New to the Mineral Rights Game

General Mineral Rights Discussion
1

I have recently inherited several mineral rights all leased with 4 different companies. I have many questions as this is all new to me.

  1. Why isn’t there a maturity date on the leases? My wife is a commercial banker and she has never seen a lease or a loan without a maturity date. We both find this curious and a little disconcerting.

  2. Who decides on the percentage of royalty that the Lessor will receive? The percentage stated on one of the leases is far more than what is currently being received.

  3. When a lease is taken over by another company, why isn’t the lease ratified or a new lease signed with the Lessor?

  4. How can a Lessee collect mortgage, taxes or liens from me if I only have mineral rights not property rights?

5a) I do not have a copy of all the leases with the various companies. When I asked one of the companies for a copy of the lease, I was ignored. What rights do I have as a Lessor when dealing with the Lessee? 5b) Is there a way to find and obtain a copy of the lease?

I appreciate any help that you can give me. Bill

2

Utah

3

  1. If there are producing wells, it’s when they quit producing. Otherwise, the lease will state something like 3 yrs, that is from the date signed. Unless it has an extension, then they have to pay a bonus which is stated in the lease.

  2. Whomever signed the lease agreed to a percentage of the royalty.

  3. When a lease is signed, it can go to any company.

  4. Lessee will collect taxes that are due to the government or state. Plus several other taxes. Oil companies can put liens on the mineral they have leased, kind of like owning a car, if it’s paid for, you can mortgage it to get money.

  5. You should be able to go to the county clerk office where the leases are and purchase copies of the lease or you can hire a land man to do it for you. Sounds like you may need to join the NARO in your state and get some education on owning minerals.

4

Virginia,

Thank you for your reply, your answers have been helpful. I need to clarify my question regarding the percentage of royalty. The original lease was signed by my great grandmother at 1/5 royalty. This was then inherited by her three children. Would the royalty have been split into thirds with each child receiving 1/15? Then would each 1/15 be split again with the heirs from each of the children? Thanks again.

Bill

5

Bill,

Not sure where you mean by 1/15.

The 1/5 is the total that the mineral owner will get, then it’s divided by the acres each person owns.

Let’s say the well total production for the month is $3,000. The total acres that the mineral owners would get is 1/5 or 20% times 3,000 = 600 for the acres that are in the spacing. Now let’s say the spacing is on 120 acres, so you can divide 600 by 120 to see what each acre gets = 5. Now if the 3 of you owned all 120, you would just divide the 600 by 3 and each would get 200. But, let’s say, the total the 3 of you owned in the spacing was only 90 acres. That would be 30 acres for each x $5 per acre, or $150.

I’m sure this is as clear as mud, maybe someone else can explain it better.

6

Virginia,

Lol! I had to read it a couple of times, but it does make sense. Thank you again for your help. I greatly appreciate it!

Bill