Mitsui is in process of drilling within lands that we own oil, gas & mineral rights. I understand vertical hole is complete and fracking is in process for horizontal drilling. I have been contacted by a landman that is representing “the attorneys” and requested confirmation of our royalty ownership. Additionally he has requested that we sign a RATIFICATION OF OIL,GAS AND MINERALS LEASE for the lease that was signed by the land owners a few years ago. The ratification document does identify the tracts for which we hold a deed. It also includes that by signing we “desire to adopt, ratify and confirm said Lease and any further amendments to insofar as it covers any present or future right, title and interest…” and “hereby grants, leases and lets the above described lands unto Lessee, subject to and in accordance all terms of the Lease…”. I am totally unaware of the content of the land owners lease. Given this I have declined to sign the ratification document. I have been advised by the landman that refusal to sign could result in not receiving royalties. Is this statement correct? Is there legal precedent that the Lessor must comply and is the validation process of royalty ownership normally handled by a Landman versus the Lessors legal team? What actions should I be proactively taking to ensure recognition of royalty ownership and future income from those royalties?
First thing I would do is, request the Lease you are being asked to ratify. Read the terms and ask questions about what exactly you are being asked to ratify. Landmen are usually vague for a reason. They will usually explain, but you have to ask the right questions. Remember, they are being hired by the oil companies, they don’t represent you, you have to hire a Landman or an Attorney to help you. I am assuming you possess a NPRI, Non Participating Royalty Interest.
Mr. Crowley is correct in assuming you have a non-participating royalty interest in the land which, would be covered by the lease you’re being asked to ratify. The landman has to duty to provide a copy of the document you are being asked to ratify. Aside from a NPRI ratification, some ratifications have revivor language in them if the lease has been deemed expired. But there should be language to that effect in the ratification document: “to grant, revive and ratify” the subject lease. Ask the landman for a full disclosure of the intents of the ratification. If there is a NPRI in the land, a ratification should legitimately be signed before production can be paid. The purpose of a ratification is to make the NPRI subject to pooling. If the drillsite is on the land with the NPRI, that’s a different story and it would be my advice to get a knowledgeable oil and gas attorney to represent you. If the well is on an unratified NPRI, you can get your royalty paid on a tract basis and not diluted in a pooled unit. So, the bottom line is that is can be as uncomplicated as ratifying for pooling or as complicated as a revivor document or the drillsite is on an unratified interest. Drilling on an unratified NPRI is a huge mistake, but it happens.
You state that you “own” the mineral rights. You also state that the lease was signed by the “land owners” a few years ago. So it sounds as if you obtained ownership of whatever interest you have after the lease was signed by the land owners, or the land-owners conveyed to you a “non-participating royalty interest” before (or maybe after) the land owners signed the lease, and the actual mineral estate is no owned by you.
If any of that is correct, then yes, you obtained your interest subject to all of the lease terms. If so, CW Croley is correct in his response - you should ask for a copy of the mineral lease that applies to your interest that they want you to ratify. You may also be able to get a copy that was filed in the county deed records, or at least a memorandum of the lease that lists many of the important terms.
I would never ratify something that affects my property or my legal rights until I look at it, and if necessary, have an attorney look at it. More than likely there is nothing you can do to change anything at this point, but you need to know what you’re agreeing to. Personally, I don’t like that wording “any further amendments…”
TexasOwner13, I agree, what’s the point of “any further amendments” when the true purpose of a ratification of lease is to make the NPRI subject to pooling. Does that mean that there in another motive? If I was in this position, I would want to get to the bottom of it.
I would hands down be getting on the phone with multiple oil and gas attorneys in your area. Don’t sign any legal document that comes straight from the o&g company or Landman without having legal representation because they do their best to gain control and reduce the land owners control and options. Does anyone on here have a recommendations for attorneys that would be licensed and knowledgeable for this location?