I inherited a 25 % working interest in 2 gas wells and the leasehold on 550 acres in Parker County Texas. One of the wells has produced 3 billion cubic feet since 1956. Since 1964 the interest has been managed by a Bank Trust department. All they have done is record deeds transferring ownership. I don’t have any documentation of the working interest agreement, only one lease and one designation of unit. The operator claims they have lost the JOA. Any suggestions on how to pry these documents out of the bank or the operator? Why would an operator buy 2 wells without that documentation?
Thanks in advance. Feel like I’m being played, but not sure.
One of my lawyers calls it hide the ball.
If they can't produce the JOA, you are not bound by it, if they can, then you are bound by it. Maybe there is something that they are doing that is/would be covered by the JOA that you could tell them to stop doing and they would have to produce the document to show they have the right to continue?
I hope you have in writing that they do not have the JOA? Anything you hear in an unrecorded phone call never happened. Make sure it's legal to record calls in your state or tell other parties that you are recording. You can tell them you are recording even if you aren't, and it has an amazing effect on calls, mainly the brevity.
I really prefer to do business in writing, it cuts way down on the garbage.
I got an email yesterday to that effect, from a landman at Merit, they they did not have the JOA. Must not have gotten it at acquisition is what he said in a email. I am attempting to get it from Bank of America, who managed it for 40 years. Yes, I prefer writing, too. Thanks for the input.
All parties to a JOA (or any other agreement for that matter) should retain a copy for their records. The fact that the operator cannot produce a copy of it does not automatically suggest any impropriety on their behalf, any more than it does on your behalf.
You might check with the Parker County Clerk's office to see if the JOA has been recorded (not likely) or if a memorandum of the JOA has been recorded (more likely). If the JOA has been recorded, bingo! If the memo has been recorded, then you at least know that one exists and that further investigation is more than warranted.
If your research confirms the existence of a JOA, you might inquire of the other working interest owners if they had the foresight to keep a copy and ask them for a duplicate.
Ms. Potts predecessor may never have signed a JOA. It could explain why she does not have a copy. There is no law that I know of that you must sign a JOA.
True indeed.
Ms. Potts indicated that she thought a JOA existed.
Like you, I’m only trying to help.
I spoke to my attorney today. No, no requirement for a JOA. Not recorded either. Apparently I can have some fun challenging the definition of operating expenses, like ‘operational overhead’, and he thinks that they will find the JOA. Also means no risk penalty for non-consent, according to him. I have also contacted the bank’s trust department who handled the WI for 40 years. The other WI partner, Devon, is trying to buy me out.
I appreciate the help. Thanks
The phasing out of those rolls for the public does not sound good. I wonder if they would refuse to let you see it if you were an interest in the venture?
I noticed that certified rolls were available when doing title research. My first thought was that it is a good thing to close it, assuming that is where all of the unsolicited buy offers get your contact info and that it is a money maker for the county. It is only on producing minerals, and those offers are always really low. I have used appraisal rolls for years in commercial real estate, and you should still be able to search them. That is one way you are allowed to protest your property taxes, by comparing to others, and they can’t take that info away.
As for me personally. I know who the other WI partner is, Mitchell Energy, and thanks to Gary Hutchinson, now I know that Devon, who wants a farmout, assignment, etc of mine acquired Mitchell’s 50% interest 11 years ago.
It’s a sad state of affairs that a bank trust department can manage oil and gas for 40 years and not turn over the files. And they are too big to sue!
Ms. Potts, what makes you think they kept files? I don't trust bank trusts. You might search "chris wilson" on this site and see what he has to say about the bank that manages his families trust. " Mineral Rights in a Family Trust" would probably be enlightening.
Me either! I will search. Thanks. That is why I am rebuilding the files, or rather trying to. My husband was 3 when his grandfather died. I am having the same dilemma, as to mineral management, since I have an adult child who is disabled.
R. W., are you saying that bank trusts might intentionally NOT keep good records in order to nickel-and-dime the Trust down to zero? I have heard that they are really, really good at doing that.
Pete, I am saying that since the bank trust may be virtually unassailable due to the fact that if you sue them they will hire a lawyer with your money and fight you until the trust is bankrupt, they may not feel the need to keep good records. I suppose you might say that someone might intentionally do a poor job of the onerous task of keeping good records, the bank will still get their cut no matter what and the oversite of the bank is only what they allow.
Nickel and diming to nothing may be the less horrible outcome. If the trust is charged with perpetuating itself and growing forever, the bleeding will never stop. Nothing should be forever except a post office stamp, there should be an exit strategy for anything, even if it were only an opportunity for the heirs to dissolve the trust every 25 years. I can understand the temptation to stop the possibility of a future generation from just blowing whatever you leave behind, but what if the trust itself through mismanagement and the trust managers self interest puts the benefit of the money/property beyond the reach of your descendents, would that differ so greatly than the possibility that your descendents would blow it? I would hope my heirs know better but if they blow it, I'd rather have it that way.
Yep, I have heard some horror stories with bank trusts, or I guess I should say trusts that have banks as their trustees.
I know some 4th generation kids of a very well known oil family in Dallas; same age as my kids. In that family, there are trusts to protect for liability, as a very clever first wife negotiated, but the trustee is the family owned oil company, not a bank. Down the generations, if a kid wants to work for the trustee, he has to graduate from a 4 year college and start as a landman. No exceptions. Seem to be going strong into this generation for management.
Members of the "lucky sperm" club, as my stepmother would say. What about the females, do they have to get a sheepskin and work as landmen too?
My dad calls them that too, and it’s not a compliment. Only know my son’s friend; don’t know if the girls have the same option. Just know it keeps the management away from a bank.
The operator finally found the JOA! Amazing. I got an email this afternoon. Right of Audit, right to challenge the operator for right to operate, expenses allocated by well all part of the JOA. Non-consent penalty 200%.
Well that saves you endless headaches, hallelujah!