According to a landman who sent us a Serial Register Page from the BLM, he says the SRP shows that we have ‘100% Record Title’ still in my dead Grandfather’s name!
However, it is a ‘naked’ Record Title he says. He says a ‘naked’ record title is only a liability for us because all Working Interests have been already conveyed out decades ago, and the lease is not bonded.
He wants us to convey (give not sell) the naked record title to the oil and gas company he works for because it would clean up the title, AND his company can bond it. By the way, this company this landman works for is the company that has been paying us ORI for several years.
What questions should I be asking him?
Ask for a clear detailed explanation in writing of the situation and liabilities, including the legal description so you can look up wells. I would be concerned that the ‘gift’ might result in loss of the override. You should also check to see if there is new activity in the area which may add to your OR.
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Thank you TennisDaze!
The landman said that any ORRI that was carved out of the Working Interest decades ago would not be affected. In other words, our ORRI would not be affected - he says. I have the Lease number, and done my homework; I know all the wells, including the new permits in the area.
Does “says” mean verbal or written statement? Is the written statement officially from the operator? If you have been receiving an OR all these years, then your grandfather or successor may have opted to farm out or assign the WI and reserved an OR. That assignment may be in the original JOA or other agreement among the WI owners at that time. Do you know whether your grandfather was ever a WI or did he only receive an OR? You should have any paperwork reviewed by a NM oil and gas attorney to determine and verify the legal affect. In particular, you will want to be sure that you receive OR for any future wells, not just existing wells, drilled under the lease.
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None of the above is relevant to owning record title interest in a BLM lease. You have no benefit to holding it. Assign to the operator and move on.
Thank you for your input, Permian.
Thank you TennisDaze, yes he was a WI owner and did retain and receive ORI. We’ve quieted some title issues and are receiving ORI in some tracks, but the ‘naked’ title news came as a surprise, hence my question on how to approach the operator’s request to convey it to them.
If it really is of no value, and we are not giving up any right to claim ORI that has not YET been ‘discovered’, then…
Permian is probably right but there are some nuances to this. BLM leases are a PIA. Record title is the primary ownership of an interest in an oil and gas lease usually tied to the inception of the lease although RT can be transfered as well. * Operating rights can be severed from record title and transferred separately. ORs can be depth specific, RT assignments cannot have depth limitations. Naked RT is probably more of liability than a benefit depending on the situation. If the operator runs into problems with the well or wells and needs to ask the BLM for a suspension or if a situation arises where provisions governing the secondary term need to be utilized- you are the one that has to deal with the BLM. Meaning potentially paying rentals etc. Unlikely situation espcially if modern wells are holding the lease. You could potentially leverage that against them. If they want the RT assignment I would have them provide the BLM file and title support ensuring that your Grandfather divested of the operating rights in all depths. If they were limited to Bone Springs for instance then you may own the working interest in wolfcamp and everything below. Again, unlikely but if they are asking for a free assignment then make sure there is not some kind of catch here where you are getting diffused of something valuable.
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Why would they need to “clean up the title” NOW? Your getting money so why would you risk that? GIVE?
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Why would anyone do that? After all these year’s and now they want a “free be”! So funny!
Thank you for your reply!
We don’t know for sure if we own at other depths. We’ve done quiet title research on the area and we see assignments out of grandfather’s name, but not coming in. We currently have ORRI.
They want RT in some specific areas, but have not yet provided to what depth. In theory, we may own Operating Rights at other depths, but it is unlikely.
Do you know of any other document we should be asking them to provide? (Perhaps a page from the Title Opinion they are relying on? Maybe something else no one has mentioned that would show my grandfather’s interest?
Anyway, thank you so much for your answer. It was appreciated.