Please advise - issue worth pursuing?

General Mineral Rights Discussion
1

Thank you for accepting my membership to this website. I am posting on behalf of a family friend who could have been easily screwed over due to lack of industry knowledge and resources to hire an attorney. I am wondering if she got screwed over on mineral rights leasing valuation and/or the ultimate selling of said mineral rights.


My concerns are based on..


1. An expert in mineral rights valuation indicated to me recently that when she leased the acreage for $300 an acre, she could have easily received upwards of $2,000 an acre;


2. Her lack of industry knowledge may have resulted in an unreasonable and uncustomary valuation in selling the mineral rights, and;


3. Important, as it doubles everything above: the company who would ultimately be buying the mineral rights told her that they were unable to locate a will. There is evidence of one existing, such as an affidavit from the deceased mineral rights owner’s wife saying there was a will. This caused the Texas Decent and Distribution law to kick in, which cut her and her siblings inheritance in half. This was never researched by someone qualified to find this type of document.


In her own words:


“In mid-2012 I received notification from company A that myself and several siblings were each entitled to 80 acres of mineral rights in South Texas. This was due to them believing there was a will on file. There is also a signed affidavit from the wife of the deceased mineral rights owner saying they had a will. This affidavit was from the 60s.


We each leased our 80 acres to Company A for about $300 an acre (approximately $30K each).


Feeling it was a good idea to sell the acreage, and since Company A was not responding to correspondence in a timely manner, we ended up communicating with Company B (who approached us). Company B said there was no will on file (assumed to have been destroyed) and that, as per Texas Descent and Distribution, we were only entitled to 40 acres each.

Despite being told by the attorney brokering the sale to hire an attorney and research the will issue, that he “believed there was in fact a will”, we ended up each selling 40 acres, not 80, for about $250,000 each.”

My limited understanding of contract law leads me to believe that if there is significant grievance between what a contract stipulates and what would be considered reasonable and customary, the contract may be considered null and void.


- If the $300 an acre leasing valuation, or the $250K sale evaluation, is grossly below what would be considered reasonable and customary, may she petition the company or the court to somehow make this right?


- Is there anything to be gained by any parties, other than her and her siblings, for the will to not have been found? If the will were located, may she and her siblings petition the company or the court to somehow make this right?


If the answer to either of the above questions is “yes”, does anyone have any insight on whether or not a legal institution, familiar with this type of stuff, would take a look at this on a high-commission basis? I know that if any of these concerns are valid (grossly unreasonable or uncustomary valuation of leasing rights, grossly unreasonable or uncustomary valuation of mineral rights, or a will not being entered into consideration) that Texas laws should favor her and her siblings – just need to have the right people tear into this. She has excellent records of every step of the process and is willing to pay a high percentage commission on any return since the alternative is a complete loss.

2

Texas requires a will be probated within 4 years, with limited exceptions. If deceased was not Texas resident and probate was filed in another state, then that qualifies to transfer title in Texas. That said, this a cautionary tale to be lessons to other mineral owners. First, if you are beneficiary as chlid or other relative, you need to take proactive action to protect your interests by asking questions and gathering documents. Do not rely on third parties to take care of you. Second, if you have very limited knowledge about oil and gas leasing, current terms in your geographic area, oil and gas activity close to your minerals, etc., then you need to research extensively or, if the money is sufficient, hire an attorney. There was at leaSt $90,000 at stake from the lease and $750,000 from sale and that would have paid. Fourth, you should ask then landman for chain of title into you and then pull all those deeds fro your records. Have no idea by meaning of wife's supposed affidavit in 1960's, but people change their wills and it is not proof that a will existed or what any terms were. You should have asked for a copy of this affidavit and then asked the wife to sign statementioned that she was making no claims. Sems odd to me that husband would have disinherited his wife unless she was maybe unrelated to his children and he was trying to divide assets. Fifth, both the lease and sale were transactions between a willing buyer and a willing seller. Seller' s remorse because you did not sufficiently research, talk with other brokers, etc. will not save you. Only if you were under severe duress from the landman might there be recourse. This is not the landman claiming the deal is only good for 2 days because that was his negotiating tactic and you could have told him to go away. But then you run into statute of limitations. Sixth, once you sold the minerals, you also sold any claims as to the minerals. And really the buyer would be stuck with the lease. Think of it this way, if a stranger came to your door and offered to buy your house for $10,000 and you agreed without talking to a real estate broker and determining that your house was worth $100,000, then that is your loss. For your friend and siblings, none of this means they did not get the best price possible and hopefully they put the money to good use.