How are the royalties oaid if there are multiple leases involved? Example: Within a spacing unit you could have several different mineral owners with leases over several years and even speculators who say bought leases from A, B and @ 100 bonus and 16% royalty, sold them to another speculator for 19% royalty who sold them to the operator? I would like to know how and who pays the original owner? How is he guaranteed that he gets paid in that scenario? Thanks for your help.
Mike:
I will give you a short answer to your question. If I sign a lease and a well is drilled on my minerals prior to the lease expiration, I will be paid according to the terms of my lease, based on the NMA and the % royalty. I don't worry about the rest of it as long as I am recieving my share under the lease terms that I negotiated. I let the oil company worry about the rest of the deal.
OK, but who pays you? Do you get the check from the landman who paid you for the lease, from the landman who buys the lease from the landman who bought your lease or the operator who sells the oil?
charles s mallory said:
Mike:
I will give you a short answer to your question. If I sign a lease and a well is drilled on my minerals prior to the lease expiration, I will be paid according to the terms of my lease, based on the NMA and the % royalty. I don't worry about the rest of it as long as I am recieving my share under the lease terms that I negotiated. I let the oil company worry about the rest of the deal.
Mike:
Sorry, I didn't understand your original question. The oil company who is selling the oil pays the royalty owners. The landman usually works for a broker, who in turn is leasing for an oil company or is leasing in order to flip the lease for a profit at a later date.
mike orsborn said:
OK, but who pays you? Do you get the check from the landman who paid you for the lease, from the landman who buys the lease from the landman who bought your lease or the operator who sells the oil?
charles s mallory said:Mike:
I will give you a short answer to your question. If I sign a lease and a well is drilled on my minerals prior to the lease expiration, I will be paid according to the terms of my lease, based on the NMA and the % royalty. I don't worry about the rest of it as long as I am recieving my share under the lease terms that I negotiated. I let the oil company worry about the rest of the deal.
Thanks Charles,
That sorta makes sense. Just to be clear, there could be 2-3 lease holders between the mineral owner and the operator of the well when all is said and done. So, if I read your response correctly, the mineral owner will receive DIRECTLY from the operator whatever he/she signed for with the first landman/lessee originally and not from the operator to the second lessee to the third lessee to the mineral owner? The money comes directly from the operator to the mineral owner even if he/she signed for 10% royalty with lessee A and lessee A signed for 15% and as you say flipped it to lessee B and lessee B sold it all to the operator for 20%? So, the operator pays lessee B directly 5% royalty, lessee A directly 5% royalty and the mineral owner directly 10% royalty? Is that correct? Thanks, Mike
charles s mallory said:
Mike:
Sorry, I didn't understand your original question. The oil company who is selling the oil pays the royalty owners. The landman usually works for a broker, who in turn is leasing for an oil company or is leasing in order to flip the lease for a profit at a later date.
mike orsborn said:OK, but who pays you? Do you get the check from the landman who paid you for the lease, from the landman who buys the lease from the landman who bought your lease or the operator who sells the oil?
charles s mallory said:Mike:
I will give you a short answer to your question. If I sign a lease and a well is drilled on my minerals prior to the lease expiration, I will be paid according to the terms of my lease, based on the NMA and the % royalty. I don't worry about the rest of it as long as I am recieving my share under the lease terms that I negotiated. I let the oil company worry about the rest of the deal.
Mike:
Yes, the selller of the crude (the operator) pays the minerals owners based on their lease agreements.
Thank you so much for clearing it up for us.
charles s mallory said:
Mike:
Yes, the selller of the crude (the operator) pays the minerals owners based on their lease agreements.