Is the person who has the executive rights the only person with negotiating power?
i got a letter recently with lease dollars and royalty info. I would assume I am just to accept this as I am not the person with the executive rights.
also, i would assume that the lease and royalty payments I would get will be on par with that of the person with executive rights receives as well?
does this make sense? any help would be appreciated.
Thanks!
Dear Jay,
You have a firm understanding as to your rights. The owner of the executive rights cannot make a transaction that benefits him to your detriment. He is in a position of trust.
You might want to consider attempting to having the executive rights, as they pertain to your mineral rights, transferred back to you.
There is one other thing with which you need to be aware. You will likely be asked to execute a Ratification in order to be paid your share of bonus dollars. As a rule, I do not recommend doing so. The reason is that by executing a Ratification, you are agreeing to all of the terms of the lease, which may include pooling. You might want to keep that right in your back pocket so that you can use or not use the pooling transaction as may be to your advantage at that point in time.
Best,
Buddy CottenJay,
So you don't get confused, you seem to be on target with your basic understanding of executive rights. In general, they are created through a reservation in a deed. Therefore, there is usually a reason for someone wanting to retain those rights. I would imagine it might be difficult to get those back, or they may come with a price.
It would be interesting to see some actual case law where the owner of executive rights violates a fiduciary relationship by signing an oil & gas lease, and specifically what the circumstances were. I am sure some exists, but am not inclined to research it at this time.
From reading your original posting, they have acquired a lease, and it sounds like they are trying to pay you for your non-executive interest. Can you say, no, I want more? I think not. Yes, you should receive the same royalty, or the royalty that is stated in the lease, and signed by the owner of the executive rights. Is there anything in the transaction that benefits him to your detriment? I don't know. If you think something is rotten in Denmark, maybe you should consult an attorney.
I just read Dave’s post and it sounds really confusing to me. A lot of words for not much content. But bless his heart, he tries so hard. I think Buddy C-o-t-t-E-n makes an excellent recommendation regarding the Ratification. Good luck.
Stop violating the USER POLICY by making comments like that. I've gotten a lot more thanks and appreciation on this site than you have. Maybe you need to learn how to read better. If the personal attacks continue, I will lodge a formal complaint with site administrator.
Go play with your dog if you can't contribute anything constructive. My advice to Jay was very specific and as clear as glass, actually addressing his original questions a little more on point. Go get your vision checked so you don't step on you dog's paw.
Is there a difference between a “formal” complaint and a non-formal complaint? Linton. T-O-M-L-I-N, (since Dave have also renamed me).
It depends on what I am wearing at the time I lodge it, I guess.
I guess I was under the mistaken impression this was a forum where “mineral rights owners” could come and garner info from each other and those who truly want to contribute and help, not pick fights and spread animosity. Lodge a complaint if you want, Dave, but your threats aren’t going to keep me from stating my opinion. I’m just a person who has a small amount of mineral interests who has benefited greatly by learning from those who have helped me on this site. I’m assuming you are a landman, not really sure, as you aren’t real forthcoming in that department. I really don’t care one way or the other. I found this forum by virtue of who I am, a small mineral rights owner just trying to learn. Linton T-O-M-L-I-N
I think your dog is waiting.
A few weeks ago I was so dissatisfied with the replies that a lady named Cyndy had received, who was asking about a mineral interest in a far west Texas county, that I drove several hours to Van Horn on my own gas, so that she might get some better answers. She thanked me profusely. Prior to that, all that she was getting were guesses and conjecture, that weren't even accurate. More recently, Mathew Love, that is Mathew with one T, had some questions about Red Crest Trust. On Friday, I sent him a name and address of a trustee for Red Crest Trust in Fort Worth because I thought that might help him. He acknowledged it, and seemed very appreciative.
I don't really care how you try to qualify me lady. It's not supported by my replies.
Thanks for letting me know that you were not mistaken about this being a "mineral rights forum". I too own some mineral rights, so I guess I came to the right place.
I'm not threatening you, but your attacks are personal, and in violation of the USER POLICY. If they continue, I will lodge a complaint, formal or informal. What he wants to do about it, will be up to him.
Jay ,
Ask for a copy of the signed lease for your records. You are entitled to know the exact terms of the lease which governs your royalties. You can see if there is unrestricted pooling, the royalty rate, whether or not coasts are deducted, etc. Also, ask if there is only one executive/lease governing your minerals. While I have not seen this discussed, if the executive rights were established long ago, and the minerals holding the executive rights have been split among multiple heirs who then all sign separate and different leases, it is possible that your minerals could also be divided under all those leases. In that case, if the oil company is going to treat your minerals under the terms of only one of those leases by asking you to ratify only one lease, then you want to ratify the lease with the best terms. Ask for the drilling title opinion as it pertains to your minerals and all related executive rights and then ask for signed copies of all the leases. It would be best to get copies of recorded leases, but many companies are only filing memorandum of a lease.
A decision regarding ratification depends on the gross acreage in which you own an interest. If the acreage is pooled and the well is not on your acreage, then you will only be paid if you ratify. If the acreage is pooled and the well is on your acreage, then your royalty rate will be higher. However, there are numerous unresolved legal issues with respect to horizontal well bores that travel under multiple tracts that have been pooled. If you own in one tract and not all tracts and have not ratified, then you might have lot of trouble regarding your royalties. At least these uncertainties are in Texas as discussed in seminars and legal papers. If your interest is small, then you are likely better off ratifying. If your interest is large, then you might want to consult an attorney familiar with state laws and cases in state where your minerals are located.
Good to see someone stay focused and on point.
TennisDaze said:
Jay ,
Ask for a copy of the signed lease for your records. You are entitled to know the exact terms of the lease which governs your royalties. You can see if there is unrestricted pooling, the royalty rate, whether or not coasts are deducted, etc. Also, ask if there is only one executive/lease governing your minerals. While I have not seen this discussed, if the executive rights were established long ago, and the minerals holding the executive rights have been split among multiple heirs who then all sign separate and different leases, it is possible that your minerals could also be divided under all those leases. In that case, if the oil company is going to treat your minerals under the terms of only one of those leases by asking you to ratify only one lease, then you want to ratify the lease with the best terms. Ask for the drilling title opinion as it pertains to your minerals and all related executive rights and then ask for signed copies of all the leases. It would be best to get copies of recorded leases, but many companies are only filing memorandum of a lease.
A decision regarding ratification depends on the gross acreage in which you own an interest. If the acreage is pooled and the well is not on your acreage, then you will only be paid if you ratify. If the acreage is pooled and the well is on your acreage, then your royalty rate will be higher. However, there are numerous unresolved legal issues with respect to horizontal well bores that travel under multiple tracts that have been pooled. If you own in one tract and not all tracts and have not ratified, then you might have lot of trouble regarding your royalties. At least these uncertainties are in Texas as discussed in seminars and legal papers. If your interest is small, then you are likely better off ratifying. If your interest is large, then you might want to consult an attorney familiar with state laws and cases in state where your minerals are located.
TennisDaze said:
Jay ,
Ask for a copy of the signed lease for your records. You are entitled to know the exact terms of the lease which governs your royalties. You can see if there is unrestricted pooling, the royalty rate, whether or not coasts are deducted, etc. Also, ask if there is only one executive/lease governing your minerals. While I have not seen this discussed, if the executive rights were established long ago, and the minerals holding the executive rights have been split among multiple heirs who then all sign separate and different leases, it is possible that your minerals could also be divided under all those leases. In that case, if the oil company is going to treat your minerals under the terms of only one of those leases by asking you to ratify only one lease, then you want to ratify the lease with the best terms. Ask for the drilling title opinion as it pertains to your minerals and all related executive rights and then ask for signed copies of all the leases. It would be best to get copies of recorded leases, but many companies are only filing memorandum of a lease.
A decision regarding ratification depends on the gross acreage in which you own an interest. If the acreage is pooled and the well is not on your acreage, then you will only be paid if you ratify. If the acreage is pooled and the well is on your acreage, then your royalty rate will be higher. However, there are numerous unresolved legal issues with respect to horizontal well bores that travel under multiple tracts that have been pooled. If you own in one tract and not all tracts and have not ratified, then you might have lot of trouble regarding your royalties. At least these uncertainties are in Texas as discussed in seminars and legal papers. If your interest is small, then you are likely better off ratifying. If your interest is large, then you might want to consult an attorney familiar with state laws and cases in state where your minerals are located.
Good reply. Stayed on topic.
Yes, the person with the executive rights is the only one with negotiating power and the only one who signs the Lease. Yes, if you are a Non-Executive Mineral Interest (NEMI) owner, I would take the money straight to the bank. If you don't accept the money, the Lease will still be in effect. Yes, I would assume that you will be paid the exact same royalty as the executive on the same piece of property underneath which you own the NEMI, but also ask the executive for a copy of the Lease.
And yes, I agree with Buddy Cotten that I would not automatically sign a Ratification or other instrument that the producer throws at you. It might be to your advantage NOT to do so. Mr. Cotten is one of the wisest, most experienced contributers on this Forum. I do not recall a single instance when I disagreed with the advice he offered.
Buddy
When the Executive Rights are passed to the next generation and repeatedly split into smaller and smaller parts, lease negotiations become more difficult. What do you recommend in order to keep the Executive Rights in the hands of a manageable number of people?
Thanks CarlosTX@sbcglobal.net
Dear Carlos,
It even gets worse than splitting the executive rights up. What about the situation where the executives do not communicate with each other? One signs for one royalty rate, cost free and another signs for another rate, bearing costs? It can be complex, quickly.
It used to be an honor to be someone's Executor in a will. However, the duty to represent to sometimes your detriment and the possibility of suits by beneficiaries make it not such a great idea. I feel the same way about holding an executive right. It used to be that in order to be an executive rights owner, you had to have an interest in the property (power coupled with an interest). Not so anymore, the cheese stands alone (the executive owner has no underlying interest in the property as a requirement to be an executive).
I would not want to hold executive rights and I would not want to be a non-executive. If I had an interest, I would want to paddle my own canoe.
As to a manageable number of people, it can always be placed in a Trust for management purposes.
No easy, one size fits all answer.
Best,
Buddy Cotten