New Mineral Owner w/ questions


I recently inherited some mineral rights in Grady County; SEC 21-T7N-R6W and SEC 20-T007N-R006W. There is a current lease with Continental Resources (CR); the lease basically says it’s for 3 years (signed in 2008), but also says that it’s until CR stops drilling at 3/16th. So, I am basically stuck with a lease that my Grandmother signed? Which just doesn’t sound right to me, but what do I know. In addition, I was sent the Division Orders, but I never signed them I just sent in my W9 form and then they began paying me the monthly royalties.

Anyway, I am not entirely sure what I need to know, but thought maybe some vets could give me some pointers on how to handle these mineral rights. Are there any loopholes in the lease I can use to renegotiate? I just want to ensure I am not being taken advantage of.

Thank you in advance for your insight!

The division order just gives both parties a chance to agree about what they think the interest is in terms of a percent (actually fraction) of the oil and gas revenue. A division order is not required but by not signing you have accepted their fraction.

Yes, the lease your grandmother signed is probably valid. She probably got a bonus check to sign it. You should read it in detail. If the lessor is producing oil or gas then the lease is valid as long as they do regardless of the primary term (typically, one to three years).

You need to search on the Internet and download the pdf file containing the Oklahoma Royalty Owners Handbook which is published free by the Oklahoma Corporation Commission. You can find useful information and telephone numbers.

Mr. Weeks,

Thank you for your reply and information. I truly appreciate it. I will definitely download the Oklahoma Royalty Owners Handbook.

Thank you again!!!

You are welcome. Good luck. You might try to get an extract of the title opinion from Continental that explains how their title attorney determined your interest and then you can ask them how they determined your fractional interest in the well.

It has been my experience that CR doesn't share their in-house title opinions with royalty owners. However, the division order analyst listed on your division order paperwork can and should be willing to explain how they came up with your interest percentage. This way you have more information about if they have the correct number of mineral acres you have interest in and if they have the correct percentage on file. Good luck to you. This is a wonderful place with some awesome, very well informed people willing to share their information and knowledge, like Stephen Weeks et al!

Yes, You are basically being ruled by the lease agreement your Grandmother signed. It's too late ( probably ) to add any conditions favorable to you and your profit. If you don't have the lease ( and the terms - you live under ) go to the County Clerk for a copy. The Oil companies are very careful to include all the terms in their favor in the lease and the time to influence those terms is when the lease is signed. Also, the length of time that the lease will be in effect is stated in the lease including extensions, shut-ins and the terms you will be controlled by. It is most important to change those terms ( mostly not in favor to the lessee ) at the time of signing.

Miss Marilyn, you are correct about the title opinion. Usually, only the working interest owners can get a copy (since they paid their share of the cost of it and the royalty owners did not) but it does't hurt to ask. Sometimes I ask for an extract and get the whole thing!