If the operator cannot find the royalty owner and does not pay them, in Texas, what % does the operator owe the royalty owner when they find them. It would be nice if it was 25%.
Robert, I assume you mean the mineral owner and they have never signed a lease? They owe whatever royalty they negotiate when they do a lease. The mineral owner can also decide not to sign a lease and be paid out of the profits of the well, but they don’t get paid until the operator has completely recovered his drilling costs.
Wade,
You gave a GREAT reply!!!! The royalty owners were never given the opportunity to sign a lease since they could not be found. I had never thought about their being a tenant in common (slap my forehead!). That means the royalty owner only comes in after the well pays out which means that I'll have to do a payout audit. Thanks again for your wonderful help.
Bob Malone, Malone Petroleum Consulting
Robert,
For sure Wade is a valuable asset to this Forum. Thank you Wade for your never ending contribution.
And I am sure Linton Tomlin will agree.
Clint Liles
Yep, Wade is invaluable on and off this website! He helped me get a better bonus than I otherwise would have, but MUCH MORE IMPORTANTLY, he negotiated terms in the lease that I would not have had the expertise/knowledge to acquire. It’s never cheap, folks, but it’s just like everything else, you pay to be able to sleep at night, and in the long run, it’s worth the money spent up front to not only get what you are entitled to, but to protect your interests that you can rest assured the opposition is going to be trying to beat you out of. I just wish I had used Wade Caldwell sooner. Live and learn. LINTON TOMLIN
Dear Bob,
Without making assumptions and appending to the advice of Wade Caldwell, I would recommend that you determine the following:
Is the interest a mineral interest or a royalty interest?
Is the interest a drillsite interest?
Has a receivership lease been executed for the missing or unlocatable mineral owner? (It would be filed in the County where the minerals are located.)
If the interest is a royalty interest, there is a provision in the statues for pooling a missing or unlocatable owner of a NPRI using the receivership statutes. (That would also be filed in the County records.)
If the interest is mineral interest, non-drillsite and not leased in fact or by receivership lease, then your client will need to force their way into the unit. (Very difficult)
If the interest is a NPRI and non-drillsite, then the interest will need to ratify the lease or the unit and they will be paid effective as of the date of ratification. (Prior production revenue lost.)
If the interest is mineral, not leased and drillsite, then the laws of co-tenancy applies.
If the interest is royalty and drillsite and not ratified, then the interest is effective from date of first production and not diluted by pooling.
There might be more questions after the answers to those are determined.
Best
Buddy CottenBuddy,*
Just love it when you and Wade reply!
As you can guess, your e-mail is so through that I had to read it more than once! :-) Good job!
For now, here is what I know. This was land that was drilled which was 100% owned by the client.
So, if I understand your detailed, e-mail right, it would appear the laws of co-tenancy apply.
If the laws of co-tenancy apply, what is the royalty % that is due the client AFTER PAYOUT????
Thanks again Buddy!
Bob
If the property is 100% owned by your client in fee simple, then your client can tell the oil company to get off his property. I doubt that is the case, though.
There is more here than meets the eye, unless there is a tremendous failure of title to the oil companies interest. Has anybody contacted the operator to get their take on what is going on? I bet a dollar that there is a lease in place somewhere. I might lose a dollar though.
I have a bit of a saying, "When you know the whole truth, decisions are easier to make."
Curiosity makes me ask if this is a horizontal drainhole. If it is, the oil company could purchase an easement of passage from the surface owner and not have any take points within 467' of the perimeter of the property and the mineral owner gets drained and can not do much about it. This scenario would not create co-tenancy situation.
Buddy
If co-tenancy applies, then there is no royalty involved. They become a quasi working interest owner after well payout. They pay their share of the expenses and get their share of the revenue. For example, if they owned a 10% interest in the drillsite tract, after payout (APO), they pay 10% of the expenses and receive 10% of the revenue. So, the interest would be analogous to a 100% cost bearing royalty.
Buddy
Robert P. Malone said:
Buddy,*
Just love it when you and Wade reply!
As you can guess, your e-mail is so through that I had to read it more than once! :-) Good job!
For now, here is what I know. This was land that was drilled which was 100% owned by the client.
So, if I understand your detailed, e-mail right, it would appear the laws of co-tenancy apply.
If the laws of co-tenancy apply, what is the royalty % that is due the client AFTER PAYOUT????
Thanks again Buddy!
Bob
Buddy,
I need to do some research. I don't think the property is 100% owned by the client, but I think the minerals are 100% owned. The client received a letter from the operator showing the wells the client has an ownership.
Initially, the operator said they could not find the royalty owner.
It says, "This is not a Division Order." It says to contact the Division Order Department if there are any questions. I doubt if these are horizontal since they are older wells.
You are very wise saying, "When you know the whole truth, decisions are easier to make."
Thanks again Buddy - I enjoy your expertise and wisedom!!
Bob
Really, really sounds to me like there is an old lease in place and the interest changed and the current owners never contacted the operator to inform them of the change.
Let us know how it comes out.
Buddy
Robert P. Malone said:
Buddy,
I need to do some research. I don't think the property is 100% owned by the client, but I think the minerals are 100% owned. The client received a letter from the operator showing the wells the client has an ownership.
Initially, the operator said they could not find the royalty owner.
It says, "This is not a Division Order." It says to contact the Division Order Department if there are any questions. I doubt if these are horizontal since they are older wells.
You are very wise saying, "When you know the whole truth, decisions are easier to make."
Thanks again Buddy - I enjoy your expertise and wisedom!!
Bob