Hi,
Most of our property in Burke County is handled through Oasis Petroleum. I recently was contacted by AQYRE LLC with a mineral rights offer for the following;
Township 161 North, Range 91 West 5th P.M.
Sec. 30: NE
160.00 Acres m/l, Burke County, North Dakota
We never went through probate and we dont want to. The offer is for 5 years and is stating if we dont go through probate we will only be paid the bonus. If production is achieved, which is the goal, the royalty money will be held in escrow by Liberty Resources until this property is probated and documentation can be provided.
Is this a normal procedure?
I do not know if the offer I have been presented with is fair or not. Any landmans or anyone that could help me out would be awesome!
Thank you!
It's not unusual at all, in my experience. The level of title documentation required to merely obtain an oil and gas lease is lower than that for payment of royalties under that same lease. Put another way...it's the difference between "leasing title" and "division order title." Come division order time, the operator will request a title opinion (something that is usually not done when a lease is signed) and most title examiners will require some recorded evidence of the succession of interest (usually a probate proceeding or possibly an affidavit of heirship) before signing off on the royalty distribution. If the examiner is satisfied that the recorded evidence vests mineral title in the heirs of the deceased, the interest goes into "Pay" status. If, on the basis of the recorded evidence presented to him/her, he/she is not satisfied that title has passed into the heirs of the deceased, then the examiner will place that interest into "Suspend" status (which is the escrow arrangement you describe above), pending receipt of satisfactory evidence that will permit him/her to place the interest into "Pay" status.
It is possible that the title examiner may, in lieu of probating the will, accept an affidavit of heirship that sets forth the identities of the heirs-at-law of the deceased, and which contains a statement to the effect that rather than offering the will for probate, the heirs elected to take under the laws of descent and distribution of the State of North Dakota.
At least the Lessee is letting you know well ahead of time what will be needed from you, should they manage to bring in a successful well. As to the remainder of the offer to lease, the only other feature mentioned is the primary term of the lease, which I would limit to three years instead of five. For any other terms (bonus per acre, royalty, other desirable provisions) I would have to defer to someone who is more familiar with the action on the ground in North Dakota.
The attached map shows the location of the parcel you describe. Nothing new has been drilled around here for several years as you can see from the dates on the map. Oasis is the nearest operator, and unfortunately those wells closest to you are not very good wells. Since Oasis has leased other minerals from you, and they haven't leased this one, my guess is they don't consider it very prospective.
Sounds like AQYRE is "aqyring" on behalf of Liberty. Liberty doesn't have any wells nearby, but they have been successful elsewhere where others have failed. Hopefully, they can make something work here.
161N_91W_30.pdf
Regarding the need for probate, I have seen many Companies accept an Affidavit of Heirship in lieu of probate, but it is sometimes Company policy not to accept it. In my personal experience, it often depends on the perceived value of the minerals in question. The higher the value, the more is at risk and the greater likelihood of probate being required.
You could always just wait and see if the royalties amount to anything before committing to probate. The Operator will escrow your funds until they are satisfied they are going to the right people.