I have been sent a letter ratification of oil gas & mineral lease. We are nonparticipating royalty owners only. There are 2 tracts, 100 acres and 170 acres. They want us to adopt, ratify, and confirm the leases. It also says I hereby lease, grant, demise, and let the lands to terms and as if I had been an original party to said leases, that they are valid, and agree that the nonparticipating royalty interest in the leased lands may be pooled and unitized. They said the drill site tract is located on the nonparticipating royalty interest place and they might do two wells. From what I read, we should not sign if the drillsite tract, the accounting for that interest is to be on a tract than a unit basis because of a cotenancy law covers unpooled interest in a drill site tract. Should we have two separate leases for each tract and say not to be pooled or unitized but anything out of our 270 acres can be pooled? Or should we not sign anything? How would we get paid as our whole part mine is 1/48th of said royalty and not be proportioned with all involved and have it free of risk as a nonpooled cotenant?
Dear Ms. Peterson,
There are consents and ratifications and then there are clever consents and ratifications. Done properly, you can have your cake and eat it also.
Thanks for responding, I was thinking of crossing out the pool and unitization and say that I want 2 leases for each tract and say no pooling or unitization on the survey abstract and 100 acres and the 170 acres. I don’t know how they will respond, but if they said the drillsite tract is on ours then I would be stupid to sign that I want to be in a pool.
Buddy Cotten wrote: There are consents and ratifications and then there are clever consents and ratifications. Done properly, you can have your cake and eat it also.
What is the “proper” way to do it … how can Nancy have her cake and eat it, too … Buddy, or anyone?
Dear Mr. Joyson,
I cannot give you the recipe. It is 5 stars in difficulty and unless you are a 5 star cook, you will ruin dinner.
It is much safer for her to not do it herself and get someone, like a real good oil and gas attorney, to assist her.
Ray H. Joyson said:
Buddy Cotten wrote: There are consents and ratifications and then there are clever consents and ratifications. Done properly, you can have your cake and eat it also.
What is the “proper” way to do it … how can Nancy have her cake and eat it, too … Buddy, or anyone?
Thanks, Buddy … I’ll stay out of the kitchen!
But this brings up another question. When you’re in this situation … unleased and being asked to ratify a lease in order to receive royalties … do you have any leverage to negotiate changes to the lease at this point … or is it take it or leave it?
Ray
Dear Mr. Joyson,
Yes, in some circumstances you do. There is sometimes a middle ground that saves the company money in royalty and gets you in more wells.
They said the well is a horizontal well not a vertical well. Would that make a difference with not pooling vs pooling and is it important as a nonparticipating royalty owner to put in the Pugh clause?