Noob with questions about mineral rights

Oklahoma Mineral Rights Grady County, OK
1

Hello, first post here, but I have been reading for weeks. I am very new to the mineral rights thing, and I have many questions about things, I just don’t understand.

For context: last year my parents transferred their mineral rights to me figuring that it would be easier than having it being probated after they passed. Now, you would think that they could answer my questions, but they have really just accepted the checks they receive, and never really questioned it. They had even forgotten about two of the wells until they received a check about six months after they thought they had done all of the transfers.

Which brings me to what I (think) I know. I have a deed that states I own mineral rights in (for simplicity’s sake) section 25, 5 north, 5 west Grady county. Basically the left half of the range square. There are six producing wells as well as 1 or two capped. The deed does not specify any percentage of the oil rights I have, just that I have all of my parents interest. What I know is that the land was my great-grandmother’s and I am fairly sure that that claim dates back to before Oklahoma was a state.

When she passed, my understanding is that she left the land to one of her children, and divided the mineral rights between her other six children. I do not know if this division was equal, but suspect it was, and anyone reading this that has a claim in the same section, we’re probably cousins somewhere so howdie. When my grand parents passed, they did divide their share equally between my mother and her brother. My parents have now passed it all to me since they didn’t think it was worth dividing further.

So this is where I get fuzzy. Assuming that the rights were divided equally all three times, doing simple math says that I should own 8% of the minerals at that location. However, that is not what I am being paid. Two wells pay .8%, two pay .4% and two pay .075%. So what I don’t understand is how those numbers come about (and why they aren’t all the same). I found a site that explains that I need the percentage of NMA’s I own, and that is used to calculate the royalty rate, but if that is the case then shouldn’t I also be getting paid from all of the wells sharing that oil field, and not just the six? And that still doesn’t explain why all of the rates are different.

Finally, I am also getting paid by two wells for Plant Material. What is that? I don’t own the land so anything grown there shouldn’t be mine.

So any explanations as to how all of this works would be greatly appreciated.

2

Hello @kilted, you might find the following handbook helpful. Royalty Owners Handbook

Plant products doesn’t mean green-growing plants in this case. This usually refers to propane and butane and other products that can be obtained from oil and gas condensate.

For a typical simple case,the decimal multiplier that is multiplied by the total well proceeds to determine your payment is determined by your net mineral acres, the size of the well spacing unit and the royalty rate set by your lease or pooling agreement. Any of these factors can change for a different well, but that is probably why you see some variation in how your proceeds are calculated. It often takes some research to determine the well spacing unit, and to find what part, or if all of your mineral acres are included in a given well. Hope this helps.

3

Follow up. So I contacted the company that is paying be the lowest royalty and asked for a copy of the lease and how they calculate my royalty. They sent the lease, signed by my grandfather in 1980. I states that he was leasing 10 acres and had a 3/8th interest in the mineral rights. Here’s where it gets hinky. They are saying I own 0.641026 net acres at 3/16th interest and the pool size is 160 acres. The 160 acres I get (it is the NW quarter of the section square). The 3/16th (.1875) I get (1/2 of my grandfather’s interest). What I don’t get is the net acres. How do they figure this out? They are dividing the 10 acres by 15.60 and I don’t know where that number comes from.

4

What is the legal description of where your 3/8ths of a gross 10 acres are located? If all the 10 acres are not in the NW/4, only those acres in the NW/4 count towards your net revenue.

5

It is specifically the SW/4 of the SW/4 of the NW/4. And I am assuming that the 160 acre pool is just the NW/4 as if it were any more northerly or more easterly, then my 10 acres wouldn’t be included, and any further south it would include a lot more land that I have the mineral rights to.

6

All of your 1/2 of 3/8ths of the 10 acre tract are included in the 160 acre spacing unit, if as you describe. So 10/160 x .375 (3/8) x .5 (1/2) x .1875 (3/16)= .00219727 unit net revenue interest. Does this help?

7

That’s what I think it should be as well (almost, you took my royalty share twice, the number I got is .01172). But they are claiming that the 10 acres leased is only 0.641026 acres and paying a rate of .00075120. So my question is, is there a way they are claiming that there is no oil under nearly 95% of the land, or are they (intentionally or unintentionally ) screwing me. And if they are, what can I do about it, and can a get past revenue paid?

8

Are you sure he owned 10 acres? Or was the acreage he owned within a 10 acre tract of land described on the lease? Leases will give the tract description and say an acreage, but the acreage is usually describing the tract described and not saying that’s what the person owns.

9

Everything in both the original lease, and my deed seem to indicate it is 10 acres. Considering that my deed also says that I have 120 acres in the SW corner also seems to confirm this (they are leased by other companies, and I haven’t begun to look at them yet). There does seem to be a line in the lease that suggests that they don’t have to include all of the leased area in a pool, but that would suggest that the pool size should be 150.4 and not 160.

10

Is it possible sometime during ownership that an undivided interest in the minerals were conveyed out of the family? It usually takes deed research to determine net mineral interest ownership in a tract. O&G Leases state the gross acres of a tract. The undivided net mineral interest within that gross acreage is determined by title opinion later, when the division of interest is set. In the 1930’s, when times were tough, folks sometimes resorted to selling some of their mineral interest in a tract.

11

Which wells are you getting paid on? There appear to be more than two active wells in that section, so depending upon the spacing of the gas wells, you may have some more research to do.

12

I don’t think any of the rights were ever sold, but I honestly don’t know for sure. I am getting paid from all of the wells on the west side of the section square, but specifically the ones I have been discussing so far are the two at the top.

13

This topic was automatically closed after 90 days. New replies are no longer allowed.