Lease not signed due to death

My Dad had a lease in Gregg County. He died in 2000 and left all his O&G interests to my Mom. My Mom fell ill in 2008 and died in 2009. A lease supposedly was sent in 2008 or 2009 - the landman wasn’t sure when - and it went unsigned. Whether it was a bad address or what I do not know. This landman told me that this royalty interest from the lease became a working interest. Since no one signed the lease, the company he works for paid the amount due to the working interest and absorbed the interest. My Dad’s will was probated in Harris county then recorded in Gregg County. Same for my Mom. Seems they didn’t look too hard for anyone. Does this sound right to anyone. Can an oil company do this?

Sounds like you are in Texas. the MRF directory has the following Texas Attorneys. G. Wade Caldwell Caldwell East & Finlayson 700 North Saint Mary’s Street Ste.1825 San Antonio, TX 78205 210-225-1655

Patrick John Flueckiger Attorney at Law 2028 E Ben White Blvd. Suite 240-2425 Austin, TX 78741 512-535-8301

Oil companies can drill on a property even if 100% of the mineral interest is not leased. I think this is usually called a carried interest, but yes, essentially it becomes working interest. They will absorb the cost of the unleased mineral owners. The mineral owners will not get paid until their proportionate costs of the well have paid out 100%. Once the other working interest owners have recouped their costs, the mineral owner will start receiving payments. The upside is, you’ll get the full interest, instead of a reduced interest due to royalty rate in a lease. Downside is, you have to wait until the well pays out. It’s possible the company might be willing to lease to you now if you want to start receiving payments sooner, just be aware it will be less than if you are willing to wait it out until pay out. Also bear in mind, it’s possible the wells may never pay out. This system is put in place for scenarios like this when owners can’t be found or reached, or owners refuse to sign a lease. Hope that helps.

Edit: it might be worth your time to speak to an attorney.

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The landman I talked to told me he was under no obligation to tell me anything. Is that correct? Can they tell me if the well has paid out? It’s been producing for probably 10 years.

The operator knows the pay-out status of the well as those records are maintained by the accounting department. Whether or not the landman knows is not clear. However he seems to be unwilling to work with you and may next offer to buy your minerals. Best move is to send a demand letter to the company for information. It will get more attention if you have an oil and gas attorney. But you need to know how many net mineral acres you own.

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Yes! They absolutely will! Big Oil did it to us… my family. Several of us were willed mineral rights from an elderly aunt. The she finally died (in another state), an oil company laid claimed to the interests, claiming ‘no descendants could be found.’ When all was said and done, they showed attempts to contact several of the kin using misspelled names, ancient addresses, etc. A couple of us got these communications; others did not. In the long run, the company was able to “reclaim” the “abandoned rights” because the time that was required for everyone to respond (11 people) expired. It was a travesty, but a few of us did not have the resources to challenge multiple corporate lawyers. Be aware of expiration dates stipulated for challenging these take-overs.