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Oil/Gas/Inherited rights Clarke County MS


QUESTION: Recently learned group of us inherited small amount of mineral rights on 20A parcel in Clarke County, Prairie Branch Field T1N R14E, well #2302320277.  My share is very small (< 0.10 mineral acres); offer is standard tri-state lease form with 3 year term, 3/16 royalty $50/acre bonus with 'bonus paid on basis of $25 minimum'.  (1) Does that mean because my share is so small they choose to offer a flat $25 for the paid-up lease?  (2) Since it's a straight tri-state lease form and my share is so small, is there any point in trying to negotiate adding provisions such as "Favored Nations" clause on bonus level, no-cost royalty clause, minimum royalty/acre, payment deadlines/interest provision, or lien provision to secure royalty (see, pp. 26+)?

ANSWER: 1. Yes
2. No

Note: I would shoot for a 1/4 royalty and NO bonus if it were me. $25 is nothing basically, but a 1/4 royalty might pay a lot more than a 3/16 over the long run.

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
The Mineral Hub

---------- FOLLOW-UP ----------

QUESTION: In follow-up email, landman states "mineral owners that do not accept the lease offer will be subject to their pro-rata share of:  environmental clean-up costs...(etc..); then they will be subject to 100% penalty against royalty for being unleased." and "due to the field being an orphan, these costs are pushed onto the new Operator, being our client, [] who in turn pass a pro-rata share of these costs on to the Working Interest partners.  Unleased mineral owners become Working Interest Owners in the well upon payment of that 100% penalty against royalty, hence their inclusion with the Working Interest Owners."  Sounds pretty much like a take-it-or-leave-it approach to soliciting signed leases.  I thought that I was the owner of the mineral rights being solicited for lease (no matter how small the share), and I have no arrangement whatever with the Operator or any other entity to participate in any expenditures in the absence of a written agreement.  Can the Operator legally force such provisions on a rights owner in absence of a written lease?  Is there any alternative response that can be made short of capitulating to the offered lease terms?

Sounds like they're trying to "scare you" into signing a lease, and in my opinion it would be better to sign a lease if you can get decent terms. You don't want to be force-pooled in Louisiana because you won't receive any royalties until they first recover what would have been your share of the drilling costs (the 100% they mentioned) and it's possible they will never recover them if the well is a poor one and thus you'd get nothing, whereas by leasing you'd be paid royalty on all production, not just that which occurs after payout, and you'd also get the leasing bonus to keep whether they drill a well or not (though as I mentioned I'd rather see you go for a 1/4 royalty and no bonus in order to get the higher royalty which will likely pay more over the long run.)

There is a very good explanation of how forced-pooling in Louisiana works at the link below:

Hope this helps you out.
Frederick M. "Mick" Scott CMM RPL
The Mineral Hub  


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Frederick M. Scott


Oil and gas leasing, lease negotiations, how to best deal with the oil and gas companies or their representatives, buying/selling mineral rights, 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.


I am a Certified Professional Mineral Manager (CMM) certified by the National Association of Royalty Owners (NARO) in Tulsa, OK. I am also a Registered Professional Landman (RPL) with the American Association of Professional Landmen (AAPL). I have managed my family's oil and gas properties in Oklahoma for over 10 years and have dealt with many landmen, title analysts, attorneys and other oil and gas professionals in the process. I have written several articles which have appeared in various oil and gas industry magazines and newsletters. I have negotiated and drafted leases, prepared deeds, affidavits, and other legal instruments relating to my own minerals, as well as performed title, legal research, and curative work for same. I have acquired a good deal of knowledge on the subjects of oil and gas law, mineral appraisal, and landwork over the past ten years, and also worked as a professional landman and lease buyer for a time. I've seen the business from "both sides" and therefore feel confident I can help out most of the folks who ask questions in this forum.

National Association of Royalty Owners (NARO); American Association of Professional Landmen (AAPL)

National Association of Royalty Owners "Action Report" (ROAR); NADOA Magazine, The Mineral Hub, Landman Magazine, and several royalty owner association group's newsletters.

Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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