My family was recently contacted by a land man about roughly 8 acres of gas & mineral rights, an energy company would like to lease. The grandparent who owned this lease died in 2000. My father (4 children) passed before my aunt (4 children), who passed in 2005. They both owned 8 acres of mineral rights. Curious why after 26 years, we’ve just now been contacted. When searching the unclaimed money in TX, my aunt has a few royalty checks sitting in there but assume her children have been collecting the other royalties. Do we need to hire an attorney to look into this? Or would it be they’re just now doing the horizontal drilling across our 8 acres?
Called 640.00 acres, more or less, being all of Section 25, Block 37, Township 3 South, T&P RR Co. Survey, A-548, Midland County, Texas
It would be wise to get an attorney to negotiate the lease for you. You may have to deal with the probate first in order to be able to lease. The draft lease that a landman puts in front of you is rarely fair to the mineral owner, so needs significant edits. This whole area of Midland county was drilled with conventional vertical wells many years ago. Huge new horizontal play coming in now, so that is why you are getting interest now. Most mineral owners would want a 25% lease with no post production charges, but difficult to get without professional help.
I spoke with an attorney from your directories suggestion above, on Friday and read him part of the contract. This energy company acquired the land a year ago and after my brother-in-law negotiated back royalties, is willing to give us 25% of back royalties and of future royalties, plus a sizeable offer of 20K bonus per acre for a 3-year lease, with a 2-year option to extend. The attorney said he could possibly negotiate with the energy company to receive more money. From everything I’ve googled, this offer is at the top end of smaller parcels.
Be Very careful. Get an attorney. A company calling themselves Agave ( not the real Agave Energy company) contacted my elderly father with what they called a “Royalty Lease”. They now own half of our mineral rights. Nothing we can do about it.
Your reported language is concerning. There is a huge difference between 25% royalty and 25% OF royalty. First case, 25% royalty rate is 25% of the total sales. If sales are $1,000, you get $250. Second case, 25% OF royalty equates to 25% of the 25% royalty. In the second case you effectively end up with 6.25% royalty rate. If sales are $1,000, you get $62.50. To sum up, in the second case, you get 1/4 of the royalties and the company gets 3/4 of the royalties. In the first case, you get all of the royalties. Second concern is that you spoke to an attorney and read him verbally part of the contract. Without reading the contract, the attorney cannot adequately assess the legal ramifications of the document. You will have to pay for his time for that. And why is this a contract and not an oil and gas lease?
