Mineral rights in Reagan County Texas

General Mineral Rights Discussion
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i posted this in the legal forum but maybe should have posted here.

My sister, cousins and I have received an unsolicited offer to purchase mineral rights to property that we (supposedly) inherited. The property was owned by my grandmother’s nephew who never married or had children. The person who contacted us stated that the property reverts to the nephew’s parents and their siblings which then bring in my grandmother and her family. He thought that 32 people could be part of this inheritance chain.

The property is in Reagan County Texas and was put into receivership with the county clerk last year. The clerk established a 3 year lease with an oil company. They drilled a horizontal well and are producing oil and gas starting in October. I found monthly average (6 months) oil production numbers of 10255 BBL (production) and 10141 BBL (disposition). The monthly average for Casinghead gas is 20083 MCF (production and disposition).

I am trying to decide if I should sell my interest – if I have one. Is the described inheritance chain correct? How can I establish the value of our mineral rights? What monthly income is expected based on the production numbers provided? The lease stipulates a “royalty” payment at ¼ (one quarter) the market value at the mouth of the well. So far, no payments have been made to the county for royalties. The county has only received an initial lease bonus of $25,600. Are the heirs entitled to a share of this bonus?

I suspect legal fees may be costly.

Is it worth the cost to obtain title for our share of mineral rights?

Thanks in advance for any advice

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3

Bill,

I'm currently managing mineral rights for inherited mineral owners in Reagan County. The county can expect revenue from multiple wells of similar size and production to be drilled in the next 10 years. I think your perceived position may be worth a bit of your time. Consider this:

  1. Find out from the county exactly how to get your property out of receivership, then if feasible,
  2. Obtain control of as many of your kin's interest as possible through simple Affidavits of heirship and QCD convenances into one person or entity. They should nominate you to carry the ball.,
  3. Send a personal contact to me through MRF and I'll advise you about the next step. (See my posts on MRF. I'm an inherited mineral owner advocate.)

Successful legal consolidation through your efforts could mean in excess of $6000/net mineral acre to the seller depending on the exact location. Your alternative is to accept the offers with the usual strings attached and let the optionee do the work and reap the rewards.

Gary L Hutchinson

Minerals Mangement.