My sister and I inherited mineral rights from my father in Carter Co, OK. We have had the mineral deed transferred and recorded in Carter Co. last fall. We receive an annual check (less than $50) from Citation Oil and Gas, presumably from a lease my grandfather signed, likely in the 1960’s. Nobody in my family talked about these mineral rights, as we all live far from OK. I am just now trying to understand what the significance of my holdings are and what I should be doing to understand their value.
First, I have been reading both here on the forum as well as on the web. I’m looking for some suggestions for some next steps I need to take in understanding my mineral rights. Some brief background:
Our holdings appear to be on the Healdton Arbuckle oil field. It seems like this field had its heyday a long long time ago. I’m beginning to understand that the original lease (i haven’t obtained a copy of it or tracked it down) has not expired and citation oil and gas likely has no reason to let it expire. In my limited research I have found wells operated by citation as well as a number of other companies across the areas we own. Many wells are dry but many are listed as having an operator and not “capped”. IF i understand this correctly these other companies may be working with a Joint Operating Agreement.
I’m planning on tracking down these old leases, but given how old the leases likely are and the scale of our holdings (we inherited six complete PLSS sections near Healdon, OK) I’m assuming an Oil and Gas Attorney will be essential. Anything I should be prepared for or thinking of when approaching such a large amount of mineral rights and courting an attorney?
Additionally, we recently received a letter from a company called BearCat Land, who is planning to drill a vertical well near our holdings and drill a horizontal well across some of our holdings (Proposed well is to be located in section 27 34-3S-3W. Horizontal well according to our letter will cross into our holdings in section 3. They state 33% of the ~10,000’ well will be in section 3, which is a portion of my 6 sections of ownership. What is the best way to approach this situation? Im leary of being new and not understanding this offer, but also as this is the first lease offer I have ever recieved. Is an Attorney the best place to start? Or should I connect with a mineral consultant group or an independent Landmen? I feel like i am jumping in the deep end here, and any helpful information is much appreciated.
Locate & HIRE a good Oil & Gas attorney. Will he be cheap?, NO, will he be reasonable? Ehhh. You are in the deep waters. O&G companies have hundreds of attorneys, all of them wanting to look like their the best. Remember the old saying, NEVER bring a knife to a gun fight.
I also inherited multiple mineral rights in multiple counties in OK. and learning. START with an attorney! If you are being offered a lease it is because any previous leases held in your sections are for different depths horizons. The more net mineral acres you have the more bargaining power you have. Have attorney negotiate any leases. You want 1/4 royalties in addition to sign bonus, no deduction clause etc…I also live out of state and I just completed and signed a lease. I used Levinson, Smith & Huffman in OK. Make sure the estate of the person you inherited mineral rights was probated in Oklahoma as OK does not recognize probates done in other states. If probate did not happen in OK you must file an ancillary probate in OK as filing deeds with the counties is not enough to obtain clear title. Mineral rights are just like real property. If the estate was probated in OK then you are good. Good luck it is all so confusing and I have only learned enough so far to be dangerous lol.
@damlawyr@sonjatanguay Thanks both for the replies. I am currently looking for an Attorney/ Firm to help get things started.
When my sister and I were working through my father’s estate our attorney hired an attorney in OK to help get the mineral deed recorded and transferred to my sister and I. I have a copy of the recorded deed in Carter county stating the new ownership of these mineral rights. @sonjatanguay I am feeling confident that given the steps done to get the deed transferred from my father’s estate to my sister’s and mine respectively, but I guess we will find out as we continue forward.
As for negotiating leases, I am understanding that 1/4 leases are what folks are ideally trying to get. The terms I was initially offered were presented as four choices: 1. participate in the drilling wiht full extend of my interest (and share the cost of the $12,000,000 well,) 2. $1000 per acre, 87.5%, 3. $750 acre and 81.25%, 4. $350 acre and 80%.
Are the lease terms often presented in this format? And what kind of timeline do my sister and I have to respond to these folks?
Bear Cat is a land agent, not an operating company. Most likely going to be Continental as they already have a horizontal in section 27-3S-3W.
Since you are new, it would be very wise to get a good oil and gas attorney to look over any lease offer. They are not in the mineral owner’s favor and need significant edits in order to protect your rights. If you have multiple sections, DO NOT put them on the same lease. Each can be on its own identical lease.
M Barnes replied to you and she is extremely knowledgeable with a wealth of expertise so I would listen to her. The options they gave you for royalty percentages and sign bonus are NOT GOOD. The format they used 4. $350 acre and 80% really means you get 20% royalty and $350 sign bonus per acre. Pay attention to pooling hearings as this effects timelines for negotiating lease offers.
Agree with M. Barnes that an oil and gas attorney is essential to protecting your asset and negotiating the best terms in your favor. The attorney should specialize in oil and gas law, and work on behalf of mineral owners as those attorneys whom work primarily with operators will have a conflict. And if it is Continental, most firms will have a conflict. Next, while you are seeking representation, it may be beneficial to pick up a copy of Oil and Gas Law in a Nutshell to start becoming familiar with the industry and law (such as the terminology, leasing, and drilling operations). Once you are engaged with counsel, he/she will want to see proof of ownership (such as your court decree and mineral deed) and any past correspondence (such as notice of hearings or pooling orders) or executed contracts, as well as any pending offers. In the alternative, if you are interested in the actual value of the interest (for selling purposes), the attorney can also recommend an independent appraiser whom specializes in valuation of oil and gas assets.
Thanks for the responses, they are very helpful. I have been doing as much leg work as I can on my own and trying to lean how to use the OCC Well Data GIS system, as well as the OK tax search for PUN numbers. I made a spreadsheet of all the wells that were listed as AC and not listed as plugged. Of those 150 plus wells, I found record of 17 that were listed as active with the OKTap Public PUN search. Among those 17 wells at least 10 show activity in the past 12 months.
I only receive one royalty check from Citation. There are other operators, Kingery, Round Up Oil, Tripledee, Rockland Oil, Charter Oak, LE Jones Operating co, and I am puzzling over what my next move is, regarding these wells that are producing on land we have a mineral deed for, but no lease. Ive checked OK unclaimed Property, as well as unclaimed property in other states my grandfather and father lived in. I sense there is potentially a larger discrepancy here, but I am uncertain of how to approach things. Im happily in the gathering information stage and learning how to research. Some of the information posted on the forum is helpful, but it seems like I am missing some additional information. I have searched for older mineral deeds as well and only found one that my grandfather signed, but it dosn’t correlate to the citation check I receive annually.
If you were in my shoes, what other information would you try and find to help determine the status of these wells and these mineral rights?
Keep in mind that in Oklahoma and various other states, your ancestor might have been force pooled and not leased, so that may be part of the missing information. If you know the wells that are in the drilling unit for the minerals that you have, the completion report often has the pooling orders listed. Then you can work backwards and find the case number and see if your relative was on the respondents list.
You can also contact each of the operators that you mentioned and ask to be put into pay status and what are their requirements. They will usually need your name and address, the relative that you inherited from, a copy of the probated will or affidavit of heirship, death certificate, etc. They will need to know the section, township and range in OK or block, abstract and section in TX.
I Found mine online at Thrift books. There are other online used book resellers out there that had a copy as well. It’s been helpful, but it takes some work to read if you don’t have a legal background.
How many acres do you own? I own a very small interest (2 acres) in this and Ive never seen so many owners listed in a pooling in Oklahoma. Im guessing you own a very small amount as well since there are around 800 people listed, then ownership divided by 3 makes it even smaller.
Before you rush out and hire an attorney like advised above, make sure you own enough acreage to cover the attorneys fees to make it justifiable. For a hypothetical example, theres no point in hiring an attorney if you own 1 acre or 0.3 acres in the unit leased at $350.00 an acre and paying an attorney $1k to review your info and handling your lease. If you own a good chunk, by all means, hire an attorney.
I agree with Bob77. It’s sounds like you’ve done a lot of legwork already so disregard if not applicable… Many mineral owners see their mineral interests described as huge quantities like 160 acres, 80 acres, more or less in simple fractions of 640 acres. In actuality they own a fractional interest of undivided acres within an entire PLSS section. I certainly hope you are correct that you own that much interests, but mention of so many/10 active wells not paying out to you, and no funds held in suspense from your father is a pretty large red flag.
I would talk to Citation about the one well you’re getting paid out on. Ask how many acres you have in the well, figure out it’s spacing size and where exactly that spacing is in relation to your minerals. You can look up the spacing on OKTap. If it says 640 acres or 160, whatever it is, and it’s right in the middle or close to the middle of one of your sections in question, you would own possibly all or a lot of the the minerals in that well. Compare its production quantities to what you’re getting paid. This isn’t a flawless system for determining actual acreage in a well, but it will give you an idea if you actually own the minerals for six entire 640 acre sections.
As an example I have a few wells that pay out annually as well. They pay out a little bit more than your $50 each, but less than $100 annually. They are old wells and the production quantities are almost bare minimum. My leases is 3/16 interest signed by my father or grandmother. The wells are spaced at 640 acres, the acreage I have in the well is 6.6667 acres which is 1/3 of 20 acres, an easily divisible number with 640 acres.