Mineral Rights Question

General Mineral Rights Discussion
#1

So I recently discovered my family in which I inherited a part of had purchased mineral rights a long time ago from a neighbor in North Dakota who needed money at the time, but still wanted his farm land, so they bought part of their mineral rights and the deed has the following language:

A 200/640ths interest in and to:

SW4, NW4, SE4 Section 6

NE4 Section 7

It is the intent to convey 200 net mineral acres

I didn't realize they had ever purchased mineral rights, I thought it had all came with the land they owned, but now the issue is that the title opinion from the oil company states less acreage than what was in the intent, but the owner who conveyed the interest still has an interest in the other sections (or at least the heirs do), so shouldn't we get part of their interest in the other sections? When you calculate it back it appears they originally owned 100% rights in all of the parts of section 6, but not section 7. So my family really only purchased 160 net acres, but what about the intent clause? This was something a landman pointed out to me that was interested in leasing the interest and mentioned there might be something I could do if I had an attorney look at it. He had to explain it 5 times to me and mentioned a 4 corner review, but I think I get it. The section is already drilled. Is it worth an attorney review?

#2

It depends on how big your share is. The royaltys on a good well in N.D. could easily be a couple thousand $ a day for 160 acres in a 640 acre section. You need an oil and gas attorney or an experienced Landman to sort things out. It sounds like there are a few pieces missing from the puzzle.

#3

Carl,

On the basis of the language you quoted, your family was to get 31.25% of the total mineral estate transferred limited to the minerals the seller owned in the 4 quarter sections. If the seller owned less or more than 640 acres your family still gets 31.25% of the actual amount the seller owned at the time of sale to your family.

The discrepancy between your calculations and the Division Order Title Opinion may be due to the difference between the nominal quarter section size (160 acres) and the actual quarter section size. It could also be found in the size and location of the drilling unit(s) involving your family's mineral interests.

As to the 200 acre "intent", you should determine the risk to reward of taking it to an attorney. An attorney will want to know the specific warranties given by the seller in the deed to your family. Maybe the "intent" is guaranteed, and maybe it isn't.

#4

I agree with Mr. Hutchinson, in that it may not be worth a lawsuit. Possibly there is room for a negotiated settlement ? If it came to a legal battle, I feel the sure winners would be......the lawyers.

Gary L. Hutchinson said:

Carl,

On the basis of the language you quoted, your family was to get 31.25% of the total mineral estate transferred limited to the minerals the seller owned in the 4 quarter sections. If the seller owned less or more than 640 acres your family still gets 31.25% of the actual amount the seller owned at the time of sale to your family.

The discrepancy between your calculations and the Division Order Title Opinion may be due to the difference between the nominal quarter section size (160 acres) and the actual quarter section size. It could also be found in the size and location of the drilling unit(s) involving your family's mineral interests.

As to the 200 acre "intent", you should determine the risk to reward of taking it to an attorney. An attorney will want to know the specific warranties given by the seller in the deed to your family. Maybe the "intent" is guaranteed, and maybe it isn't.

Gary L. Hutchinson

Minerals Management

#5

How many mineral acres did the previous owner own in section 7? You left out some information like most do that would have helped tremendously, what is the township and range? After what you said your family would own 200/640ths in each section or at least 150 net just in section 6 and it shouldn't be a correction section. If the previous owner didn't own 200/640ths or 50 net in section 7 then they would have conveyed what they owned. I just got thru the same scenario with the attorney doing title opinion on one of my tracts. It's not rocket science to figure. Why wasn't this address when your family leased? A quiet title is fairly cheap and worth it if the previous owner owned very much more than 10 acres in section 7. How many acres are they saying your family owns in each section?

#6

Cliff,

Even though Cara isn't replying, it looks like it is in North Dakota as she stated it was a neighbor in ND who sold. If someone conveyed 200/640ths interest in a 640 acre tract or tracts and they only owned 100 acres in that tract would they not have conveyed all they own, just the 100 acres or how many acres are you saying they conveyed without a disclaimer or proportionate reduction, they couldn't have conveyed 200 acres if they only owned 100 or say 10 acres? If they only owned 10 net acres wouldn't they have conveyed those 10 or all their interest if they only owned the 10? I am in the process of dealing with such same scenario in ND and the oil company is wanting a stipulation of interest or a quiet title be done but they agree I received what was conveyed or owners full interest if owner had less than the amount in the conveyance. I don't see why it is needed but the owner stated 10 acres being conveyed when they only owned 5.

#7

Whether it be stated in the deed they were conveying 200/640ths in 640 acres or 200 acres in 640 acres wouldn't it be the same if they only owned 10 then they only convey 10?

On quit claim, is it the same to have a deed headed or titled "Mineral Deed" or "Mineral and Royalty Transfer" that states in it they grant, sell, convey and quitclaim as a deed as one that is titled "Quit Claim" with same grant, sell, convey and quitclaim?

#8

100% of section 6 and 0% of section 7 for mineral rights. This is in North Dakota. Thanks again. The total in the family is 160.

#9

This seems much more complicated than I had hoped.

#10

If you meant the previous owner owned 100% of section 6 and zero percent in section 7, the owner conveyed 200/640ths in section 6 and zero in section 7 since he owned none in section 7 and he owned at least 200/640ths of section 6. Therefore the previous owner conveyed 150 net acres in section 6 and that is all. I don't see how anyone could come up with 160 when you say the previous owner only own 100% of 480 acres in section 6 and conveyed 200/640ths of that, 31.25% (same as 200/640ths) of 480 equals 150 acres.

He might have intended one thing, but did another.

Unless the judge in the county is related to the prejudice, unjust, corrupt judge we have here I would still take it to court on the intent.

#11

Good catch, that was a typo on my part. I have gotten used to the math of 640/4 is 160 acres, but you are correct at 150. I think it is worth a review based on what I have heard here as it is pretty complicated. Thanks again for the hard look and thought that went into this.

#12