When numerous heirs each own an undivided interest in mineral rights, can just 1 or 2 sign/get paid to sign leases? I don’t think so since there’s no way to specify which section of the whole any 1 heir “owns”-rather they all own a portion of the whole. But the leasing agent said the heirs “own the division of interest in their own right. As a result, it can be leased as a group or as each individual.” Which is true???
The leasing agent is correct.
Let me try since I’m a layman myself, and you might grasp my explanation better. You each own a percentage of each mineral acre. If there are 8 heirs and all have equal shares, you each have 12.5%, that you own and can do what you like with, sell / lease, take a loan out against it or have a lien placed against your share. You don’t have to lease with whoever leased your family members, or for what they leased for or lease at all. Hope this clears things up for you. I am in the same situation as you with my share being a 1/42 th undivided interest in roughly 3 sections. RWK
Since you chose to expand on my direct answer to her direct question, don't forget to tell her about a partition in kind vs a partition by licitation, since a co-owner is never forced to stay in co-ownership with another.
While you are at it, you might want to dissertate on the practical effect of leasing separately and apart from other co-owners to potentially different companies who may not be equally yoked as to target formations, prospect valuation and ranking in their respective drilling/prospect portfolios.
r w kennedy said:
Let me try since I'm a layman myself, and you might grasp my explanation better. You each own a percentage of each mineral acre. If there are 8 heirs and all have equal shares, you each have 12.5%, that you own and can do what you like with, sell / lease, take a loan out against it or have a lien placed against your share. You don't have to lease with whoever leased your family members, or for what they leased for or lease at all. Hope this clears things up for you. I am in the same situation as you with my share being a 1/42 th undivided interest in roughly 3 sections. RWK
Well Buddy ; I did stipulate that I was a layman at the start and I thought a few examples might be helpful. I feel I made an ernest attempt to increase her knowledge. Do you really think I could give a dissertation on the things you mentioned, Buddy ? If so you flatter me. My answer increased her knowledge if for no other reason you replied to my reply bringing up these points I am not qualified to expound upon. She can now do a search on them. In any case knowledge was increased. That is the purpose of this group. Thank you; Buddy. RWK
Buddy Cotten said:
Since you chose to expand on my direct answer to her direct question, don't forget to tell her about a partition in kind vs a partition by licitation, since a co-owner is never forced to stay in co-ownership with another.
While you are at it, you might want to dissertate on the practical effect of leasing separately and apart from other co-owners to potentially different companies who may not be equally yoked as to target formations, prospect valuation and ranking in their respective drilling/prospect portfolios.
r w kennedy said:Let me try since I'm a layman myself, and you might grasp my explanation better. You each own a percentage of each mineral acre. If there are 8 heirs and all have equal shares, you each have 12.5%, that you own and can do what you like with, sell / lease, take a loan out against it or have a lien placed against your share. You don't have to lease with whoever leased your family members, or for what they leased for or lease at all. Hope this clears things up for you. I am in the same situation as you with my share being a 1/42 th undivided interest in roughly 3 sections. RWK
I should have written this post myself … thanks for doing it for me. I am a 1/8 owner in over 5,000 acres in mineral rights in Fallon County, Montana and this is exactly what happened. A broker in Billings, Montana signed up my aunt and uncle but did not sign up any of the other surviving children of the other two siblings. The children each now own their mineral rights (each now 1/8 owners). I was contacted by Petro Hunt about leasing my 1/8 and I declined based on the low (five year lease at $10 per acre) offer and the amount of activity in the Bakken filed 30 miles away in western ND. I also encouraged my fellow 1/8 mineral right owners to not negotiate with Petro Hunt at that offer level (we own together have a 1/2 interest). What I was confused about was why someone could lease part but not all of the interest without others being a part of the decision (yeah or nay). In my preliminary research it appears that State of Montana law allows each owner to negotiate individually. If a well is drilled and oil is produced the the oil company will then have to include the unleased owners in the payment. The percentage they are paid seems to be somewhat in question. I would love to hear from other informed members who may have more factual information on this issue. I clearly understand that if you do not lease your rights and they drill you will recieve no renumeration for the prior leasing period. Does that however improve you amount of actual oil proceeds from the drilling?
Dear Mr. Kennedy,
I do flatter you. Although you are lay, you are very bright. I gave you things to consider and research so that you can self educate.
Best,
Buddy Cotten
r w kennedy said:
Well Buddy ; I did stipulate that I was a layman at the start and I thought a few examples might be helpful. I feel I made an ernest attempt to increase her knowledge. Do you really think I could give a dissertation on the things you mentioned, Buddy ? If so you flatter me. My answer increased her knowledge if for no other reason you replied to my reply bringing up these points I am not qualified to expound upon. She can now do a search on them. In any case knowledge was increased. That is the purpose of this group. Thank you; Buddy. RWK
Buddy Cotten said:Since you chose to expand on my direct answer to her direct question, don't forget to tell her about a partition in kind vs a partition by licitation, since a co-owner is never forced to stay in co-ownership with another.
While you are at it, you might want to dissertate on the practical effect of leasing separately and apart from other co-owners to potentially different companies who may not be equally yoked as to target formations, prospect valuation and ranking in their respective drilling/prospect portfolios.
r w kennedy said:Let me try since I'm a layman myself, and you might grasp my explanation better. You each own a percentage of each mineral acre. If there are 8 heirs and all have equal shares, you each have 12.5%, that you own and can do what you like with, sell / lease, take a loan out against it or have a lien placed against your share. You don't have to lease with whoever leased your family members, or for what they leased for or lease at all. Hope this clears things up for you. I am in the same situation as you with my share being a 1/42 th undivided interest in roughly 3 sections. RWK
Dear Mr. Waldron,
Leasing part, but not all, of a block of land is a leasing strategy.
That action gives the lessee an "acreage position" in your case of over 5000 acres, which increases their chance of having a working or overriding royalty interest in exploration wells.
Curt Waldron said:
I should have written this post myself ... thanks for doing it for me. I am a 1/8 owner in over 5,000 acres in mineral rights in Fallon County, Montana and this is exactly what happened. A broker in Billings, Montana signed up my aunt and uncle but did not sign up any of the other surviving children of the other two siblings. The children each now own their mineral rights (each now 1/8 owners). I was contacted by Petro Hunt about leasing my 1/8 and I declined based on the low (five year lease at $10 per acre) offer and the amount of activity in the Bakken filed 30 miles away in western ND. I also encouraged my fellow 1/8 mineral right owners to not negotiate with Petro Hunt at that offer level (we own together have a 1/2 interest). What I was confused about was why someone could lease part but not all of the interest without others being a part of the decision (yeah or nay). In my preliminary research it appears that State of Montana law allows each owner to negotiate individually. If a well is drilled and oil is produced the the oil company will then have to include the unleased owners in the payment. The percentage they are paid seems to be somewhat in question. I would love to hear from other informed members who may have more factual information on this issue. I clearly understand that if you do not lease your rights and they drill you will recieve no renumeration for the prior leasing period. Does that however improve you amount of actual oil proceeds from the drilling?
Buddy,
Would you mind explaining further leasing minerals seperately? We have all leased with the same company typically. What are the pros and cons of leasing to multiple different companies?
Kevin