My family has inherited 50% of the mineral rights on some property in Oklahoma, it was leased before we got them. My question is how does the lease work and who does the negotiations for our part of the lease? Thanks in advance for your help.
Is the the property in Payne Co 1-20N-3E ?
Yes
Rick Howell said:
Is the the property in Payne Co 1-20N-3E ?
I don't see a recent lease. There is a well producing on it that was drilled in 2009 that covers the NE/4. The Glencoe 4-1. Are you getting paid on it?
Yes, Glencoe 4-1 is what we are currently being paid on. I can't seem to get much lease info from Phillips other than that they handle all of it. They gave me the name of a company out of KS that has the lease but no contact info. We are getting 1/16 and I would like to know if and what my options are as far as when negations come up again. I would like to see the lease, but haven't had any luck in getting a copy of it. Is there anyway to see what has been done on the property in the past? My Grandmother has had the rights since the 50's.
The leases have 2 terms, a primary and a secondary. The primary has a calendar term of usually 3 years. The secondary term kicks in once drilling starts and if production commences, is held as long as it is producing. Or HPB, held by production. I don’t see a lease filed in their names. I don’t see anything that could have held production. So it is a bit odd. Normally I can find a lease. Since it (or at least a portion) is being held by production, the lease will not come up for renewal.
1/16 does not sound right at all. I would expect a 1/8 at a minimum.
You might have to have someone search the records in Payne County. There should be a lease and they would have a copy on file. It is in your best interest to dig into it, but it may cost you a bit of money to have a landman search out the info.
John,
Rick Howell is all over this as usual.
Since you are getting paid by a product buyer, they must have been notified of the change of lessor designation at some point or you wouldn't be getting paid. You may have been asked to sign a new division order. That division order combined with the lease itself, will tell you much about the status.
Thanks guys!
If we were interested in selling our mineral rights off, how would we go about finding out what the value of them would be and what would the process be?
Thanks in advance for your advice.
Selling mineral rights that have a producing well associated with them is not a good idea unless you are desperate for cash. Any offer that you get very likely will not be as much as you would net from the future royalty payments less taxes.
Unless the owner has a sound understanding of geologic potential and a long term plan to reduce the risk of receiving future income. The opportunity cost of holding minerals vs. low risk, long term income that meets the owners lifestyle needs may be too great. For example, spending time with your children or grandchildren who live far away may bring better quality to life than living with the vagaries of mineral economics totally out of your control. The bottom line is to make an informed decision.
Pete Wrench said:
Selling mineral rights that have a producing well associated with them is not a good idea unless you are desperate for cash. Any offer that you get very likely will not be as much as you would net from the future royalty payments less taxes.
Well, the Buyer is going to have a "sound understanding of geological potential" too, and factor that into his offer to buy the minerals. But why would anybody want to "reduce the risk of receiving future income?" I don't understand that statement, even rich people want more money.
If you mean that it's an inconvenience for somebody to "mess" with cashing mailbox money and managing them by making an inquiry here or there about them, then by all means, yes, please sell the minerals, TO ME, for dirt cheap if income is a bad thing, and I will relieve you of that inconvenience!