Thank you Mr Barnes will work on this. This is my wife’s family and found a will showing a division on the minerals amount the family. This goes back to 1993. I have all the family names and wanted to make sure if this was still good and who’s names show.
thanks again
M Barnes, thank you for the information. Much appreciated
Has anybody received any lease offers from ECHO Energy for Sec26 2S 4W in Stephens County. My lease expired and Echo is interested in leasing.
Thank you
What is a general rule of thumb by which a company must send funds in arrears to the OK State Treasury; a time duration, i.e. annually or, up to or over a certain balance of funds?
I have heard seven years before they turn it over.
Stephen,
It depends on the source reason of the fund. If they are the result of forced pooling of an un-located mineral owner, the funds are supposed to be turned over to the OCC during the required payment period. It is then retained in the Mineral Owners Escrow Account (MOEA) for 5 years, before being transferred to the State Treasury Unclaimed property fund. These funds should show up under both a MOEA search and the unclaimed property fund search.
Payments due from an operator or purchaser from production is considered abandoned after 5 years. Then is is submitted on there payer's anniversary date. So 5-6 Years, although I have seen cases where that is not followed.
Also the payments are supposed to go to the state of the payee's last known address. If that address is unknown, it is supposed to go to the state in which the payer is located. However, that payer's "location" is usually the state of incorporation. This is why many end up in Delaware.
Thank you Rick Howell. That is a very thorough explanation.
My sister and I both leased our mineral rights in 15 1N6W to Anniston Energy, LLC in January, and our leases have been recorded at the Stephens County Courthouse. Along with our leases we each received an "Order of Payment" for $1850 per acre, due 30 banking days from receipt (which in my case would have been 2/28/18). Yesterday I got an email from the Landman telling me that the offer has been rescinded, and apologizing for "any inconvenience". My question is; doesn't the Offer and the Order of Payment, along with the signed and recorded Leases constitute a contract? And wouldn't it be possible to sue them for our bonuses in Stephens County for breach of contract?
I am no attorney, but if no consideration has changed hands, in my opinion, the contract is not complete. You should ask for a release of lease immediately to get it recorded at the courthouse so that other landmen will note that you are open. Release%20of%20lease%20oklahoma686.pdf
No, we haven't received our countersigned leases, so no lease contracts yet exist, but our leases were recorded, and our land encumbered, as if they were. I'm no lawyer either, but it seems to me that WE performed by agreeing to the terms of the offer returning the documents per instructions, and by recording our leases at the Courthouse the Company has defrauded us of our bonus money. This sucks. Thank you for the reply Martha.
Messrs McDonald/ M Barnes--This is just one case of so, so many you read about here on Mineral Rights Forum. When you lease your rights to a 3rd Party, mostly what you get is just another party to a transaction that just complicates matters. I was advised many years ago, NEVER contract with a leasing company [3rd Pty]. It is best to just wait until the production company has the lease in hand and makes the final offer or Force Pool. If you are force pooled, by law/ reg, you get an amount no less than the highest price/ bonus offered. You retain total control of your interest w/o the messy entanglements of a 3rd party. Although patience is required, and you don't get the "interim cash" associated with an interim lease arrangement, you will always come out better by being force pooled. I have never seen it otherwise and the horror stories, as noted below, are at a minimum. It is a pain in the butt, time involved, recording fees, etc. with getting a release of lease and recording it. I just would not be caught in that trap.
The only problem I see with waiting on Force Pooling is that if they don't force pool and drill you will have lost out on the bonus money you might have gotten. We leased a piece of ours out to CR for 3 years at 3/16 when the last boom started. After the 3 years with no activity on it they leased it again from us at a higher bonus and at 1/5. Just before that lease ran out Newfield drilled on a tiny bit of it and now hold it with production. If they had waited another few months before drilling we could have leased it out again. Wish that had happened! But I'm saying if we had waited to be force pooled we would have missed out on at lease those first two bonuses which were pretty nice!
I suppose you can weigh the bonus and the hope that you received the best price against the time involved to record, filing fees, etc. To each his/ her own on that one. Having a 3rd party involved to me is like divorcing 2 spouses.
Yes Linda, in our case we've been fortunate enough to have gotten four bonus checks over the years and our land remains undeveloped. And you're also right Mr. Matthews, the last lease we had ended up being much less than what the Section pooled for in 2014, before the bottom fell out and Continental walked away. Had we waited that time we likely would have recouped the small amounts of bonus we received on the three earlier leases. As geological data is secret and proprietary, there is really no way of knowing the value of what we own, so as mineral owners we remain at the mercy of the sweet talkin' landmen. My sister worked for many years as a paralegal in Texas and is energized to explore any basis for legal action we may have. No contract without consideration? That sure sounds right to me Ms Barnes.
Stephen,
Say Linda leased her 10 acres in 2016 for $500,3/16,3yr. Then in 2018 the property is force pooled for $850,3/16 while she was leased. Did she loose? She received $5000 in 2016 instead of $8500 she would have received on the force pooling in 2018. But she also leased it in 2010 and 2013 and collected a check for $5000 each time.
So she received $15,000 instead of $8500.
The above falls into the often quoted “only 30-35% of leases get drilled before they expire”. In our case our average of far less, I think we are in the 10% range over the last 20 years.
There is far more to a lease than bonus and royalty interest that impacts the bottom dollar on production compared to a forced pooling, formations encumbered, term, post production deductions, etc. But based on Bonus/RI only, it can come out either way.
In the last 5 or so years, property we own has been pooled several times. In the most recent pooled one we received an 85% higher bonus along with a 10% higher royalty interest in our lease than what was offered in the pooling order. In a couple of cases we receive a higher royalty interest than was offered in the pooling.
While it is intended to pay the highest bonus paid (in that area and surround areas) when a pooling order is issued, often that is not the case in reality. Many times much higher 3rd party bonuses are not submitted to the commission, or they have been deemed hostile or erroneous. 3rd parties often tell the company landman the bonus paid is proprietary information for various reasons. Many times deals are excluded because they involve multiple sections (this is a method I often use to gain higher bonuses on a lease).
In my experience some of the best prices paid are from non-operating 3rd parties funded by outside investment groups. But there are different types of 3rd parties out there leasing. It is rare for most (and more so for larger) operators to have any direct contact with the mineral owner. Therefore a contracted landman will be utilized. In some cases they will be publicly representing the operator, but in many cases the operator will require anonymity during early part of the leasing cycle. There are also 3rd parties that speculate and take leases independently of any operators with the intent to sell these leases to other entities. The are taking greater risk and that may reflect lower prices paid. In some cases the prices may exceed what the operator is offering. Generally leases are worth more as a package when they assign them to an operator. Although they make that profit during that assignment, that does not “always” mean you would be paid less by leasing to them than leasing to the operator or under a pooling order.
Too often I see absolutes posted. Examples; It is always best to be pooled. Never lease to a 3rd party. Never allow a lease term longer than 3 years. Never allow a term option. Never sell you interest. Always take the highest royalty. These may not always be the best answer in all cases.
Every opportunity should be judged on its own individual and sometimes unique characteristics. In many cases two different individuals owning property will have different needs for which the best choice will be different. It may be because of financial needs, the age of the individuals, the individual’s tolerance for risk, what the person intends to do with the property after their life, etc. What is best for me might not be best for someone else.
All good points, all worth considering. Rather than considering all factors named, I will take the path of least resistance and skip the 3rd party option but as I said, to each his own. I too have heard all the absolutes you mentioned Rick. I have a lot of minerals in 14 counties, all in the active SE OK. I prefer to just sit tight on mine. It is difficult for me to sit in my chair and determine a FMV of a lease with the nominal info at hand.
My complements to Rick’s superb response. I own Minerals in 9 sections in Grady and been through many leasing cycles so have experience with both majors and non ops. In my opinion, non ops are the sole reason why leases are now getting valued properly through competition. I much prefer leasing with non ops over majors as bonus, royalty and Exhibit A are superior to anything offered by majors. I have a long memory about the past arrogance and abuse when leased by majors.
So do most non-ops just buy minerals in hopes of passively participating in royalties such as we (hope to) do? Or do most of the offers come from speculators wanting to financially participate in a well? I have always assumed the latter, but it seems to me like courthouse filed leases generate offer letters. Wouldn't the land be more valuable to an such an operator if unencumbered by an existent lease?
Yes Kenneth. I think you are correct in both cases. Companies often want to participate to have access to well logs and other data. Normally offers are higher for unleased minerals. Minerals are a big business. Companies buy and hold or divest a portion at auction to help cover the cost. Sellers could look at auction sites as a way to get true retail value.
I own minerals scattered in Oklahoma and have always waited to elect from the pooling order as opposed to leasing. The terms just seem more favorable and less time on the phone. Also I don't have to sign wormy leases.