My family received a letter in the mail from Osagw Oil and Gas telling us Casillas Petroleum Corp has entered into a certain Purchase and Sale Agreement with Casillas Petroleum Energy Partners. So they say records indicate we hold preferential rights to purchase the properties under the agreement and we have the same rights to purchase the property under the same terms and conditions in the PSA
What does this mean purchase the rights means. Do we not already own the leasing rights? Any help would be appreciated
It would be difficult for anyone to comment without reading both documents. Probably a good idea for you to find all of the family documents regarding the property and put them in date order and get caught up. You might not have to do anything, but a good time to get a refresh of understanding on your status as to whether you inherited a true deed or if there is other paperwork that complicates things.
Most likely (based on how I’ve seen this other places; your situation may be different) it means the lease is being sold to another operator, but in your lease language there’s probably a line that says something like, “the lessor gets first dibs to buy back the working interest and associated royalties before the lessee sells the working interest to anyone else.” You own the minerals but the lessee probably owns 100% of the working interest and ~80% of the royalties while the lease is in place.
If this is the case, you would only want to exercise your preferential purchase rights if you wanted to be a working interest owner (more income but also subject to expenses; you’d really have to know what you’re doing) or if you had another operator wanting to lease the rights that you liked better and you wanted to turn around and sell the lease to them. Both of these are unlikely the case here but is a way to protect your minerals from being leased to someone you didn’t want to lease to.