Complicated story. My father died in '86. He left no information about prior purchases of mineral rights. Previously, we were contacted by Continental, and others, about these rights and they were sent proof of heirship, and we began to receive checks for wells that were producing.
Recently we were sent similar notifications from Halcon, regarding our mineral rights that they wish to develop and drill. They are requesting that we file the estate for probate in N.D. What would that cost? Is it worth it? How does one access the right attorneys to pursue this? Why is Halcon requiring this where other developers didn't?
Any help would be appreciated.
Different operators have different requirements when it comes to marketable title. Did you father pass away in ND, or in another state? As far as being worth it, my answer would probably be yes. The probate process isn't necessarily an expensive one, but it can take a few months to complete depending on the court where the estate is probated.
Steven, it's totally up to the operator whether they require a probate or not. In ND many operators do require the probate because they get to hold and use your royalty until you do complete the probate. Probate lawyers are expensive in ND at this time because ND lawyers have such a backlog of work that they can pick and choose. I probated my fathers estate in 2010 for $1250, I would expect the same probate today to cost $3k-4k. It was a simple probate.
I think you could negotiate that you need not probate the estate if you have not leased yet. Buddy Cotton has mentioned that not warranting title, with broad disclaimer of warrantee of title and stating that lessee leases at their own risk and making payment of royalty a condition of the lease so that if royalty is not paid the lease expires of it's own terms, could make the lessee pay without a probate, I suggest consulting a professional about this. The alternative would be that you not lease and be non-consent, which operators hate in ND.
Nobody can tell you whether it's going to be worth the probate or not without knowing how many net acres you have. If you have 1/10th of a net acre, spend $3,000 on a probate lease for 20% royalty so your after lease royalty interest is 1/50th of an acre, even if the well produces $50,000 per acre over it's life of 30-40 years, that would be $1,000 less post production costs, less taxes of production severance state and federal income, your leased interest may only put $600 to $700 in your pocket over 30-40 years. Of course you would have the bonus also. If the bonus will not cover the probate, I would not lease.
As for whether your father passed away in ND or another state, it does not matter, ND does not recognize probates from other states. The trust business in ND is booming because people want to avoid probates in future.
I hope this helps some, you would probably come out ok eventually, doing a probate, if you have 5 or more net acres in the well spacing.
Strangely, if you lease, the lessees title to your oil is good even if they say your title is no good and that you must perform a probate. Good luck.
Kudos to RW. Bonus money paid in the slam dunk area of the Bakken and Three Forks should be enough to cover the probate cost no matter what the acreage. Sooner or later a probate will be demanded. It is good protection for all parties. PLUS, it gives the the mineral owner the flexibility to sell later at a better price and closing terms, defined rights to participate, in future wells, (there will be many), and, in general, take advantage of opportunities. Also, if bonus money is used for a probate, Uncle gets to pay for part of the cost. It is my understanding that a probate has to be done in ND and not specifically in the county where your minerals are located. Try, Jamestown, Grand forks, and other ND cities for probate lawyers.