous task. Unfortunately the heirs I know simply signed their leases and returned them because the individual amounts are small and they didn't want to spend money on attorneys.
$290 K to be divided by the heirs. That equals 18 % of the revenues of approx $1.6m.
So, the oil company is proposing a lease that pays 18% of revenues.
Still sounds to me like they are holding $1,600,000 for the heirs and they want you to sign an agreement to accept $290,000 instead of the full amount. It sounds to me like the 1.6 million already belonged to your family. Some of you have already agreed to give 82% of their money due, to strangers. RWK
Steve: My name is Bill Bontrager. I am a Colorado licensed attorney (#035359) and I specialize in oil and gas matters for mineral owners. DO NOT SIGN THAT LEASE. If you do, you throw away significant money -- both present and future -- if you can prove your heirship. No, I do not work for free, but I do work on a contingent fee basis. I will be out of the U.S. for the next 5 weeks, but you can e-mail me at wdb@ftitel.net and I will get back to you. The chances of your being able to do this on your own is net to -0- as the central issue is one of first impression in Colorado.
Bill Bontrager
(970) 259-3384