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Oil/Gas/Oil/Gas Lease in Stephens County, OK

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Question
If possible, I was hoping to find some clarity on a few things related to being recently contacted by a landman for an Oil and Gas Lease in Stephens County, Oklahoma.

To start off, I was completely unaware that I had any mineral rights in my name, and at this time am unsure if the company has contacted the right person.  I currently do not live in OK, but grew up in Texas and suspect that possibly my Grandfather was the one who put the rights in my name or named me to inherit them after he passed away a few years ago.  My family was surprised that a landman called, and from their reaction I don't think they know or have any information that can help me (short of digging through probate records related to my Grandfather).  I recently spoke with the County Clerk's Office in Stephens Co, and they searched their database for both his and my names, but nothing came up (their searchable records go back to about 1992).  The woman I spoke with suggested that before I sign anything, I should contact the land company looking to lease the land and try to get some more information from them (what type of document they found my name on, book and page, or probate documentation), because there had to be something that triggered them to specifically contact me.  If there is a certain date or time period from whatever document they are working from, then she'd be able to search for me to help me find out what exactly I own rights to.  She also gave me the names and numbers of a few gentlemen that could help me physically search the records in Stephens Co if it came down to that.  

Do you have any suggestions about the above, or know of any other resources that I may be able to utilize to gain a better understanding of what exactly is in my name?  From reading several of the questions that you've previously answered, it appears crucial to know exactly what you have so that you can negotiate effectively for the leasing.


The offer from the land company is as follows:

A recent review of a Pooling Application Respondent List, suggests that you are the owner of an undivided mineral and/or leasehold interest in the above captioned lands.

We are offering the following terms for a three (3) year Oil and Gas Lease:

$3,500.00 per acre bonus consideration calling for 3/16th royalty in the event of production.
$2,900.00 per acre bonus consideration calling for 1/5th royalty in the event of production.
$1,800.00 per acre bonus consideration calling for 1/4th royalty in the event of production.  


I'm not sure what would be best out of these options, but it sure seems like there's something happening in that area.

I don't know any specifics, other than the general location: Section 03-T01S-R05W.

Any and all help or guidance on this would be greatly appreciated!

Answer
Pooling Orders are notorious for including the names of owners who either no longer or never did own anything in the pooled section, but I would call the land company that made you the offer and ask them whether they have "run title" yet. If they have, then it's likely you do own minerals here. If not, then you might say you are interested, but you'd prefer they run the title first, then contact you again once they're "sure."

You might also want to read my leasing tips article on the Mineral Hub website BEFORE actually signing a lease with them. The offer sounds about right,and is probably better than average for this area. If it were me I'd consider all the bonus options, depending on how you are set for cash. They all sound fair to me for this area, which is fairly active as you suggested.

If they do push you to go ahead and lease anyway (before they check the title) then I'd suggest you NOT "warrant" your title (strike the warranty language in the lease.) I'd also get them to exchange a check (not "bank draft" or "payment order") for your signed lease IN PERSON (they can send someone to meet you.) If you don't warrant the title, and it turns out you don't own anything, then you'd have a good argument for keeping the bonus anyway, since you didn't "warrant" (i.e. promise) that you owned anything there.

If you decide to lease before they check title and confirm your ownership, and you let them "pay" you with a bank draft or payment order, then they will run your title prior to paying it off because the draft/payment order usually gives them at least 30 days to run title before paying. If they discover you do own, they will pay the draft, if they discover you don't, they will not pay it. That said, I prefer the "exchange lease for check" method in most cases, since some companies will take "forever" to pay you (assuming you own) once they have your signed lease in-hand, notwithstanding the payment date listed on the draft/payment order. They don't usually do this "on purpose" but in busy areas companies do get behind schedule and paying off drafts late is one thing that happens in such cases. If they don't have your signed lease in-hand though, then your minerals won't be tied up waiting on them to pay.

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

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Frederick M. Scott

Expertise

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.

Experience

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.

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

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

Education/Credentials
Certified Mineral Manager (CMM), Registered Professional Landman (RPL)

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