For the people that stumble upon this website from a google search, can anyone tell us what steps should be taken when receiving a letter offering to lease mineral rights? This is the second letter I've (as well as my other family members) received. We all ignored the first one we received about two years ago but now we are wondering if we did the right thing?
I'll wait for responses before I post the location and details. I don't want to info out there for everyone to google and read :) Thanks to all you experts for your help.
Assuming Oklahoma rights because of your profile.
Take your time and research what is going on. Don't let anyone pressure you into agreeing to or signing a lease without knowing exactly what your options are. About the only reason you need to get in a hurry is when a pooling order by the state has been issued. There are county groups on this site with specific info on what is going in the counties. (on the main menu bar groups - county groups) Some will have better info than others. Look into the county where it is located and the surrounding counties.
Don't be afraid to engage help from professionals. You are entering a contract that could be basically selling your rights with an agreement to receive a portion of all the products produced from it. Any mistakes made now could have an impact beyond your lifetime.
Define right? The most profitable? The most risky or least risky?
If your interest is large, you are in business and need to keep up to date and knowledgeable. There is no business in which this is not true. If you have a small to very small interest, I would recommend just making an election under the pooling. Many knowledgeable people after much effort and some expense end up making an election under the pooling, if your interest is small you could save effort . Stipulating of course that your interest is in Oklahoma. The business probably will be different in other states.
If you have good title and current contact information, there is no reason to hide the wherabouts of your mineral interests unless you don't have the ability to throw away laughable offers and other junk mail
Rick, thank you for your advice. R W, I lost you on "election under the pooling" and this is all so foreign to me, I didn't want to show the location because...well, I found this page by googling and I figure other people do as well.
Here's what it says: "Offer to lease for oil and gas the east 45 feet of Lot 2 & the west 25 feet of lot 3 of block 85 in the original townsite of Lindsay, OK. Section 10-4N-4W; 0.01622 net mineral acres Garvin County, OK. Then it lists the options: Option 1: $1,300 per net mineral acre for a 3 yr paid up term, with a 1/8th royalty in the case of production . Option 2: $1,000 per net mineral acre for a 3 yr paid up term, with a 3/16ths royalty in the case of production. Option 3: $500.00 per net mineral acre for a 3 year paid up term, with a 1/5th royalty in the case of production. Option 4: No bonus money for a 3 year paid up term, with a 1/4th royalty in the case of production".
16 thousandths of a net mineral acre? Make sure your contact information is up to date and just make a pooling election when the state sends it to you. In the pooling election you will get a similar choice 1/8. 3/16. 1/5 and sometimes 1/4 royalty and the dollar bonus amounts which go with each one. You aren't going to make alot off this in any case, not even if you participated in the well for your tiny fraction and I suspect that if you did participate you would lose money on the paperwork and managing this interest. It's just too small. If I were the operator I would offer you $300 for it just so I would not have to track your interest.
I certainly would not lease this interest. Any contract that I put my signature to has to have a certain dollar value or I do not sign. What if the other side does not keep the agreement and you have to sue them? Obviously you don't want to do that for the small amount you could receive in a judgement.
Just to keep it simple, your option 2 above, $1,000 bonus and 3/16 royalty would be a total bonus of $16.22 and you would owe income tax on that.
I have given larger interests to a family member just to be rid of them and encouraged other family members to do the same so at least one person would receive a detectable benefit.
I agree with the above, if the acreage is correct. That is about the size of a 2 car garage. It is part of a township plat, so I imagine it was a small residential lot that the rights have been divided several times through generations. A very good horizontal well might pay $300 over 4 years (based on 1/4 RI) with that acreage amount.
However, I would do a bit of checking. There is current production on most of that section of property. You MAY be getting paid (or should have been getting paid) on the existing wells. It would be very small checks and likely once a year. If this is simply a small piece of some additional acreage that is held by production, that might make a difference in my willingness to dispose of it.
Thank you RW and Rick. Those are answers I understand. We (my sister and cousins) have never seen that description before. We currently receive yearly checks, but not for that location and we were surprised when it showed up.
Now, next question. How do find the exact location? I found the general location using 10-4N-4W but can't find a map showing the exact location. Thanks again.
You have to look at the plat maps at the Garvin Co Court house. You can also view them with a subscription on okcountyrecords.com
I believe it is going to be here. Does this look familiar to a grandparent or parent's house. Your acreage indicated would be about 1/10 of the lot.
Awww, that was my Grandparents' home. I visited Okcountyrecords but ran into the subscription needed. Thank you so much for your help. I'll let my family know what I found.