So...we had an offer of 1 mil 35 thousand for 53 acres in Culberson County with two producing wells.
After sending the company our last royalty check stubs to help establish our net mineral acres (which we have no idea of), using a very complicated formula that was "assigned when land started being leased in Texas", they revised their offer to about a third of the original amount. Yet, they upped their net mineral acres offer by $625, which seems strange to us.
Does anyone have a reputable entity they could suggest to perform title work to determine exactly what mineral rights we own on our property? We are not local and don't have any idea what steps we need to perform to get this accomplished.
This is not the only high-priced offer we have received, so I find it difficult to believe that we're still getting these offers when the percentage of royalty is available online for the companies to figure things out.
Thanks in advance for your recommendations.
Traveler
Not knowing exactly where you live, this is a search you can do yourself by a day trip to Van Horn. There are websites you can visit and search for your name to start the process. Alternatively, there are landmen you can engage to do a title search for you, but that can be expensive.
Alternatively, you can ask the operators of the wells if they will share a portion of your acreage from the title opinion they might have gotten before sending out division orders. You should be able to take your net revenue interest and divide it by the royalty percentage to get the amount of net mineral acres for which you are being paid.
James,
Thanks for the advice. We live in Maryland.
I'll have to look for those websites, as the Culberson County CAD site only gets me so far. I can see who owned the property before me, and then before the last owner (it says to 1900), but that doesn't tell me anything about mineral rights.
Again, thanks for the advice.
Traveler
If you have 2 producing wells, then the operator has based your royalty decimal on the net acres that you own. Contact the division order department and ask for the net acres and the formula. If you are serious about selling, ask the buyer to send its title run, including the deed references, that it used to determine your net acres. To research title, you not only need to trace the ownership history, but you must also read the language in the deeds to see when any portion of the minerals were reserved by the seller. For example, Seller A could reserve 1/2 of the minerals out of deed to Buyer B. Now Seller A owns 1/2 minerals and Buyer B owns 1/2 minerals. If Seller A then sells 1/2 of his remaining minerals to Buyer C. Then Seller A owns 1/4 and Buyer C owns 1/4. But if the deed language provides that Seller A is selling 1/2 minerals to C, then Seller A may have been left with nothing and C might own 1/2 minerals. If there are a lot of intervening owners, then someone (you, landman, attorney) needs to read and chart the deeds to see what net mineral acres ended up with you. Also, even if you own 1/2 minerals, a previous owner could have reserved a royalty interest (NPRI) which would be deducted from your royalty interest. Finally, the percentage of royalty does not reveal your net acres. It depends on the gross acres in the well (300? 600?), your net acres within the gross acres (all of 53 acres? 1/2 of 53 acres?), your royalty rate (20% 25%) and any NPRI burdens on your minerals. This is why it is important to save all the related paperwork and to ask a lot of questions.
Dear Mr. Traveler,
Following up on Mr. Marrow's comment, you can reverse engineer a royalty check stub to determine your mineral interest, if you only own tracts in an unit that have have the same mineral interest ownership. You cannot easily reverse engineer the mineral interests if you have two or more tracts with differing mineral interest amounts.
The formula to determine unit pay decimal is as follows:
Check decimal=((min int x tract size)/unit size) x royalty rate on lease
So, plug in what you know -- which should be everything but min int and solve for min int. If you share the missing items, I will solve for min int for you.
Also, this only works if you have a mineral interest, rather than a NPRI and you own a consistent mineral interest in the tracts that you own an interest that support the unit.
Best,
Buddy Cotten