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Mineral Hub Articles

What’s Worse than an Oklahoma Drive-by Pooling? First, for those of you not familiar with the phrase “drive-by pooling”, it is used in Oklahoma to describe the scenario in which an oil company applies to the Oklahoma Corporation Commission for a forced-pooling without first fulfilling the requirement of making a “bona fide effort to reach an agreement” with affected mineral owners, in the form of an oil and gas lease, prior to their application. Though rare, there have been instances where companies have skipped this necessary step altogether and headed straight to the pooling hearing because they were in a Continue reading…

Do class action lawsuits really benefit royalty owners?

After receiving yet another very small class action settlement check in the mail the other day, I have decided I will probably be “opting out” of the next class action that comes my way. I would rather not participate at all than be subject to a specious payoff of dubious benefit. Class actions in general are not the great equalizers they claim to be. While they are often touted as such, experience has taught me that remaining a member of a class action lawsuit often benefits the class attorneys, a few named plaintiffs, an over-burdened court system, and even the defendant more Continue reading…

When is natural gas considered to be in “marketable condition” for royalty payment purposes?

The “Marketable Condition Rule” used in oil and gas royalty valuation has been adopted in a growing minority of states, including Oklahoma. It is often viewed as an extension of the lessee’s “implied covenant to market” and states that production is not complete until the lessee has not only captured the production at the wellhead, but also has placed it in marketable condition. Any costs incurred to make the production marketable are not deductible from royalty. Oklahoma, for one, has failed to enunciate a standard for marketability however, which makes it especially difficult for royalty owners trying to determine whether Continue reading…

What are my mineral rights worth?

The price someone would be willing to pay for your mineral rights will vary from buyer-to-buyer, as there are many factors that determine value, and buyers interpret them differently depending on their particular biases for a given area. That said, properties with current or recent production are usually the most attractive to buyers and are thus the easiest to value and sell. Producing properties are commonly valued at between 36 and 72 times their average monthly income (per production month) over the past six months. For instance a property producing an average of $1000 of income each month over the past Continue reading…

Why should I sell my mineral rights?

Cash is King. Cash is a sure thing, and by selling, you receive a sure thing and transfer the risk of ownership to the buyer. Since they are in the “risk business” this works well for both parties. Energy prices are volatile and unpredictable, and many people who own mineral rights would rather not deal with the risks associated with ownership. Selling allows you to shed the risk of ownership and use the money to pay off mortgages, high-interest credit card balances, medical bills and other expenses, or simply invest the money in less risky assets such as real estate or stocks and Continue reading…

What is a “No Deductions Clause”, and Why do I Need One?

At a minimum, a no-deductions clause is supposed to prevent your lessee from deducting the costs they incur in transforming your share of the raw natural gas they bring to the surface into a marketable product. “Marketable” can be defined as “sufficiently free from impurities that it will be taken by a purchaser.” This is a vague definition at best however, as there are many types of purchasers, each of whom can have different standards for marketability. Unfortunately, most jurisdictions, with the possible exceptions of Wyoming and Colorado, have failed to enunciate a standard for marketability and thus a court Continue reading…

Division Order Antics by Oil Companies

I don’t know about you, but out here in Oklahoma there are a lot of division orders being sent out to mineral owners for the recently-completed wells that have been drilled in Beckham, Roger Mills, and other nearby counties. I expect the same is true for other areas of the state with activity as well. After taking a look at one of those division orders recently I grew concerned that some of the language contained in it was contrary to what I’d agreed to in my lease. Now as most of you, in Oklahoma at least, have been told, a Continue reading…

Understanding The Duhig Rule

The “Duhig” rule was developed to deal with the frequent problem of people accidentally drafting deeds that attempted to convey more property than they actually owned. There was actually a case called Duhig v. Peavy-Moore Lumber Company in 1940 (Texas) which is the namesake of this rule. That case summarized the rule as follows: When full effect cannot be given to the granted interest because of a previous outstanding interest, priority will be given to the granted interest (rather than to the reserved interest) until full effect is given to the granted interest. The Duhig rule is applied only to Continue reading…

Oil and Gas Leasing Tips

THE LEASING PROCESS: An oil and gas lease is essentially a contract between you, the “lessor”, and another party, the “lessee.” In most states a lease is also considered a conveyance, since you are essentially signing over your right-to-drill for and produce your oil and gas to an oil company in exchange for the agreed upon terms in the lease. They will in effect “own” the minerals, but only for the term of the lease. The initial offer to lease may come from someone at a land company hired by the oil company to buy leases for them. The land company Continue reading…

Reservation of “Oil, Coal, and Other Minerals” in Pennsylvania Warranty Deed

I have been asked whether a reservation of “Oil, Coal, and Other Minerals” in a Pennsylvania Warranty Deed would also include natural gas and therefore allow the seller to retain their natural gas rights as well as oil and coal. Based on the phrase “oil, coal and other minerals” it would be my opinion that the grantor would not retain ownership in any natural gas in such a deed when they sold the land, since natural gas was not specifically mentioned. Therefore I would caution that if one wishes to retain any natural gas rights owned when selling land, one Continue reading…

How Can I Locate Who Owns the Mineral Rights Under My Land?

If you want to know how to find out who owns the mineral rights under your land, or find out if you do, then the first stop in your quest should probably be the county clerk’s office (free) and/or a private abstract office (not free) in the county where your land is located. Both are usually located in or near the county courthouse, and are where you will find all the filed land records having to do with your property. From the land records you can construct a “chain of title.” A chain of title is simply a sequential record Continue reading…