A Texas mineral receivership has distributed to me a partial interest in a lease that a decade ago was executed on behalf of several supposedly “missing” mineral owners, including me. When I learned of the receivership, I filed with the court a claim for my accumulated royalties and ongoing interest, and thus I now hold a partial assignment of the lessor’s (receiver’s) interest in the lease. The lease is what the developer proposed to the court when it filed the receivership action, and it was approved by the court without any negotiations, of course. I have several questions about the lease terms and the royalty statements that are now coming directly to me from the current operator (itself a recent assignee of the lease).
The royalty clause in the receivership lease is drafted as a fraction (3/16) of the “net amount received by Lessee for the sale of the oil” at the time it is taken from the storage tanks. However, in other leases for the same tract, independently granted by some of the other undivided mineral owners (distant family relatives), the royalty clause is based on the “highest posted price” in the “general area posted market price” as of the day it is run into the storage tanks. I read somewhere that the first approach is more typical when the expectation is that a well drilled under the lease will turn out to be primarily a gas well (this well is near Eastland TX; it is producing mostly oil). Is that true? Any insights as to why different clauses were used?
Next, my royalty statement calculates the amount due based upon a single oil price for the month. Is this because once a month the gatherer pulls up his truck and empties the storage tanks, and the market price that particular day is the basis for what the operator (and eventually me) gets paid? How is pricing set in this type of situation?
My suspicion is that the royalties for all of us lessors are computed in the same way, regardless of the different wording in the royalty clauses. Seems to me that the second type of clause should entail daily computations reflecting the ever fluctuating oil prices. How does this really work? In general terms, is one type of clause more advantageous to the lessor or lessee?
In practical terms, what opportunity do I have to confirm or audit what the operator claims to be the monthly price? I can check volume data to see if that matches what the operator reports to the RRC, but it seems like I must take on faith what the operator claims as the revenue he “received.”
Finally, am I stuck with this lease as long as the operator keeps it alive? Any chance to obtain a new lease that is negotiated by me instead of being rubber stamped by the court?