My sibblings , myself and other relatives inherited mineral rights in ND, we all recieved lease offers from a land man but only one of us has signed. The person who signed called the land man to find out why she had not started recieving royalties, he stated that until the rest of the family signed she would recieve no royalties. Does anyone know if this is true or not?
Donna:
First, you may be somewhat confused as lease offers results in bonus amounts ($/net mineral acre) not a royalty amount which occurs after a well has been drilled and oil is sold. In regards to the other, if each of you own a share in the lease, it should not matter which sibling signs as each of you would be independent to lease your own portion of the minerals. In other words, each sibling could sign with whomever they elect.
Donna, have you forwarded the probate information to the division order department of the operator ? Once you have done this you should be able to call and check that you are in pay status, then everyone should start getting paid whether you leased or went non-consent. Keep in mind that the operator will not automatically know that the probate has been completed. I would also allow about a month lag time after you provide the probate information before you are put in pay status and if the checks have already gone out for that month, it will be next month before the checks are sent with one additional month on them.
The landman lied, I don't know any other way to put it. They had better not hold your royalty after you have met the title requirements. You do not all have to lease to start receiving royalty. Such outrageous lies are what give landmen such a bad name. I know several landmen who I am sure would not stoop to such acts but I am equally certain that there are far too many who will.
Donna, if you have not received the AFE Authorization For Expenditure (well proposal) and either elected not to participate or failed to make an election within the allotted 30 days, you still have the right to participate in this well which would save you the 50% risk penalty if you could scrape up enough money to participate for a few acres. Having 18 months production already owed to you would go a good distance towards paying back your participation costs. If you participate in this well, you can still be non-consent in following wells. I hope you find this information helpful.
Clarification, the operator should have sent you the AFE. The risk penalty can not legally be imposed until you have been made a good fait lease offer or have been given the opportunity to participate, which is what the AFE is, and you elect not to participate or 30 days pass in which you have not elected to participate. Your right to participate does not expire until you receive the offer and fail to act on it.
In a round-about way, he could have meant that a well isn't going to get drilled unless the company gets your brothers & sisters wrapped up, too. No production, no royalties.
I think Tom's on to something. So often on this Forum we are left with trying to "interpret" what somebody meant when they said something. The landman might well have meant that unless the other siblings sign, the entire acreage will be CUT OUT of the drilling unit, in which case there will be no royalties for any of you. I would talk to the siblings and see why they are holding out. Please impress upon them not to fall into the trap of thinking, "Hey, the oil company needs me, I'm going to ignore them so they will come back to me with a higher offer." In most cases, the oil company does NOT need you unless you have a large amount of acreage or a small amount of acreage in a key location.
The oil well has been drilled and active since february 2012.One reason my sibblings and I have not signed is because the probate was just recently completed , we are now the legal heirs to the mineral rights. My husband and I have been doing research and seeking advice on whether we should sign a lease or go non-consent, we have decided to go non-consent.
Pete, it's North Dakota, they can't be cut out, every single acre in the entire spacing is considered to be drillsite or wellbore tract. They will all receive the weighted average royalty of what everyone else in the spacing signed for or 16% whichever the operator elects, from the very first barrel.
The oil company really does need them if they want to make more than the amount of the bonus they offer people. I don't see why they are not happy, it's almost an exact swapping of the end of the stick. ; )
Pete Wrench said:
I think Tom's on to something. So often on this Forum we are left with trying to "interpret" what somebody meant when they said something. The landman might well have meant that unless the other siblings sign, the entire acreage will be CUT OUT of the drilling unit, in which case there will be no royalties for any of you. I would talk to the siblings and see why they are holding out. Please impress upon them not to fall into the trap of thinking, "Hey, the oil company needs me, I'm going to ignore them so they will come back to me with a higher offer." In most cases, the oil company does NOT need you unless you have a large amount of acreage or a small amount of acreage in a key location.
I don't understand. You say the well has been drilled and actively producing for the last year and a half. But in the original post you stated that you and your siblings received lease offers from a landman. Generally speaking, it would make no sense to lease minerals that were already producing. Perhaps they are wanting you to sign something else, like a division order? If the person from whom you inherited the minerals signed the Lease before he or she died, and the oil-and-gas company drilled the well before the Lease expired, then after your relative passed away all the oil-and-gas company would do, upon receiving proof of ownership change (such as a Probate), is change the name of the royalty recipient(s) in the deck, but there would be no need for them to lease, except in a couple of extremely rare circumstances that I can think of.
I was equaly confused upon recieving an offer of a lease before probate was completed , my assumption was that they were willing to take the risk that we were the legal heirs, it is all so confusing. Now that probate is finally done maybe we can get some answers.
Makes no sense to me unless they wanted you to sign something else like a division order or ratification, or were wanting to lease other minerals you inherited that were not associated with the producing well, or one of those very rare circumstances. You did not "inherit" from a stepparent, did you?
We were each sent a lease offer from Diamond resources. We inherited the mineral rights from my great grandmother.
Pete Wrench said:
Makes no sense to me unless they wanted you to sign something else like a division order or ratification, or were wanting to lease other minerals you inherited that were not associated with the producing well, or one of those very rare circumstances. You did not "inherit" from a stepparent, did you?
Oil companies often lease people after the fact of drilling the producing well in ND.
Operators don't want to force pool you and make only the 50% of actual cost of drilling and completing the well risk penalty. People still sign leases too because they don't know exactly what forced pooling means and it sounds somewhat ominous. The operator did not come there to make $4k-$5k per acre risk penalty per acre, he came there to make $25k-$50k or $100k per acre in the very best areas. They can't force you to sign the lease and give the operator the lions share in the low risk 99% success rate Bakken. They have to talk bribe or scare you into signing the lease and giving it to them.
Once the operator force pools you, he limits himself to the 50% actual cost of drilling and completing the well risk penalty and recovery of the proportionate cost of drilling that came from his pocket originally. The last thing the operator wants to do is force pool you because that means unless some slick work to get you to sign a lease after all, after the force pooling the mineral owner is on the way to become a working interest short of the well going dry or terrorists blowing it up. Wells that continue to produce will pay out, it's just a matter of time.
For all those who say, what if the well is being operated at a loss? What about the cost of plugging the well? If you never got to the point of being a working interest, you owe nothing out of pocket, that 50% risk penalty paid for that and if you do become a working interest, making the big bucks you can always give your part of the well to the operator, be paid for the salvage value of your part of the well and no longer be responsible for any part of the well's bills thereafter. of course if they do something to make the well productive again, you will not share in the proceeds of that well but you still own your minerals and would still have your interest in any other wells that are drilled that you are in the spacing of.
Well, I've certainly heard of leasing a mineral owner after drilling a well, but it certainly does not happen "often" in the four states where I have worked (not including ND). If the minerals that this poster and her other family members inherited from great-grandma were NEVER leased, then she might stand to gain more by NOT signing a Lease than by signing it.
Donna, you should contact the operator of the well directly. Contact the Division Order department or Interest Owner Relations. Diamond is a lease broker working for the Operator, therefore they cannot address all your questions as well as the operator, especially since you are going non-consent.
That's exactly what I have been contemplating doing, thank you for the advice.