If the surface owner who owns 50% of the sub-surface rights signs a lease with the oil company under the pretense of 100% subsurface ownership (the oil company did not do their research) and I am the other 50% subsurface mineral owner (Abstractor and attorney verified) - under what obligation am I to the existing lease. I would like to initiate a lease but I am not able since each oil company wants 100% ownership. The terms and conditions for the existing lease with the surface owner are not favorable and that lease expires in 2 years. Is the existing lease null and void since it was not signed by me. Thank you in advance. Roland
Dear Mr. Gerard,
This question is better asked of a Pennsylvania attorney, because there may be nuances that have not been disclosed, such as tract size, forced pooling, etc.
However, the surface owner cannot bind your mineral interest. You are not bound to the existing lease. The existing lease is not null and void. HOWEVER, there is a land strategy that can be employed. I call it the top fork.
If Company B leases your 1/2 interest, then Company A cannot do anything without Company B. If Company B leases your 1/2 interest and top leases Company A's lease, then in 2 years, Company B owns the prospect. You should be able to strike a great deal with Company B since you have offered to them a solution to the problem and you are willing to facilitate them either owning 1/2 the prospect now, or all of the prospect in 2 years.
Make sense?
isn’t this a question where the surface owner has the “surface rights” in addition to 1/2 the minerals. the surface owner doesn’t necc have to own the “surface rights” from my understanding. I’ve looked at properties without surface rights meaning would have little to no control over well placement etc. from what i understand the bonus goes to these “surface rights” owners not all the mineral holders… at least thats how i understand tx. pa may be different
Bonus goes to the mineral owner - in Texas and PA
but the question to be asked is are the mineral rights non-participating and where do the executive rights lay.
Dear CMOSS,
Of course there are exceptions to many rules. If the mineral rights are non-participating (as in non-executive), then he still gets paid a bonus. If he owns a non-participating royalty interest, he gets no bonus.
But if you read what he wrote, he has a verified 1/2 interest in the minerals and apparently found another oil company who would like to lease his 1/2 and the other 1/2 (which is under lease).
"from what i understand the bonus goes to these "surface rights" owners not all the mineral holders.... at least thats how i understand tx. pa may be different"
The bonus still goes to the mineral owners, not the "surface rights" owners.
IMHO, the real question was asked by Mr. Gerard.
Now i am really confused, lets take Mr Gerard’s original scenario but using Texas law and the surface rights owner which has 50% minerals also has executive rights. My understanding is the surface right owner with executive rights gets 100% bonus. Is this incorrect?
Buddy Cotten said:
Dear CMOSS,
Of course there are exceptions to many rules. If the mineral rights are non-participating (as in non-executive), then he still gets paid a bonus. If he owns a non-participating royalty interest, he gets no bonus.
But if you read what he wrote, he has a verified 1/2 interest in the minerals and apparently found another oil company who would like to lease his 1/2 and the other 1/2 (which is under lease).
"from what i understand the bonus goes to these "surface rights" owners not all the mineral holders.... at least thats how i understand tx. pa may be different"
The bonus still goes to the mineral owners, not the "surface rights" owners.
IMHO, the real question was asked by Mr. Gerard.
Best,
Buddy Cotten
That is how i understand it JBob. Whether the mineral rights are participating or non-participating (who has the executive rights).
JBob said:
Now i am really confused, lets take Mr Gerard's original scenario but using Texas law and the surface rights owner which has 50% minerals also has executive rights. My understanding is the surface right owner with executive rights gets 100% bonus. Is this incorrect?
Buddy Cotten said:
Dear CMOSS,
Of course there are exceptions to many rules. If the mineral rights are non-participating (as in non-executive), then he still gets paid a bonus. If he owns a non-participating royalty interest, he gets no bonus.
But if you read what he wrote, he has a verified 1/2 interest in the minerals and apparently found another oil company who would like to lease his 1/2 and the other 1/2 (which is under lease).
"from what i understand the bonus goes to these "surface rights" owners not all the mineral holders.... at least thats how i understand tx. pa may be different"
The bonus still goes to the mineral owners, not the "surface rights" owners.
IMHO, the real question was asked by Mr. Gerard.
Best,
Buddy Cotten
If the surface rights owner owns 100% of the executive rights, but has a 1/2 mineral interest, the surface owner executes the lease and is entitled to 1/2 of the bonus by virtue of his mineral interest. The non-executive does not sign the lease, but is entitled to 1/2 of the bonus.
Here, go read this.
JBob said:
Now i am really confused, lets take Mr Gerard's original scenario but using Texas law and the surface rights owner which has 50% minerals also has executive rights. My understanding is the surface right owner with executive rights gets 100% bonus. Is this incorrect?
Buddy Cotten said:
Dear CMOSS,
Of course there are exceptions to many rules. If the mineral rights are non-participating (as in non-executive), then he still gets paid a bonus. If he owns a non-participating royalty interest, he gets no bonus.
But if you read what he wrote, he has a verified 1/2 interest in the minerals and apparently found another oil company who would like to lease his 1/2 and the other 1/2 (which is under lease).
"from what i understand the bonus goes to these "surface rights" owners not all the mineral holders.... at least thats how i understand tx. pa may be different"
The bonus still goes to the mineral owners, not the "surface rights" owners.
IMHO, the real question was asked by Mr. Gerard.
Best,
Buddy Cotten
Jbob,
I think you are confusing a non participating royalty interest (NPRI) with a non-executive interest. A NPRI owner is only entitled to his proportionate share of the production whereas a non-executive mineral owner owns the minerals in place but does not have the authority to execute a lease. In other words he owns everything but the right to execute a lease, including his proportionate share of the lease bonus.
Cory
thanks Cory
Cory Doggett said:
Jbob,
I think you are confusing a non participating royalty interest (NPRI) with a non-executive interest. A NPRI owner is only entitled to his proportionate share of the production whereas a non-executive mineral owner owns the minerals in place but does not have the authority to execute a lease. In other words he owns everything but the right to execute a lease, including his proportionate share of the lease bonus.
Cory