With the rapid expansion of the Permian Basin over the past few years, many owners of lands that have previously not been in production, or were only marginally productive, are now being contacted with offers to buy mineral rights.
In many instances we’ve found that these mineral owners didn’t even know they owned minerals in the area. The minerals may have passed down to them through inheritance or were reserved when landowners left the area decades ago. In a lot of cases, we’ve found that there has already been a well drilled on the property and the current well operators owe our clients money.
In one case, we found mineral ownership in seven sections of land (a section of land is a square mile, or 640 acres) that two brothers had inherited from their great-great grandparents, who were the first settlers on that land back in the late eighteen hundreds. Their great-great grandfather, and his wife, had risked everything to travel to the harsh and unforgiving Permian Basin, by covered wagon, to farm the land and start a new life.
That mineral interest, and the revenue it generates through oil production, is those two brothers’ birthright.
They deserve to reap the reward of their great-great grandparents’ hard work and sacrifice. I’m certain that their great-great grandparents would be happy to know that their hard work is still paying off, almost 130 years later.
We helped them make that happen by doing the title research to determine their ownership, preparing and filing the appropriate documentation with the local county clerks, and notifying the well operators of the heirs to the original mineral interests.
Give us a call if you’ve been contacted by a mineral buyer. We may be able to help you too.
Before You Consider Selling Your Mineral Rights
Before you agree to sell mineral rights or sign any paperwork, you should consider taking the time to determine what you actually own.
This information is critical in determining exactly what you should be getting paid in the sale of your minerals (we rarely recommend anybody sell their mineral rights).
In determining exactly what lands you own, you’ll also be able to utilize the public records available at the Texas Railroad Commission to determine what kind of well production is nearby, whether a well has been permitted on your minerals, or even if a well has been drilled and is producing, but you aren’t getting paid for it.
We’ve seen numerous times that a well has been drilled and is producing, but a mineral owner is not getting paid due to problems with record title.
In a lot of cases, one of the mineral owner’s ancestors acquired the interest, then subsequently moved away from the area. As that ancestor grew old and later died, they didn’t consider in their estate planning that even though they wrote a will and had it probated, it wasn’t probated in the county in which the interest is located. Additionally, if the land was not productive when the ancestor died, then the ancestor and their heirs often don’t even know the mineral interest exists. There is no evidence in the county that the minerals are located that the ownership has passed on to that person’s heir. There isn’t even any evidence that the original owner has died. For all intents and purposes, that person is just missing and can’t be located.
In these cases, the oil company that drilled a well has no way of knowing (and no obligation to find out) that the original mineral owner is now deceased and their heirs are entitled to the interest.
When this happens, the oil company places the money in “suspense” for a period of time until it escheats to the state (you can search for money escheated to the State of Texas here: https://claimittexas.org/). It is the mineral owner’s obligation to notify the oil well operator of the change in ownership from the original mineral owner to his/her heirs.
If you’ve been sent an offer to buy your minerals by mail, or a landman has called you with an offer, please feel free to give us a call. We’ll be happy to discuss it with you before you commit to moving forward.
Before you call, it would be helpful if you have the following information handy:
- Where you believe you might have received the interest
- What county the interest is located in
- The legal description of the property in the offer letter (for example, Section 1, Block 35, T-4-S, T&P RR Co., Martin County, Texas)
If you don’t have all of the above information available to you, that’s okay, we can work with you to get it sorted out.
If You Decide to Go Ahead and Sell Mineral Rights
Although we rarely recommend clients sell their mineral interests, everybody’s life situation is different, and it may make more sense to realize as much value as possible now rather than looking toward a larger gain trickled in over the long term.
This is where knowing what you own is critical. To effectively negotiate the highest price for your mineral interest, you have to know exactly what you own.
A lot of mineral buyers capitalize on the fact that it is unlikely that you know what you own. If you get far enough in the mineral/royalty selling process that the potential buyer has sent you a copy of their proposed Deed, pay special attention to the fine print, especially in the paragraphs surrounding the legal description of the property described in the instrument. You’ll likely find additional language that, in effect, broadens the conveyance to include every mineral interest that you own in that particular county.
If you are unaware of exactly what you own, you may inadvertently convey interests in additional tracts and never even be aware. You may possibly be able to recover a per acre payment if you become aware that an additional tract was conveyed (how will you ever know?), but likely not without the help of an attorney.
If you do decide to move forward with selling your mineral or royalty interest, be sure you read the fine print in every document that you sign. Also, it may benefit you to have competing bids on your property. We may be able to help with that. Give us a call or shoot us an email and we’ll be happy to discuss it with you.
Remember, as you go through this process, you are in charge of the pace. Don’t let anybody intimidate you into signing anything by making you believe that you only have a few days or weeks to make a decision. You’re better off finding another buyer in that case.
I’m guessing they’ll still be interested after you’ve completed your due-diligence. If they’re not, somebody else will be.