New mineral owner - Next steps?

I live in California and I am a new owner(by inheritance) of Section 32, Township 7 North, Range 3 West in McClain Co.

I am very concerned as I do not know what I should be doing…Do I accept offers? Do I lease? Do I wait for royalties? Are they drilling? I do not want to wish to sell, as I have heard through these forums that it is better to just receive the royalties, but what do I need to do?

Thank you ! Janet

Welcome to the forum and to mineral ownership. Every person’s situation may be different. You said you just inherited. Was it by a probated will or just someone implying it. If the first, then you are in good shape (most likely). If the second, then you will need to get a legal title accomplished.

A very good place to start in getting informed is here on the forum (Mineral Help tab at the top), the National Association of Royalty owners (they have quite a few references) and the OK Corporation Commission (good handbook for mineral owners on their website-it is very helpful).

32-7N-3W Your section had some old wells back in the day, but they are no longer active. Native just pooled the section on July 19, 2021. It was to change the venue of the hearing, so you don’t need to worry about this one. However, if another one comes up, then if the pooling is regarding a well and you did not lease before the order date, then you have 20 days in which to respond to the pooling or the decision will be made for you and you may not be pleased as they will assign you the lowest royalty. Native did have a well planned for sections 29 & 32, but it has been dismissed. You have some time now to learn things.

You may get offers to buy. I would not sell unless I thoroughly understood what I owned and the pros and cons. In your case, there is quite a bit of horizontal drilling nearby, so buyers may want the minerals for what they would be worth in the future.

You may get offers to lease. The first draft of those leases is not generally in the mineral owner’s favor, so they need some negotiation to improve the lease clauses. The forum can help with some of the general ideas, but best to hire and oil and gas attorney to get professional help. If you lease, you will may get a bonus which is essentially a paid up rent for the terms of the lease. If a well is drilled, then you will get a royalty for the production. Most of us prefer a higher royalty as the lease can hold the first well and any subsequent wells under the term of the lease (or pooling). The lease can last a short time if not drilling or decades if the drilling is successful.

If you don’t lease, then you can be force pooled which is not a bad thing in my opinion. It is essentially a very short lease for a specific reservoir which is worded by the Corporation Commission as to its terms. Keep asking questions!

Keep in mind things to make it easier for the next generation to inherit. If you have a trust, the minerals should be deeded into it. There are other ways to pass down minerals outside of probate such as a transfer on death deed. See your California estate planning attorney. He or she may want to contact an Oklahoma attorney for help.