Ratify a Lease

I recently learned I’ve inherited mineral righs on some land. The land is not owned by my family any longer. Recently I was asked to ratify a lease so that drilling on the land can proceed, and I will then receive a royalty for any minerals found. I’m wondering what I need to be aware of going forward. I am new to this business.

You probably own a royalty interest reserved in a sale of the land. The ratification allows the operator to pool this royalty interest with other lands and leases. If your royalty interest was under the drill site tract, pooling is not necessary. If you own a royalty interest under a drill site tract never sign a ratification as it allows the operator to dilute your interest by pooling it with other lands or leases. If you own a royalty interest on lands other than the drill site tract, you must ratify in order to get paid. in your case it makes no difference since you have already signed a ratification.

Thanks, James. I was just made aware of this inheritance. The land was sold in 1961 but the mineral rights were reserved by my great grandfather. My grandmother's share was passed down to me, my siblings, and various aunts and uncles. We have not signed the ratification yet, as it only arrived today. I wonder if I should look at the lease with the oil company first, and if I should get a title history/report. The landman is not providing any of this but has told me the volume and page numbers of county records where the original deed and lease can be found. How agressive in due diligence should I be in tracking down these documents or does it matter? I am a non-executive owner, and was informed that if I don't ratify my portion of the lease, I will not receive any royalties. Do you know if there is a separate royalty agreement between parties later in the process?



Debra Kumar said:

Thanks, James. I was just made aware of this inheritance. The land was sold in 1961 but the mineral rights were reserved by my great grandfather. My grandmother's share was passed down to me, my siblings, and various aunts and uncles. We have not signed the ratification yet, as it only arrived today. I wonder if I should look at the lease with the oil company first, and if I should get a title history/report. The landman is not providing any of this but has told me the volume and page numbers of county records where the original deed and lease can be found. How agressive in due diligence should I be in tracking down these documents or does it matter? I am a non-executive owner, and was informed that if I don't ratify my portion of the lease, I will not receive any royalties. Do you know if there is a separate royalty agreement between parties later in the process?

I was told by the landman that my interest will be pooled. How do I know whether or not the property is a drill site tract?

What State are your minerals located?

Texas. Montague County

Limit the ratification to cover only those lands included within the surface boundaries of a specific designated unit.

Debra Kumar said:



Debra Kumar said:

Thanks, James. I was just made aware of this inheritance. The land was sold in 1961 but the mineral rights were reserved by my great grandfather. My grandmother's share was passed down to me, my siblings, and various aunts and uncles. We have not signed the ratification yet, as it only arrived today. I wonder if I should look at the lease with the oil company first, and if I should get a title history/report. The landman is not providing any of this but has told me the volume and page numbers of county records where the original deed and lease can be found. How agressive in due diligence should I be in tracking down these documents or does it matter? I am a non-executive owner, and was informed that if I don't ratify my portion of the lease, I will not receive any royalties. Do you know if there is a separate royalty agreement between parties later in the process?

I was told by the landman that my interest will be pooled. How do I know whether or not the property is a drill site tract?

The ratification does state that I will "adopt, ratify and confirm said lease only as to that certain 104 acreas referenced above" Is this what is meant by covering only those lands included within the surface boundaries of a specific designated unit?

Thank you, James. You've been most gracious responding to my questions.

IMO, you should not sign anything until you obtain bona fide copies of the source deed, the lease they are asking you to ratify, and any pooling declarations on record, conduct some research, and discuss the matter with an oil and gas attorney. I would be highly suspicious of an agent who is asking you to ratify a contract without providing you with a copy of the contract. IMO, you should be very agressive in gathering all information relevant to the transaction in order to make an informed decision.

Thank you, DG. I will track down the original documents as well as the contract. Appreciation your reply.

DG said:

IMO, you should not sign anything until you obtain bona fide copies of the source deed, the lease they are asking you to ratify, and any pooling declarations on record, conduct some research, and discuss the matter with an oil and gas attorney. I would be highly suspicious of an agent who is asking you to ratify a contract without providing you with a copy of the contract. IMO, you should be very agressive in gathering all information relevant to the transaction in order to make an informed decision.

Dear Ms. Kumar,

You say that you are a non-executive. Were you told that by a landman who knew what he was talking about?

Typically, a non-executive refers to a non-executive mineral owner. IF that is the case, you should have been paid a lease bonus. Non executive mineral interests have to ratify leases as to pooling OR ratify the pooling declaration to be pooled. Pooling in Texas is a cross conveyance of minerals and the owner of the executive right does not have the authority to convey the non executive's interest.

You really need to determine the nature of your interest. In any event, you do not have to ratify a lease to consent to pooling your interest. You could also ratify the pooling transaction, the Declaration of Unit. There are advantages to using that approach. You could also refuse to pool. Depending on the size of the non-executive or NPRI interest,whatever it is, you could effectively kill exploration by refusing to ratify.

Like I would advise anybody, don't make any quick moves until you understand all of the ramifications of what you are agreeing to.

Debra Kumar said:

Thanks, James. I was just made aware of this inheritance. The land was sold in 1961 but the mineral rights were reserved by my great grandfather. My grandmother's share was passed down to me, my siblings, and various aunts and uncles. We have not signed the ratification yet, as it only arrived today. I wonder if I should look at the lease with the oil company first, and if I should get a title history/report. The landman is not providing any of this but has told me the volume and page numbers of county records where the original deed and lease can be found. How agressive in due diligence should I be in tracking down these documents or does it matter? I am a non-executive owner, and was informed that if I don't ratify my portion of the lease, I will not receive any royalties. Do you know if there is a separate royalty agreement between parties later in the process?