Leasing Your Mineral Rights
If you own mineral rights in Oklahoma, it’s likely you’ve been contacted before about leasing those rights out. But what if you haven’t been contacted before? What if you’re new to the mineral rights world? Where do you even start? If you haven’t been contacted, there may be a few reasons why.
The rights are in someone else’s name. If you inherited mineral rights, it’s possible that the transfer never got properly filed in the county records. Oklahoma doesn’t require county clerks or any state agency to keep mineral ownership information up-to-date, which includes inheritances and changes of address. It’s ultimately on the owner of the rights to ensure that information stays current. You may need a probate or affidavit of heirship to transfer ownership, especially if there wasn’t a will. Even if there was a will, and you know you inherited minerals or any land, you should check with the county clerk to make sure any surface or mineral rights have been switched to your name.
You have unclaimed property. According to the Oklahoma State Treasurer’s website, “unclaimed property includes everything from jewelry, stock certificates, coin collections and cash”. This means unclaimed mineral interests are considered unclaimed property. They might be considered unclaimed if oil and gas companies or other buyers can’t find you. Oil and gas companies need to be able to find you in order for you to make any money from a lease. They don’t need to find you to start drilling, however. In Oklahoma, we have something called forced pooling. In order to cut down on the number of unnecessarily drilled wells, there are spacing requirements between wells. When one well is going to encompass more than one owner’s property or minerals, a company can apply for a pooling order to force all the owners to comply with the drilling plans (52 O.S. § 87.1). If your land is in a forced pool, they will try to contact all known owners. If they made a good faith effort to find you and failed, the Oklahoma Corporation Commission will force pooling, and your interest will be held in “suspense” by the oil and gas company. That money stays in the suspense escrow account for five years before becoming unclaimed property, which is maintained by the state.
Previous leases haven’t been successful. If the land was leased before, it’s possible that the company had plans for drilling that did not result in a producing well, and they let the lease expire. This doesn’t exclude you from ever making money off your interests, but the value of minerals depends on many factors, one of which being previous production on the land. Also important is proximity to producing wells. If you’re close to a producing well, it’s likely your land could be profitable.
If you want to lease or sell your minerals, you don’t have to wait on a company to make you an offer. You can be more proactive in looking for a buyer, using a paid membership website like Red River Hub or The Mineral Auction. You can talk to your neighbors or the people who own mineral rights near yours and see who, if anyone, is making them offers. You can make sure the rights are in your name and that there is an updated address on file. But once you’re ready to sell or lease, you should discuss any contracts or offers with an oil and gas attorney. If you negotiate alone, you risk not getting the best offer or the true value of your minerals. Companies will often accept changes to the contract language, and an attorney can navigate those language changes for you—especially if you’re a first-time lessor. Our team at Plainview Legal Group knows what to look for and where to look when dealing with oil and gas contracts. Owning and managing mineral rights is not like owning stocks, shares, or other financial investments. While they have the same ability to make you money, mineral rights require a lot more work and do not typically have a quick return on investment. To make sure you’re getting the most out of your rights, give us a call at (405) 310-0183 or request a free consultation through our website.
