My family was recently contacted by an Energy company and they stated that my grandma & her siblings are heirs to mineral (& surface) rights in McKenzie County, ND. It seems like the Energy company isn't very forth coming in the information - they state that there are royal monies in 'suspense'. We are just not sure if they are telling us all of the information (maybe there is more than they originally told us, but want us to go through the whole probate process before disclosing the full details?). Is there a time frame that they monies will be held in 'suspense'? Is there a way besides going through the timely & costly probate process to find out what % of each section are 'ours'? They did say that it is not leased, currently - but that we would probably be approached to lease (by them we are assuming, since they are already drilling there, right?) Sorry so many different questions...
SR, you will probably have to probate sooner or later to collect royalty. If you need more than one probate it would probably be best to do a quiet title action instead.
To find out what you own before the operator tells you, you will probably have to search the chain of title, look in probates and look at deeds or old leases if any.
I wouldn't sign anything until you know how much you own and how good the wells are because you could be owners in the well or wells if it was in one of the better areas and it was producing for a few years.
You might contact a different company and tell them you would like to lease and they might not be so tight lipped. If you told your operator you were seeking offers from others right now, they might rush a lease to you with the property description on it and that would make it alot easier to find.
You might check with the state to see if they are holding funds in an ancestors name.
Good luck.
How do you go about checking with the state to see if they are holding funds?
How do you go about contacting a different company if one is already drilling on the property? I think it is best that we do the probate / or as you mentioned the quiet title action (what is the difference?). But there are a few different parties involved. (So are we not to believe that that oil companies are giving us the full disclosure / truth all the time, not that they are lying to us - they are just trying to do their business and make as much as possible, right?!)
You should be able to search Office of the State Treasurer North Dakota.
The oil companies are trying to make as much as possible. More for them is less for you, it's a zero sum game. If you told some company that you had mineral acres to lease in Mckenzie county that already have a well on it so they can see the production and possibly participate at virtually no risk, possibly have enough money sitting in suspence so they could participate just by leasing you with no money out of their pockets so they can collect from 80% of the oil produced from your acres from now on.....they might jump at the chance. If it's not Continental Resources drilling, contact Diamond Resources who leases for them. Contact Empire oil, Northern oil and gas, Hess, Whiting, XTO, Kodiak and so on.
What is the difference between quiet title action and probate?
In a nutshell, probate is when the court approves the division of the deceased persons property. If ownership passed through more than one unprobated estate, you would need to do each probate in order. Multiple actions $$$.
Quiet title is to silence claims to the property you are seeking title to. If the probate/s would have given you title, you should have the superior claim and other interested parties [ most likely other family members, if they wish ] can dispute your claim, and the court decides who the property belongs to according to law, as a probate would determine according to will or law. If the minerals have been passed down to you through multiple unprobated estates, the quiet title action can deal with all of them at once and give you marketable title that you need to get paid royalty.
If there is a problem with your title, such as lacking a probate/s, the operator need not pay you until you clean up your title. If it takes you years to clean up your title the operator gets free use of your money for years. You get no interest.
Ivan, istalick08@law.du.edu 307-752-6864 , met Ivan at Williston courthouse
Morgan, morganstalick@live.com 307-752-0830
Robert Kennedy will tell about what to do when producers drill without a lease, and how to actually be in on the producing end of the business with them.Its your call, they slipped up!
Apparently they are holding funds that are 'ours', we just need to prove that we are the heirs. Is there a way, besides quiet title/probate to see how much is being held for these 2 sections that we have interest in? Or is there a way to get them to give this to us before this process is completed? So we can have some inclination that it is going to be worth while to spend the resources doing this process? We have been in contact with an attorney, but have not retained them yet.
Thank you RW & Larry! We appreciate your input, thoughts and suggestions. This is helping us make decisions... that will hopefully increase our 'royalty money'!!
Is there anything (fees, contracts, solicitation, etc...) that we should be leary about?
First, don't enter any contracts, a lease is a contract, until you know what is going on. Don't cash any checks either.
If you knew where it was and approximately how many acres you could, or rather I could, [but I'd be glad to show you how] you could find the production for wells, determine how much money they would be holding for you at a 20% lease, or how much they are already holding and would have to pay you at 16% statutory royalty if you refuse to lease and become a carried interest.
SR, this is the thing that makes my ears prick up, USUALLY, THEY ARE NOT SO SECRETIVE. usually it's just a few acres, they would like to have them, but it doesn't really matter to them anyway. You could be in one of the spacings where they drilled 6 wells simultaneously and all had initial production of 20,000 to 25,000 barrels oil per month. Even a few acres in such a spacing could be serious money from the first check to far into the future. In such a situation you would want to maximize your asset, whether that be to go non-consent or lease to the highest bidder because you still can at the moment.
The reason that you can still lease to the highest bidder is because the operator has not offered you a good faith lease offer, has not offered you an opportunity to participate if you refuse to lease. These are requirements before the operator can force pool you and you automatically become non-consent. You will have 30 days from the offer to participate to decide if you would like to participate.
If you absolutely had to to, you could send the operator a letter that you refuse to lease and that they need to send you the AFE [authorization for expenditure] [participation offer] find out where your acres were located so you could gain all the knowledge of production and how much should be waiting for you in suspense. I would hold that card for a little while until you become more familliar with what is going on because once you get the offer you have to do something, decide to lease, decide to participate, decide to be non-consent, try to sell your afe for a yet to be determined amount of money up to $10,000 per acre, retaining your rights to any future wells, lots of decisions and 30 days is and is not alot of time. If you were in a space with multiple wells, they would need to send you multiple AFE.
If the landman/operator is not being forthcoming with information, you need to deal with them only by mail. If they are not going to tell you anything, it doesn't matter how long it takes for them to tell you nothing and you want a record if it appears they are acting furtive. Better safe than sorry. Welcome to oil and gas.
Just don't sign anything, check, contract/agreement or whatever.
SR said:
Apparently they are holding funds that are 'ours', we just need to prove that we are the heirs. Is there a way, besides quiet title/probate to see how much is being held for these 2 sections that we have interest in? Or is there a way to get them to give this to us before this process is completed? So we can have some inclination that it is going to be worth while to spend the resources doing this process? We have been in contact with an attorney, but have not retained them yet.
Sections 1 & 12, T150N, R99W, McKenzie Co.
Starting by date and preserving their anonymity, although I don't think there is any reason to except you may not want to be mobbed with offers.
1. 50,988 bbl oil in 3 months
2. 34,266 bbl oil in a little under 3 months
3. 40,750 bbl oil in 51 actual days of production
4. DRL status [drilling] ehich usually means it's being fracked
5. 13,943 bbl oil in 28 days
The above were drilled from section 12
There was one drilled from section 1, and we have a winner! This is the first well that made them decide to drill the other 5. 179,899 bbl oil since May of 2011. They only produced this well for 19 days in Feb and it still produced 6,024 bbl oil, about 317 bbl oil per day.
Just 2 things. 1) Don't sign anything! 2) I hope I'm not boring you, lol.
I consider any well that produces at least 50,000 bbl oil in the first 6 months to be a good candidate for at least being a carried interest in. The 16% royalty should console you until the wells pay out.
I guess we know what the big secret is now. You might search "non-consent" or "carried interest" and look for my posts. Read up, think about it, check out the forced pooling law NDCC 38-08-08, read it carefully because there is some stuff in there that does not pertain to a mineral owner but to someone who LEASED a mineral owner and then did not participate in a well, their penalty is much greater than for the actual mineral owner. At this point, the operators landmen are probably going to try and scare you, they will tell half truths and untruths because they want the money for 80% of your oil and they can't get it unless you voluntarily give it to them in a lease.
Do some study and let me know if I can help.
SR said:
Sections 1 & 12, T150N, R99W, McKenzie Co.
Whew, my head is kinda spinning right now. Guess we will have to get some research done (and hire an attorney!!) . Thank you so much.
Robert, is this outfit worth its price?
also is this below just propaganda or uninformed advice?
Go ahead and ask, as you DO have a case.
I tried to get lawyers at Watford city and got this reply from
Legal Assistant Khala Kronenberg <Khala@dakotalawdogs.com>
109 5th St. SW
P.O. Box 1260
Watford City, ND 58854
Phone: (701) 444-2211
Fax: (701) 444-2847
They are not taking new clients at this time. The reason for this is that they already have a major caseload and simply do not have enough time for new cases. It would not be fair to you or their other clients to accept another case.
I am sorry for the inconvenience. Please refer to the attorney referral number and they will be able to assist you in finding an attorney that can help you. Again, that number is 1-866-450-9579.
Larry, there are several different kinds of wells, their advice may be good for many. I wouldn't want to participate in a verticle well on 40 acres, but I might want to be non-consent in it. If it never made money I would take the ND statutory royalty and if it looked bad after recovering cost/penalty, I could always, by law, give it back to the operator and they would have to pay me salvage value for my part of the well, sell my part of that particular hole in the ground and retain my mineral rights otherwise or other options. If the well never pays out and recovers the penalty, all they could do would be place a lien against the PRODUCTION of my minerals, if anyone ever decided to drill again after a fiasco.
Larry, that particular post did not mention non-consent, just pay up front participation.
I am sure that the NARO is a fine organization but they may be slanted towards leasing.....and I'm not. I tried leasing myself at one time, the problem was that the cheapskates never paid and I would have to fight them to get 20%? If you are going to have to go through all the trouble you might as well keep as much as you can. As soon as they have you solidly leased, the most you can get is the 16% - 22% that you leased for so you could never win a court battle, if winning means, made more money than you spent.
Is there a time frame from when we were notified that we were the heirs to these mineral rights before we start proceeding? I am assuming that they just not keep putting these funds 'on-hold' indefinitely.