My family was recently informed that we had inherited some acreage in Texas where there is oil and gas activity. In Houston County, we have been approached by a landman in regard to an easement on the property for the Oneok Sterling III pipeline.
We have also been approached by neighboring land owners interested in purchasing our deed, which is less than 10 acres.
What would be the more most financially sound decision to make? We have asked for an appraisal of the deeded land we hold as well as a price quote from Oneok as to what they will pay to procure an easement. Would selling surface rights and retaining the mineral rights be a decision to be factored into our choices?
If we keep the property and sell the easement, are there drawbacks to this decision?
Any input would be appreciated.
Mr. Harper:
First, I would do some research in regards to any oil and gas activity in your area. The decision to sell the surface rights is strictly up to you and sounds like you are on the right by getting an appraisal for the surface rights. If you discover that the area is currently being developed (oil and gas), you might want to consider maintaining the mineral rights as this could provide additional income in the years ahead. You can always negotiate with Oneok in reagards to pipeline easements across your property. I would recommend seeking the advice of an attorney before signing any easement in order to protect your property from future pollution problems, depth and position of the pipeline, etc. There are properties all over Texas with active production which have pipeline easements associated with the property. If the area is developed (oil and gas) in the future, this could prove more valuable than the surface rights. All decisions are left up to you but be careful and do your homework in regards to both the pipeline easement and the mineral area involved with this property.
CL,
In addition to Mr. Mallory's comments, you may as well get a near term and long term mineral potential then you will have all the cards in your hand to measure the opportunity cost of holding surface or minerals or both and be able to properly evaluate any offers that come around. The studies I have done in Houston County indicate that there are some hot spots and some areas that will become prospective in the future due to newer drilling and completion technologies.
A pipeline makes your surface less marketable. If you cannot afford to travel to look at the property, contact a realtor in the area to see if they can go by and look at it and give you an assessment on marketability.
Dear Mr. Harper,
Speaking only as to the pipeline ~~
The Sterling III pipeline is being laid from Cushing, Oklahoma to Mount Bellvieu, Texas. The pipeline also has common carrier status. That pretty much means if OneOK wants to cross your property bad enough, they can go to court and have your property condemned.
OneOK will not give you the best deal right off the bat. What they will come back with is a valuation WELL in excess of the property used. It may be that the highest and best use of your surface is one of a pipeline route. It just depends on what they are offering and the value of the property. Don't take their first offer, they will do better.
Thank you to everyone who responded to my query. All of the information presented has been very educational.
In doing further research, I found the deed in question. The deed states that my family receives 1/2 undivided interest in a total of 39 acres. From reading other blog posts on this forum, it is my understanding that this means that my family owns about 19 acres and has 1/2 interest in the mineral rights of the 39 acres. There is no record of the mineral rights being reserved. Is my understanding correct?
The land owners who own the remaining 19 acres have offered to share the compensation they receive for the pipeline easement from OneOk (which they said was $400 per rod, on 2788 x 75 feet of property) in exchange for my family giving them back the land by signing a quit claim deed. The appraised value of the land is about $2500 per acre.
IF my family would consider signing over the land, what would be a fair compensation for us?
Any other advice?
As before, all input will be greatly appreciated. Thank you.