Hello and thank you in advance for reading my query. If I should post this in another forum please let me know. This is my first post.
I inherited mineral rights and surface rights from property in Pottawatomie County, OK. I know nothing about the property, nor have I ever seen it, as I live in the far west. Out of the blue I received a phone call from an individual interested in purchasing my rights on this particular piece of property... I am only one of several owners that all inherited a small percentage... other than hiring someone I do not know in a land far, far away to appraise my ownership how can I determine the value of the offer that has been made to me? Interestingly enough, even though I said I wasn't really interested in selling, I received a check and deed to sign in the mail. This makes me think it might be worth more than I am being offered. I emailed the county offices but did not receive any response about my ownership and asking general information. For example, I am not sure what "surface rights" even are in Oklahoma. Water?
The check you received was likely a check that was subject to their examination of title. The real checks tend to be considerably less.
please assume that they know much more than you -- because they do.
I would recommend that you get someone in your corner -- lawyer or landman -- to give advice. There would be due diligence involved, such as are you in a producing unit or already have a well bore planned under your property.
Mr Cotten offers good advice and I have seen this practice occur in the past. Very important statement made by Mr Cotten was "assume they know much more than you". I have also known this to be the case in several occasions in the past. Take your time and contact an experienced oil and gas attorney or landman who is familiar with your mineral area as it will be time and money well spent.
South Half of the Northwest Quarter (S/2 NW/4) in Section Twenty Six, Township (8) North, Range Four (4) East of the Indian Meridian.
I only own a portion maybe one acre. But I have both mineral and surface rights. They offered in the neighborhood of $2300 for all of my rights. To my knowledge there is not a well on the property, but I had asked them to send me both that information and a plat map.... I only got a deed to sign and a check that I could cash even before I sign the deed. Weird.
Can someone recommend a "landman" or attorney in the area of Pottawatomie County, Ok?
charles s mallory said:
C East:
Mr Cotten offers good advice and I have seen this practice occur in the past. Very important statement made by Mr Cotten was "assume they know much more than you". I have also known this to be the case in several occasions in the past. Take your time and contact an experienced oil and gas attorney or landman who is familiar with your mineral area as it will be time and money well spent.
The check you received was likely a check that was subject to their examination of title. The real checks tend to be considerably less.
please assume that they know much more than you -- because they do.
I would recommend that you get someone in your corner -- lawyer or landman -- to give advice. There would be due diligence involved, such as are you in a producing unit or already have a well bore planned under your property.
Thank you for supporting Mr. Cotten's advice! Sounds like a prudent move to me!
charles s mallory said:
C East:
Mr Cotten offers good advice and I have seen this practice occur in the past. Very important statement made by Mr Cotten was "assume they know much more than you". I have also known this to be the case in several occasions in the past. Take your time and contact an experienced oil and gas attorney or landman who is familiar with your mineral area as it will be time and money well spent.
If they do not have your signed, notarized, original Lease already in hand, I would bet that the "check that I could cash even before signing the deed" is actually a Bank Draft. It's like a check but the funds do not get transferred to your account until THEY say so, and they won't say so until they get the signed, notarized, original Lease in hand and do some double-checking on the mineral title. Common practice when dealing with mineral owners through the mail. Your instinct that the minerals "might be worth more than I am being offered" is surely correct, as they want to make a profit on the deal.
A similar issue was brought up to me today by a co worker. Because he also owns surface rights like you, he's done some additional research on the property and it has cattle grazing on it. However, he has not received any lease payments for the cattle operation that is happening there. You may want to find out if any of your surface property is being utilized for farm activity, as well as determining your mineral rights issues.
What ever you do DON"T SIGN THAT " Check"! It is probably something that looks like a check, but is a Bank Draft offer to be placed for Collections . If you sign it you are locked in but if they decide not to make the deal all they have to do is not come up with the money to make it good. That is a very old an dirty trick that is played over and over in the Oil Game. I don't know if it is illegal, but it sure is immoral. It is most certainly worth the money you will pay to a qualified oil & gas attorney in that area to represent your interests. If you sign, you could well lose the whole thing.
It certainly is NOT immoral, or illegal, to offer a bank draft to a mineral owner as consideration for signing an Oil and Gas Lease, especially if the mineral owner and the company are not geographically close to each other and the transaction is being conducted through the mail.
Presumably, those who claim so would want the company to send a company check or cashier's check to the mineral owner along with the Lease to sign, in other words without the Lease's ever having been returned. That doesn't seem too wise on the part of the company, I certainly would not operate that way if I had my own company. Would you pay somebody money for a house without receiving a Deed in hand (or without your lender's receiving it if you go through a bank)? Of course not.
Pete, the only two times I accepted a draft neither one was honored. Wells were drilled on both leases. You just can't trust oil companies, whether it be KOG or a small lessee. I'm zero for two. My brother is zero for one and he was dealing with Diamond Resources a different company from those I was dealing with, so together we are zero for three. There is an old saying "Once is happenstance, twice is coincidence, THREE TIMES IS ENEMY ACTION".
I recommend that no mineral owner deal with a lessee on the basis of a bank, site or time draft, order for payment or bill of exchange. At least one of the companies offered to fly someone in later to hand me cash if I would only sign a ratification, they could have just honored their draft in the first place, but they didn't. I also didn't accept their offer to fly in and pay me 30 times the original amount in cash, in exchange for a ratification because I didn't want to do business with people whose WORD IS NO GOOD.
Three in a row Pete, not a single successful transaction with three different companies that have been in business for decades. There are at least one well and up to 6 wells on each of the three leases I mentioned above. We have good title. What was the problem with honoring the bank sight draft options? Oh, by the way, the lease or memorandums of lease were recorded immediately, by these dishonest companies. You can't trust any of them, period.
I like you Pete and I would not accept a draft etc. from you because it's not good business from the mineral owners standpoint.
Pete Wrench said:
Dear Mr./Ms. East,
It certainly is NOT immoral, or illegal, to offer a bank draft to a mineral owner as consideration for signing an Oil and Gas Lease, especially if the mineral owner and the company are not geographically close to each other and the transaction is being conducted through the mail.
Presumably, those who claim so would want the company to send a company check or cashier's check to the mineral owner along with the Lease to sign, in other words without the Lease's ever having been returned. That doesn't seem too wise on the part of the company, I certainly would not operate that way if I had my own company. Would you pay somebody money for a house without receiving a Deed in hand (or without your lender's receiving it if you go through a bank)? Of course not.
Thank you, can you tell me what the difference is between "surface rights" and land ownership? I would have thought "surface rights" would refer to water or something similar. Sorry to be dense, clearly I need the advice of a professional!
Kitchen said:
A similar issue was brought up to me today by a co worker. Because he also owns surface rights like you, he's done some additional research on the property and it has cattle grazing on it. However, he has not received any lease payments for the cattle operation that is happening there. You may want to find out if any of your surface property is being utilized for farm activity, as well as determining your mineral rights issues.
Thank you, can you tell me what the difference is between "surface rights" and land ownership? I would have thought "surface rights" would refer to water or something similar. Sorry to be dense, clearly I need the advice of a professional!
Surface rights usually include water, wind, pore space for underground storage of gasses such as CO2 and I think would include gravel in Ok. You may have all of these with land ownership or some may be severed. It's very unlikely that water is severed. I think people use surface rights instead of land ownership to show that they have more in mind than just the dirt to be found in a particular location.
R. W., you keep saying you can't trust oil companies, well why should they trust you, or any other mineral owner? Why should they send you a company check or cashier's check in the mail without the signed, notarized, original Lease back in hand? Would you write a check to somebody to buy or lease their real property without having a signed, original Deed or Lease Agreement in hand? I wouldn't, and that's not good business from the oil company's standpoint.
I have worked as a landman for a decade, and never had one single issue with bank drafts. Of course, all my clients have been reputable, obviously all it takes is one crooked operator to spoil the stew. But also, every single time that a mineral owner requested a company check or cashier's check from me instead of a bank draft, we GAVE it to them! So if anybody out there is freaked out about the bank draft, just ASK for a company check instead and you are likely to get it. Just know that it probably will take a month or two longer for you to get your money than it would take a bank draft to process, and don't expect to get a company check without sending back the signed, original Lease.
If the thought of doing that also bothers anybody, and they are not "local" to the company office, I guess they are going to have to get somebody to walk the Lease into the company office and swap it for a company check, essentially performing a "closing" as in a regular real-estate transaction. Otherwise, if the money is not forthcoming when the bank draft says it will be, all somebody has to do is file an "Affidavit of Non-Payment of Bonus Consideration" in the public records, and even if the company does file the unpaid-for Lease in the public records, it will be null and void.
Did you or your brother file such an Affidavit in any of the three cases in which you allege you never were paid bonus consideration? Depending upon the Lease wording and the production level, you might have made more money WITHOUT a valid Lease than WITH one!
Actually no, I did not file the affidavit of non-payment because it would have no effect in ND because the courts have declared that the "mere chance of future royalty is enough consideration to sustain a lease" so I am embroiled in one lawsuit, the other case the lessee recorded a release of lease because they knew without doubt that I would sue and yes I am going to make a heck of a lot more from not being leased, that was the one where they offered to fly someone in and pay me 30 times the original amount in cash if I would just sign a ratification. My brother is looking at a lawsuit for his also, which also includes fraud. Diamond Resources recorded a memorandum of lease for my brothers lease then went to court seeking an unlocatable mineral owner trust where they swore they could not find us AFTER recording the memorandum of lease. The only reason their rear end is not up between their ears is because my brother is supposed to be handling it and he's a drunk but at some point I will take over if my brother continues to do nothing. I keep saying you can't trust oil companies because it's true. Three different companies Pete. Three different deals. None of them kept their word and compounded it in one case with fraud. Let me tell you, KOG really didn't want to file the release, it sat on someones desk for 3 months or more gathering dust because they lined out the original date on it when they did file it. They only released it 4 days after my final call saying my lawyer told me he finally had a block of time and it would be now or a year from now, and I was going to file suit this week if I didn't have the release. Pete, if you lease three times in a row and never get paid, although you have good title and the minerals are good with at least a dozen wells on them, now. I would say that the problem was on the other side. If the industry was anywhere as good as you say we shouldn't have been able to go zero for three with three separate leases with 3 separate companies. I say you can't trust oil companies because you can't trust oil companies. I have 3 good examples myself and you can find probably a hundred more here if you looked. I don't buy into the rogue landman theory either that is much bandied about. In my brothers issue with Diamond Resources at least half a dozen people at Diamond had their hand in it. I realize you don't know how the law differs from where you have worked and ND and that you didn't know an affidavit of non-payment would have had no effect. I don't blame you for not knowing because I don't know jack about oil and gas in Pennsylvania and not as much as I would like about oil and gas in Texas, but just so you know, the affidavit of non-payment does nothing in ND. I suppose I could have recorded one pro forma but it wouldn't have had the effect you think.
Pete Wrench said:
R. W., you keep saying you can't trust oil companies, well why should they trust you, or any other mineral owner? Why should they send you a company check or cashier's check in the mail without the signed, notarized, original Lease back in hand? Would you write a check to somebody to buy or lease their real property without having a signed, original Deed or Lease Agreement in hand? I wouldn't, and that's not good business from the oil company's standpoint.
I have worked as a landman for a decade, and never had one single issue with bank drafts. Of course, all my clients have been reputable, obviously all it takes is one crooked operator to spoil the stew. But also, every single time that a mineral owner requested a company check or cashier's check from me instead of a bank draft, we GAVE it to them! So if anybody out there is freaked out about the bank draft, just ASK for a company check instead and you are likely to get it. Just know that it probably will take a month or two longer for you to get your money than it would take a bank draft to process, and don't expect to get a company check without sending back the signed, original Lease.
If the thought of doing that also bothers anybody, and they are not "local" to the company office, I guess they are going to have to get somebody to walk the Lease into the company office and swap it for a company check, essentially performing a "closing" as in a regular real-estate transaction. Otherwise, if the money is not forthcoming when the bank draft says it will be, all somebody has to do is file an "Affidavit of Non-Payment of Bonus Consideration" in the public records, and even if the company does file the unpaid-for Lease in the public records, it will be null and void.
Did you or your brother file such an Affidavit in any of the three cases in which you allege you never were paid bonus consideration? Depending upon the Lease wording and the production level, you might have made more money WITHOUT a valid Lease than WITH one!