AboutFrederick M. Scott CMM RPL Expertise I can answer questions about oil and gas leasing, and give suggestions on negotiating a good oil and gas lease and how to best deal with oil companies or their representatives. I can answer questions about buying and selling oil and gas royalty or mineral rights. I can help with questions concerning forced-pooling, correlative rights, deeds and conveyances, and "post-production" costs. I am most experienced with Oklahoma properties and laws, but am able to answer questions concerning other oil and gas producing states in many cases.
Experience I am a Certified Professional Mineral Manager (CMM) (certified by the National Association of Royalty Owners in Tulsa, OK) and have managed my own oil and gas properties in Oklahoma for over 10 years. I have dealt with many landmen, attorneys, and other oil and gas professionals in the course of doing so. I am also a member of several professional associations and have written articles of interest to royalty owners which have appeared in several industry publications. I have prepared deeds, title work, and done curative for my own minerals; and have acquired a good deal of knowledge on the subject of oil and gas law and landwork in general in the process. I am the owner of Timbercreek Mineral Company, LLC; which was formed as a vehicle to manage family mineral interests, and as a way to facilitate the buying and selling of oil and gas interests for other people.
Organizations NARO, NADOA, AAPL
Publications National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, Landman Magazine, and several royalty owner association groups newsletters.
Question Mr. Scott, thank you in advance for your help. I joined a pool with approx. 1000 mineral acres involved in Louisiana to have an attorney obtain an acceptable bid. I gave the attorney the data on my three tracts of interest, he made up the bid package and we received an acceptable bid in June 2008. Then in Jan. 2009, I signed the lease contracts. Now it is June 2009 and still no payment. The Land Co. said last week that they will not pay due to the "Bid package" does not agree with "title". However, I received and signed the lease, which does agree with tile, and the draft they sent to me last Jan. How can this be??? Isn't the lease contract made after search of title and it does reflect the correct location and acreage. Plus the draft reflected the correct payout. What am I missing here. I have not seen the bid package that the attorney submitted to the Land Co. but if their were questions they must have worked it out before issuing the contract to be signed, and it does agree with what I gave him to put in the bid package. Also, since I did not make up the bid package nor see it, who is responsible for resolving these differences, me or the attorney? Help Please.
Answer Walter, it's very common for lessees to accept signed leases back from lessors after only a cursory check of the title. In fact, most lease offers come after only a cursory check of the title. They rarely would pay the bonus without checking more thoroughly however. This is why they send you a "draft" instead of a check or cash. The draft gives them time (30-90 days, depending on the draft) to check title before the draft must be paid, and in addition some state on the draft that failure of title will void the draft.
It sounds like the company apparently found later that you, or someone else in the group, didn't own what they thought was owned, and so don't want to pay for minerals that aren't owned. Depending on your group's agreement with them, it may void the whole deal if just one owner's title is bad. You'd have to ask the group's attorney about that. It does seem strange that they waited so long to tell you this...nearly six months? Perhaps they told this attorney prior to the draft being payable, and he just didn't tell you? Again, I'd check with him and see what really happened there.
If the draft had a "pay date" prior to June, and they didn't pay it AND didn't say why, then in my opinion they owe it to you whether there is a problem with some of the title or not. They should have told you (or the attorney) BEFORE the draft was due that there was a title problem. You'd need to sic your attorney on them to get it now most likely, and may have to take them to court.
Did this attorney for the group check the title before agreeing to lease? Did he warrant the title of the group to the lessee? I'd check with the attorney on this really, I'm sure he's more familiar with what's going on than I, and you likely had to pay him something for his services, so I'd figure a call wouldn't be out of line.
I would at least demand (from someone) an explanation as to exactly what the problem is, and whether it even involves your minerals or not. If it doesn't involve your minerals, then perhaps they will still pay your bonus.
The attorney for the group likely had you sign some sort of contract with him. Does it specify who's responsible in the event you aren't paid, or in the event of someone else's title failure?
Frankly I"m usually a little wary of "oil and gas" attorneys (and other "experts") who attempt to herd mineral owners into a group by promising them he can "get a better deal" for everyone if they'll just join the group (and sign his exclusivity contract, and pay his fee and/or percentage of bonus.) Some of these "experts" are just idiots. Some are just out for easy money. Some of them are simply getting the same deal you could have negotiated on your own, but are charging you for the privilege.
Still others are also making money from the OIL COMPANY in addition to their "fee"; in the form of additional bonus money that is not shared with, or even revealed to, the mineral owners! Certainly these types are the exception rather than the rule, but I'm usually wary of offers to "help" in situations where the mineral owners are fairly ignorant of the whole process. It just leaves the door open for abuse and/or incompetence.
Better to learn how to negotiate your own lease in my opinion. It's not rocket science, but does take time to learn. NARO (the National Association of Royalty Owners) is a good source for mineral owner education. their website is www.naro-us.org. Membership is a little over $100 per year, and is well worth it in my opinion. They also have several conventions each year as well where you can learn about lease negotiation, and mineral management. I've been a member for several years and have learned a lot about managing my family's minerals.
