Energy Industry (Oil & Gas)/royalties and transfer orders

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Question
My father passed away 35 years ago.  My sister and I inherited royalties from him on property he inherited from his father and his father inherited from a brother.  

A company contacted all of us who have an interest in these mineral rights and asked to sign a ratification of lease.  Which we did.  Now they are asking us to sign a transfer order.

The transfer order has us as a seller.. to the company drilling.  We do not want to sell anything.  Transfer Order says...

The seller guarantees, represent, and warrents to _________ (oil company) its sucessors and assigns that Seller has sold and/or assigned the interest hereinafter set forth in all Oil (as defined here) produced and saved from the ______________lease.


What exactly is this order - if signed doing??

Answer
Hello Rhonda.  You need to have a lawyer look at the transfer order before you sign it.  It sounds like you own a non-participating royalty interest and that is why you were asked to sign a ratification.  Usually, a transfer order, or a letter in lieu of transfer order, is signed when an owner has sold minerals or royalties to another party, or even a trust that you may have set up.   Some companies will require an heir to sign a transfer order after a will is probated, but normal transfer orders do not contain the language set forth by you.  You should also ask the company about the language of the instrument and why you are being asked to sign one so long after your father's death, and when you haven't previously sold anything.    If signed, the order tells the oil company that your royalty proceeds belong to the person or entity indicated in the transfer order.   Be careful in signing his kind of instrument if you haven't sold anything.


Good luck and let e know if you have any other questions.  

Energy Industry (Oil & Gas)

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David B. McCall

Expertise

Questions regarding oil and gas exploration and production, the operation and management of oil and gas producing properties, and questions related to mineral ownership, title problems, and oil and gas leases.

Experience

I am Board Certified in Oil, Gas and Mineral Law in the state of Texas. I have more than 37 years of experience in the industry as both an in house attorney for major oil companies and as a partner in oil and gas firms. I am also a mineral owner and receive royalties from oil and gas production. I have extensive title examination experience, and have represented clients in many administrative and court proceedings.

Organizations
State Bar of Texas, Texas Bar Foundation, and Austin Bar Foundation.

Publications
Various state bar seminars on Oil and Gas matters.

Education/Credentials
I have a business degree in marketing from McMurry University, 1971, and a JD degree from Texas Tech University in 1974, where I graduated 17th in my class. Board Certified in Oil, Gas and Mineral Law in 1986.

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