Hi John, I still don’t understand the net acreage in the way you explained it to Donald House. If I own (for example) 100 acres of land, and the company could pick and choose where on that 100 acres to drill/produce, yet they say my net is 26 acres that I’m leased at, why is that? Isn’t 100 surface acres still 100 surface acres, and the minerals I own beneath should be equivalent? I appreciate learning how this works, as most of it seems less than straight forward. Thanks
John Bender said:
Hello, I work for an oil company and although there are a few out there that are not completely ethical, not all of us are out to profit at the expense of mineral owners. It is a job--Would you expect a plumber to not get compensated for working on your toilet? Some of these mineral interest owners have messy land titles that need cleaning up--Ex: you own interests, but say they were your great great grandfathers--the more honorable oil companies will trace your ancestry back generations, procuring documents which entitle you to be the legal owner--this way, if a rig is drilled on your land, you would get the royalty checks. If this title curative never happens...those checks would go to the last known address of the technical owner (your great great grandfather). This process of getting interests into the current owner's name is a tedious one as well as expensive. This is why oil companies offer the royalty percentage anywhere from 12 to 18.75%--so they are duly compensated for this work(and they recieve the remaining percentage out of the 20). It would either be that or a lower sign-on bonus for some cases.
As far as the gross acreage/ net acreage total... You own 9.6 acres out of the 37.8 acres in that particular township-range-section. You don't own the total 37.8--that is just what your actual acreage lies on, if that makes sense?
Also a lot of oil companies are not local (Hess is from Texas)--some are from Colorado-Nevada-etc.
There are a lot more factors at hand here than just oil companies trying to make huge monetary profits at the expense of the mineral owners (although some of them do)--it is not a practice all of us adopt and that I can assure you.
Donald R. House said:
Exact same cenario here. Hess you should watch, because nothing adds up when it comes to them. I have 37.8 gross acres that was worked out to 9.6 net mineral acres. But that acerage is figured out by the energy comp. And if you have Lone Tree Energy once the lease is signed they don't care who gets burned on their lease. Be sure you read your lease very carefully if lone tree is the one you sign the lease with. Because I do believe they probably use same leases. Make sure you read the lease carefully. Seems funny how you here how wealthy all the local mineral owners are getting in ND, and the not locals getting shaft? Pretty clear how it works in ND.
If for example, there is 100 GROSS Mineral acres and you own 20 NET Mineral acres, then other individuals own the other 80 NET Mineral acres. These "net" acres are set forth in the Mineral Deeds filed with the County Clerks office.
Snues said:
Hi John, I still don't understand the net acreage in the way you explained it to Donald House. If I own (for example) 100 acres of land, and the company could pick and choose where on that 100 acres to drill/produce, yet they say my net is 26 acres that I'm leased at, why is that? Isn't 100 surface acres still 100 surface acres, and the minerals I own beneath should be equivalent? I appreciate learning how this works, as most of it seems less than straight forward. Thanks
John Bender said:
Hello, I work for an oil company and although there are a few out there that are not completely ethical, not all of us are out to profit at the expense of mineral owners. It is a job--Would you expect a plumber to not get compensated for working on your toilet? Some of these mineral interest owners have messy land titles that need cleaning up--Ex: you own interests, but say they were your great great grandfathers--the more honorable oil companies will trace your ancestry back generations, procuring documents which entitle you to be the legal owner--this way, if a rig is drilled on your land, you would get the royalty checks. If this title curative never happens...those checks would go to the last known address of the technical owner (your great great grandfather). This process of getting interests into the current owner's name is a tedious one as well as expensive. This is why oil companies offer the royalty percentage anywhere from 12 to 18.75%--so they are duly compensated for this work(and they recieve the remaining percentage out of the 20). It would either be that or a lower sign-on bonus for some cases.
As far as the gross acreage/ net acreage total... You own 9.6 acres out of the 37.8 acres in that particular township-range-section. You don't own the total 37.8--that is just what your actual acreage lies on, if that makes sense?
Also a lot of oil companies are not local (Hess is from Texas)--some are from Colorado-Nevada-etc.
There are a lot more factors at hand here than just oil companies trying to make huge monetary profits at the expense of the mineral owners (although some of them do)--it is not a practice all of us adopt and that I can assure you.
Donald R. House said:
Exact same cenario here. Hess you should watch, because nothing adds up when it comes to them. I have 37.8 gross acres that was worked out to 9.6 net mineral acres. But that acerage is figured out by the energy comp. And if you have Lone Tree Energy once the lease is signed they don't care who gets burned on their lease. Be sure you read your lease very carefully if lone tree is the one you sign the lease with. Because I do believe they probably use same leases. Make sure you read the lease carefully. Seems funny how you here how wealthy all the local mineral owners are getting in ND, and the not locals getting shaft? Pretty clear how it works in ND.
This stuff is definitely not straight forward like you said, it sounds like a foreign language sometimes. I will try to give a better example here. Say your grandpa owned 100 acres--These 100 acres are found in sections ( a township has 36 sections). Say the 100 acres is located in Williams county, the legal description would be something like Township 155 Range 101 Section 35. One section contains more or less 640 acres. Here is where it gets a bit tricky... if your legals were as stated above--you would have to clarify which tracts or where exactly the land is located in Section 35. For instance, is it in the NE quarter? (160 acres) is it in the NE quarter of the NE quarter (40 acres) and so on. That is where the gross acreage comes from. The 100 acres your theoretical "grandpa" owned might have been in section 35, but he does not own ALL 640 acres in section 35. In this scenario the gross acreage would be 640 and his net interests would be 100 (because it is among the total acreage of 640 in section 35). This then gets diluted more by inheritances. your grandpa had 2 kids--the 100 net acres becomes the 50 net acres for both kids over the 640 gross acres.
I do not know if that explanation helped at all...if you have more questions, let me know.
Snues said:
Hi John, I still don't understand the net acreage in the way you explained it to Donald House. If I own (for example) 100 acres of land, and the company could pick and choose where on that 100 acres to drill/produce, yet they say my net is 26 acres that I'm leased at, why is that? Isn't 100 surface acres still 100 surface acres, and the minerals I own beneath should be equivalent? I appreciate learning how this works, as most of it seems less than straight forward. Thanks
John Bender said:
Hello, I work for an oil company and although there are a few out there that are not completely ethical, not all of us are out to profit at the expense of mineral owners. It is a job--Would you expect a plumber to not get compensated for working on your toilet? Some of these mineral interest owners have messy land titles that need cleaning up--Ex: you own interests, but say they were your great great grandfathers--the more honorable oil companies will trace your ancestry back generations, procuring documents which entitle you to be the legal owner--this way, if a rig is drilled on your land, you would get the royalty checks. If this title curative never happens...those checks would go to the last known address of the technical owner (your great great grandfather). This process of getting interests into the current owner's name is a tedious one as well as expensive. This is why oil companies offer the royalty percentage anywhere from 12 to 18.75%--so they are duly compensated for this work(and they recieve the remaining percentage out of the 20). It would either be that or a lower sign-on bonus for some cases.
As far as the gross acreage/ net acreage total... You own 9.6 acres out of the 37.8 acres in that particular township-range-section. You don't own the total 37.8--that is just what your actual acreage lies on, if that makes sense?
Also a lot of oil companies are not local (Hess is from Texas)--some are from Colorado-Nevada-etc.
There are a lot more factors at hand here than just oil companies trying to make huge monetary profits at the expense of the mineral owners (although some of them do)--it is not a practice all of us adopt and that I can assure you.
Donald R. House said:
Exact same cenario here. Hess you should watch, because nothing adds up when it comes to them. I have 37.8 gross acres that was worked out to 9.6 net mineral acres. But that acerage is figured out by the energy comp. And if you have Lone Tree Energy once the lease is signed they don't care who gets burned on their lease. Be sure you read your lease very carefully if lone tree is the one you sign the lease with. Because I do believe they probably use same leases. Make sure you read the lease carefully. Seems funny how you here how wealthy all the local mineral owners are getting in ND, and the not locals getting shaft? Pretty clear how it works in ND.
I do have other questions, one being if an extended family owns 1066.55 gross acres, and it shows 213.31 as net acres. 5 of us own all of one section and a portion of another. The math works out perfectly, it was land that a grandfather held as homestead and documented as such, never sold off any portion he held. Heired to family that still has their minerals, not surface acres, yet on the NDRIN there is 9 various individuals that have put in claims and leases on the exact minerals on the exact tracts of land and acreage; all since 2006 once the Bakken Shale became news. Not sure I've explained this so you can understand, but I'm guessing a trip to the Courthouse is needed. I did notice on some of the leases, the part about warranty of title (I think its #14 in the lease) was crossed out with one line thru that. Does the courthouses or the oil companies make sure the lease or so called owners are legit? Once again Thanks for your knowledge. John Bender said:
Hi Snues,
This stuff is definitely not straight forward like you said, it sounds like a foreign language sometimes. I will try to give a better example here. Say your grandpa owned 100 acres--These 100 acres are found in sections ( a township has 36 sections). Say the 100 acres is located in Williams county, the legal description would be something like Township 155 Range 101 Section 35. One section contains more or less 640 acres. Here is where it gets a bit tricky... if your legals were as stated above--you would have to clarify which tracts or where exactly the land is located in Section 35. For instance, is it in the NE quarter? (160 acres) is it in the NE quarter of the NE quarter (40 acres) and so on. That is where the gross acreage comes from. The 100 acres your theoretical "grandpa" owned might have been in section 35, but he does not own ALL 640 acres in section 35. In this scenario the gross acreage would be 640 and his net interests would be 100 (because it is among the total acreage of 640 in section 35). This then gets diluted more by inheritances. your grandpa had 2 kids--the 100 net acres becomes the 50 net acres for both kids over the 640 gross acres.
I do not know if that explanation helped at all...if you have more questions, let me know.
Snues said:
Hi John, I still don't understand the net acreage in the way you explained it to Donald House. If I own (for example) 100 acres of land, and the company could pick and choose where on that 100 acres to drill/produce, yet they say my net is 26 acres that I'm leased at, why is that? Isn't 100 surface acres still 100 surface acres, and the minerals I own beneath should be equivalent? I appreciate learning how this works, as most of it seems less than straight forward. Thanks
John Bender said:
Hello, I work for an oil company and although there are a few out there that are not completely ethical, not all of us are out to profit at the expense of mineral owners. It is a job--Would you expect a plumber to not get compensated for working on your toilet? Some of these mineral interest owners have messy land titles that need cleaning up--Ex: you own interests, but say they were your great great grandfathers--the more honorable oil companies will trace your ancestry back generations, procuring documents which entitle you to be the legal owner--this way, if a rig is drilled on your land, you would get the royalty checks. If this title curative never happens...those checks would go to the last known address of the technical owner (your great great grandfather). This process of getting interests into the current owner's name is a tedious one as well as expensive. This is why oil companies offer the royalty percentage anywhere from 12 to 18.75%--so they are duly compensated for this work(and they recieve the remaining percentage out of the 20). It would either be that or a lower sign-on bonus for some cases.
As far as the gross acreage/ net acreage total... You own 9.6 acres out of the 37.8 acres in that particular township-range-section. You don't own the total 37.8--that is just what your actual acreage lies on, if that makes sense?
Also a lot of oil companies are not local (Hess is from Texas)--some are from Colorado-Nevada-etc.
There are a lot more factors at hand here than just oil companies trying to make huge monetary profits at the expense of the mineral owners (although some of them do)--it is not a practice all of us adopt and that I can assure you.
Donald R. House said:
Exact same cenario here. Hess you should watch, because nothing adds up when it comes to them. I have 37.8 gross acres that was worked out to 9.6 net mineral acres. But that acerage is figured out by the energy comp. And if you have Lone Tree Energy once the lease is signed they don't care who gets burned on their lease. Be sure you read your lease very carefully if lone tree is the one you sign the lease with. Because I do believe they probably use same leases. Make sure you read the lease carefully. Seems funny how you here how wealthy all the local mineral owners are getting in ND, and the not locals getting shaft? Pretty clear how it works in ND.
It could be a couple things. The first thought that came to my mind was when you said the 5 of you own the 213+ acres--after which you said that between the five of you, you owned a complete section and part of another. Owning a complete section would mean that you own 640 (give or take a few) acres and that this 640 would be your net acreage and not the 213.
I think what is maybe confusing here is the gross vs net acres again. Let's say you all own the 213.31 acres in section 30 and part of section 31... The legal could read something like this:
Township 150, range 85
Section 30: ALL
Section 31: E2
I am not sure if this is the case for your legals, but if the Section is followed by an "ALL" after it, that means your acreage could be found within ALL of the 640 acres in section 30 (the 200+ would be amongst the 640)--it doesn't mean you own all of the 640 acres within that section.
HOWEVER, if you meant that the five of you individually own the 213 acres each for the total of 1000+ acres, then there might be a problem. If no one had staked a claim on these lands or provided any documents in the courthouse claiming the mineral interests within the past 20 years, the surface owners can reclaim the mineral interests. So I guess my question is if your family member still live on these lands? If not, the people living on there now can stake claims on the interests if there has been at least 20 years of inactivity for them. i hope this is not the case, but I have seen it happen before. Let me know.
Yes, the one section says ALL and the other shows the portions of the next section. Perhaps the ALL wording is where I was confused, thinking we owned ALL of that sections mineral acreage. However, if you only owned part of that, wouldn't it be pieced out to the exact parts?
The last lease on that was 1996 for 5 years, so it should still be within the 20 year limitation. It isn't in one of the areas that is currently being drilled, and interest in getting leasing, has been null for many years. That is why after checking the NDRIN and seeing that the interest did increase bigtime on those acres after the news of the Bakken Shale, and all the "extra names".
I'm thinking the documents listed on that county only date back to around 2000, so our 1996 lease isn't showing. We have made plans to visit the courthouse within the month, to get further information and assure that our documents are in proper order to protect us moving forward.
Thank you for the helpful data and information. I'll keep you posted if we find anything thats out of the normal routine.
Hello, Mr. Bender. Could you explain to me how oil co's are helping people untangle their titles and which oil co's are doing it? I have a bone of contention with a division order analyst who says they think my aunt may own some minerals that belong to my brother and I. I asked him what documentation he has that this is the case and he told me he has a report from a landman that this may be so, and nothing else. My aunt did inherit my uncles share after my grandmother passed because he died without issue. My father on the other hand had 2 strapping sons and died intestate. I have never heard of an oil co helping someone to untangle their title problems. I'm sure it has happened, somewhere, but I have never heard of it.
I should have been more specfic, oil companies that lease people are responsible for clearing up titles, but if a well is drilled on lands that have the majority of people leased or wanting to lease on them, the royalty checks would go to the last known address on record. In this scenario, oil companies are simply obligated to send out one check and as soon as that check is returned to them, they do not have to put forth the time,effort, money to find the true heirs of that interest holder.
That is why I usually tell people that leasing is a good thing--if you lease with a good/honorable company, they will clear up all the title work for you, moving it into your names legally in the courts.
As for the report from the landman saying your aunt owns the interests, unless there was a mineral deed conveying them to her...I can't see how that would be possible. Let me get this straight, though.
Whose interests were they in the first place? Were they your grandmothers? If, say, your grandma owned 10 mineral acres, passed away and by natural order of succession (or her Last Will), they would go to your father and your uncle evenly--5 to your dad, 5 to your uncle. The 5 your uncle owned would have passed from him to your aunt, but the five your dad owned should have been split up evenly by you and your brother (2.5 each), Unless your grandma gifted all 10 to your uncle, there is no way your aunt can own your interests.
Did the original owner have a Will? And was it ever probated or processed in the Court? Let me know because it sounds as if these interests do belong to you and not soley to your aunt.
The interests passed from my great grandfather to his children and a few others by will. My grandfather and grandmother divorced, so originally grandmother had no interest. When grandfather passed he willed the minerals to his two sons,[ my father and uncle ] and his daughter (my aunt). My uncle married and divorced and passed with no issue. Grandmother inherited my uncles share. When my grandmother passed she willed everything to my aunt. So my aunt came to posess my uncles share. My father and Mother divorced, and dad died intestate, but he had two sons, my brother and I. All the wills and my fathers estate are properly probated in the state of North Dakota. I wonder how a landman could possibly think my aunt posessed any of my fathers minerals. It’s a somewhat annoying situation. At this point, the division order analyst says that my brothers ownership in the Kermit 31 well is confirmed and he is tentatively penciled in on the Rink 24 that they think my aunt may own our interest. There are 2 other wells Curtis and Cherry Creek that the same documents clearly show our ownership in all 4 wells. I am told that they merely have me tentatively penciled in on the Kermit well. When I mention the Curtis and Cherry Creek wells they ask why we would have interests there. The interests are clearly stated on the same documents that they used to determine my brothers interest in the Kermit well that they admit to. I think incompetence has led to large errors and they really wish I didn’t exist. Good times all round.
Hmm...yeah from what you have said, there is no way anyone should think your aunt can possibly own your father's interests. I think "somewhat annoying situation" is a bit of an understatement. I would be peeved if I was you. I honestly do not know why they would think this. Your father's estate and mineral interests are yours--have you filed a quit claim deed to the public in the past? Portraying that you do own these interests?
r w kennedy said:
The interests passed from my great grandfather to his children and a few others by will. My grandfather and grandmother divorced, so originally grandmother had no interest. When grandfather passed he willed the minerals to his two sons,[ my father and uncle ] and his daughter (my aunt). My uncle married and divorced and passed with no issue. Grandmother inherited my uncles share. When my grandmother passed she willed everything to my aunt. So my aunt came to posess my uncles share. My father and Mother divorced, and dad died intestate, but he had two sons, my brother and I. All the wills and my fathers estate are properly probated in the state of North Dakota. I wonder how a landman could possibly think my aunt posessed any of my fathers minerals. It's a somewhat annoying situation. At this point, the division order analyst says that my brothers ownership in the Kermit 31 well is confirmed and he is tentatively penciled in on the Rink 24 that they think my aunt may own our interest. There are 2 other wells Curtis and Cherry Creek that the same documents clearly show our ownership in all 4 wells. I am told that they merely have me tentatively penciled in on the Kermit well. When I mention the Curtis and Cherry Creek wells they ask why we would have interests there. The interests are clearly stated on the same documents that they used to determine my brothers interest in the Kermit well that they admit to. I think incompetence has led to large errors and they really wish I didn't exist. Good times all round.
I have filed the mineral deed of distribution from the probate of my fathers estate. The operator has no excuse that I can see. They seemed really shocked that I exist when I first contacted them and they didn’t tell me my owners number for about 2 months. I will crack this one day. Thanks for listening.