If an oil company offers to lease you mineral rights and has sent you a division order but you feel you would like to go "non consent" and just receive your 16 %, do you just inform them that this is what you want to do, or just turn down their lease offer? I just don't want to say or do the wrong thing as this would be my first experience with this. Your help is greatly appreciated.
You can inform that you do not wish to lease.
You could also do nothing.
Ask them since you don't have a lease, what are they basing the interest of the division order on? They may already have you at 16%.
It's required that the operator make a good faith attempt to lease you which you have refused and offer you participation in the well by sending you the AFE which you must also refuse or allow the lapse of 30 days without informing the operator you plan to participate, before the 50% risk penalty can legally imposed.
It would not hurt for you to inform them that you do not wish to lease. By law you should not have to do anything, but it can't hurt to head off any misunderstandings.
Why would you elect 16%. I would settle for nothing less than 22.5%
Because after payout he would have 100%, less cost of production, slightly more than 22.5% by 60% to 70%.
Tom Ed Moore said:
Why would you elect 16%. I would settle for nothing less than 22.5%
Your question doesn't really make sense. The term "non-consent" is generally used for a working interest owner that does not elect to participate in a well under a joint operating agreement. If you are getting a division order, then the well has been drilled. Too late to "non-consent".