Oil/Gas/Offer to purchase
My wife recieved an offer to purchase her portion of mineral interests in Howard County Texas. My wife is the sole heir of her father's estate. This property is currently listed as being owned by my wife's grandfather. The property has 5 operating wells from what little information I have been able to get. A third party recommended that we not sell the interest but go through the title transfer process to get it in my wife's name. This is where we have no experience and need some help to figure what to do next. I do not see very much in the way of unclaimed royalties on the Texas unclaimed property site so i am not sure if the royalties are being held someplace else, or if we should just go ahead and sell. The property is Langley 41, Laredo Petroleum, T15 BLK33 SEC41 A-378, T&P RR.
This is an excellent question, thank you for asking me to answer it for you. Getting the interest into your wife's name is pretty simple. All she needs to do is fill out an Affidavit of Heirship form for her deceased grandfather. She needs to answer every question, even if the answer is "DNA" (Does Not Apply). If any of her grandfather's sons or daughters are now deceased, a separate Affidavit of Heirship form needs to be completed for each of those relatives, too. It is important to list the current addresses of all living heirs in the form.
I tried to attach a PDF of a blank Texas Affidavit of Death and Heirship (ADH) form that I have used as a D.O. analyst for many years, and an example of a completed ADH so your wife can see how to fill it out, but the attachment function here wouldn't allow a PDF. Please email me at marshab at oilpatchpress dot com and I will email those two PDFs to you.
Once every necessary ADH is completed, they will all together prove how title passed from the grandfather to the current living heirs according to Texas descent and distribution laws. Once your wife has signed them as the affiant and had her signature notarized, each of the signed & notarized ADH forms should be filed into the Deed Records at the Howard County, Texas courthouse. All you need to do is look online for the Howard County Clerk contact information. Call the contact number and ask for the current rates for recording. Usually it is a set amount, such as $10 for the first page of each document and $1 for each additional page. The attached ADH would be 2 pages unless additional lines are needed for larger numbers of children. You can mail the form(s) all in one envelope and enclose one payment, but (1) be sure the amount is correct or the entire package will be returned unrecorded; and (2) be sure to write on the form at the bottom of the 2nd page, above "This affidavit must be filed..." the words "When Recorded Return To: (then state your wife's name and mailing address).
Now as to the question of whether or not to sell, that is entirely a personal decision, HOWEVER, I always urge landowners to get all the facts concerning the value of what they have, before they sell. Let me tell you a story that I have re-lived many, many times during my 40-year career. This very thing happened again about two months ago with the company where I work now, so this happens far too often. Three adult children inherited mineral rights in Texas lands from their mother, a brother and two sisters. A royalty-purchasing company approached all three of them wanting to buy their interest. The brother decided right away he didn't want to sell, and sent a completed and recorded Affidavit of Death & Heirship to us that allowed us to change our records to give the new ownership to the three adult children. What none of them knew was, when their mother moved to a new residence 4 years earlier, her revenue check got returned undelivered. Since we couldn't find her, her money went into "suspense" (held by the company until we find her or must pay it to the Texas State Comptroller by law). We had paid the oldest one year of revenues over to the State of Texas, which was approximately $1800. But our company was still holding another $4,900. By the time we got the recorded Affidavit of Death and Heirship form along with a copy of the Death Certificate (required), one of the sisters had already sold her 1/3 share of the mother's mineral rights to a royalty purchasing company. The brother told me that each of them had been offered $500. The deed that the royalty-purchasing company used for the conveyance stated plainly that they now owned not only the mineral rights, but all past-production revenue money owed to the Seller and being held by any third party. Because of that language, the sister gave away her mineral rights for $500 when we would have paid her 1/3 of $4,900 PLUS she would have had ongoing monthly income. We also helped the brother to file a successful claim with the State Comptroller's Unclaimed Property division to get paid the $1800 we had "escheated" by law. I'm sure the seller-sister got 1/3 of that, but the $500 and her share of the claim is all she will ever get.
Just make sure you know all the facts. Is your land currently under lease? If so, how many pooled units is your lease included in? There may not be a well physically located on your wife's land for your wife to be entitled to royalties. Do you know for certain who all of the companies are that would have paid royalties to your grandfather if he had been alive and they had a good address for him? You say you have checked the unclaimed property records, but you should know that other states could be holding revenue money payable to your wife and other heirs of her grandfather. The Unclaimed Property Reporting laws work like this: if the Payor (oil company) knows the last-known state of residence for an owner, they are required to pay over to that state the unclaimed funds according to a time table in the law, and continue paying them over for as long as the well(s) produce revenues. But if a Payor does not know, and has never known, the last State of residence for the owner, the company is required to pay it over to the State of that company's incorporation or State of residence if unincorporated. An LLC, LP, or LLP qualifies as a "corporation" for that last statement, in addition to an "Inc." or "Corp.".
Since you can't know what the State of incorporation is for each of the potential Payors over the years, you quite literally should go online and look up each and every State Unclaimed Property website to access their database to see if your grandfather's name appears anywhere. Start with Delaware (vast majority of oil companies are incorporated there) followed by Nevada, Oklahoma, Louisiana, Colorado, California. Once you have checked all of those, check each of the remaining 49 States, omitting Hawaii unless you are simply curious. Be prepared: if a Payor didn't know your grandfather's address, it's highly likely they didn't know his SSN either, so the State account will not have one. But, the payment from each Payor was required to give identifying information: it was oil and gas royalty revenue, Howard County, possibly even the name of the well.
Good luck, and after your wife is confident that she had enough information, I'm sure she will make the right choice to sell or keep the interest. One last fact for you, though: I have had two different geologists, two different companies, tell me in the past 5 years that there are now more places to drill or re-enter old wells using new technology, than there is money to do all of it. Bottom line: Howard County will someday have drilling activity again, because every piece of land can be drilled to multiple depths looking for oil & gas. Shallower depths have been drilled, 6,000' or less. But horizontal drilling is reopening that depth. Then the deeper depths: 7,000', 8,000', 9,000' and so on, can each have their own separate reservoir of oil or gas found at that depth. Mineral rights don't cost anything to own, unless they are producing, and then property taxes are assessed by Howard County but it's a fraction of the income already received.