Leasing vs partnership

I am the executor on my mother’s estate and we just found out she has mineral rights where two producing wells are. It was drilled in 2027 and began producing in 2018. Is it better lease our mineral rights or become a partner? If we lease we receive 25% royalty back to the production date. A partner is paid royalty after the cost of the well was paid off. Which is better?

Welcome to the forum and condolences on your loss.

If she had mineral rights and they are producing and you are getting paid, then you are probably already held by a lease that will be in effect until production ceases. Make sure that when you probate the estate the new owners’ names and addresses are properly filed in the county where the minerals are located. Your attorney can help with this. You also need to contact the operator and ask what they need in order to transfer the payments to the new owners.

If you are brand new to the oil business, being a Working Interest owner (partner) is not for the uninformed. You have to have deep pockets, because bills will be coming for the life of the well(s). You need a good oil and gas attorney, oil & gas tax accountant and liability insurance, so those will also be bills as long as the tract produces. Production can last for decades, depending upon what kind of wells are producing. Many families had an ancestor that was very savvy about the business and invested in working interests and knew what to do with them. A few generations down, the families are desperately trying to get out of them and it can be difficult.

We have never received Royalty for the Wells bc we didn’t know they existed and ME Energy never contacted us concerning our mineral rights or the producing Wells. We just sent the documentation of ownership of the mineral rights. We have signed no lease agreement and no lease agreement exists. Thank you so much for your direction. Where do I find out more about lease agreements for mineral rights.

Leasing varies from state to state. You may want to post that question in the state and county where you have minerals.

To start with, read the Mineral Help tab above. Depending upon your state, you may have been pooled which is a form of “leasing”, so that can be a factor. OK leases can be about two pages long with an addendum. Texas leases can be 15 pages long, so you can see how they can vary.

In my opinion, it is better to lease. No money comes out of your pocket and at 25% royalty, you should be getting a good share of revenue.

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