four siblings inherit 40 ac parcel of land with active oil & gas lease with drilling started. Three think it best to take ownership under a Tenant in Common and one wants to partition individual 10 ac parcels or partition his ownership and let the remaining three form their TIC. What is the best option for dealing with the energy company and for future ownership of the property? This doesn't seem that it would be a rare occurrence but haven't seen any discussion on the subject.
Each cotenant has an absolute right to partition. The remainder of the group can then cross convey after the partition occurs. Or alternatively, you can do this by agreement and deed and not go through the court. The problem with partition is that you are getting a larger piece of a smaller pie. Thus, the smaller piece has a higher chance of being excluded from a drilling location, etc. This all depends on type of drilling and how strong the contract is. I hope this helps some.
One last consideration, sometimes the court can find that there is no equitable way to partition the property (because of development, etc) and has the power to force a sale of all interests at auction. This is the worst option for those that want to keep their property.
Do you own surface and minerals or only minerals? If only minerals, there is no reason to partition as co - tenants can lease together in one lease or separately in multiple leases. If you own surface and one sibling wants his own acreage for building or personal use, you can consider partitioning all of the surface (into four tracts or into one 10 acre and one 30 acre tract) and leaving the minerals under joint ownership. However, this may be an issue is states where there is a reversion of mineral rights back to the surface owner. So you should talk with an oil & gas attorney in the state where the acreage is located.
The state you're in will make a difference. For example, in Oklahoma, one cannot go to court and partition minerals. You can do it voluntarily.
Now, in Texas, if you own a separate tract, a company could cut a wholly owned 10 acre tract
out of a unit if you don't execute an ogl. But, if you were in the same 40 acre tract, they would have to cut the entire 40 out of a unit.