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.
