The questions mineral owners actually ask

If you have the probate, will, or an affidavit of heirship as well as a death certificate, you can contact the operator on the check and request an ownership change form or inquire about their formal process, so you can change the ownership into your (and, if applicable, the other descendants') names. If you don't have anything but the check stub, still contact the operator on the check (the payor) and explain that you found the check stub and you don't know what your parent(s) owned. They should be able to give you a county and/or specific wells. If you have power of attorney, you can even ask for a division order for your records, that will include land descriptions, interests, the owner number, etc. It doesn't hurt to ask for any land documents they have as well, although you will rarely get anything. Once you have an idea of what is owned, you can go to the website of the County Clerk (AKA Clerk of Court AKA Recorder's office) and search for any documents you might need.

While being able to see a rig from your property is a decent indicator that there are minerals under your property, first you need to determine if you own the minerals or not. In most cases, the minerals were severed from the surface long ago. In other words, someone owns the minerals and someone else owns the surface. If you do own the minerals, you can contact the County Clerk's office to ask about activity in the area, speak with your neighbor who has the rig on their property and get the name of the operator or look for a sign with the operator's name near the property. Then contact the operator and speak with the land department or leasing department and explain that you have unleased minerals near one of their wells and see if they're willing to lease with you as well. If you do not own the minerals, then unless you live in a state where the minerals revert to the surface owner after laying dormant for a certain period of time, there is not much you can do. (Louisiana is 10 years, North Dakota, Ohio, and Indiana are 20 years, and Michigan can revert to the surface owner if the conditions of certain statutes are met.)

Start here: the lease in front of you is the operator's paper, written by their lawyers, and it's a starting point, not a final offer. Most of the time "I don't like the terms" gets fixed by countering, and the operator would still rather have a signed lease than a pooling hearing, so ask for what you want. If you truly can't come to terms, what happens next depends on your state. In Oklahoma, the operator can apply to the Corporation Commission to pool the unleased owners in the unit. Being pooled doesn't take your minerals away, but it does put you on a clock. Once a pooling order is issued you usually have 20 days from the date of the order (not the date the envelope reaches you) to pick from the options in it, typically participating in the well and paying your share of the drilling costs (most mineral owners don't) or taking one of a few combinations of cash bonus and royalty. If you don't answer in time, an election gets made for you, and the default is usually the one you'd like least. Some states work very differently, Texas has no real forced pooling at all, which is exactly why this is a good place to spend money on help. If a pooling application or order ever shows up in your mail, open it that day and get it in front of an oil and gas attorney who knows your state before the deadline. NARO and mineralrightsforum.com are good places to hear from people who have been through it. A pooling order is not the end of the world, but the clock is short and the default is not your friend.

The ones the operator's form leaves out, and it leaves them out on purpose. The printed form was written by their lawyers, and nothing protecting you comes pre-printed, it gets added in an exhibit or addendum that says it wins wherever it disagrees with the form. The words around your royalty fraction matter more than the fraction itself: you want royalty paid on gross proceeds, free of post-production costs (sometimes called a no-deductions or cost-free clause), because without it the operator can net out gathering, processing, and transportation before your share is figured, and over the life of a well that difference can be worth more than the gap between a 3/16 and a 1/4. You want a Pugh clause, so one producing unit on a corner of your acreage can't hold everything you leased forever, it releases the acreage that isn't actually in a producing unit when the primary term ends so you can lease it again. You want depth severance, which is the same idea vertically, so a shallow well doesn't lock up your deep rights for decades. You want a cap on shut-in payments, the small fees that let an operator hold a lease on a well that isn't producing, because without a limit on how long and how much, your minerals can sit idle indefinitely while the lease stays alive. And don't warrant title you're not absolutely sure of, strike or soften the warranty clause so a title problem doesn't become your personal liability. While you're at it, make sure words like "commence drilling" and "production" are pinned down instead of left loose. Every state has its nuances, so have someone knowledgeable read the whole lease before you sign, an independent landman or an oil and gas attorney, and NARO is a good resource here too. Reading a lease the way the operator reads it is the work we do, if you want it read before you sign.

Shorter is generally better for you. Three years is the most common, and three to five is the normal range. The shorter the term, the sooner you get your minerals back if the operator doesn't drill, and the sooner you get another shot at a bonus check and better terms from somebody who will. The operator wants the opposite, time is option value to them and it's your minerals sitting idle, so if there's real activity in your area you have the leverage to hold at three years or less, and in quieter country you may see them ask for five. Watch the extension option, because it's a longer term wearing a disguise. A three year term with a two year option is really a five year lease where the operator decides later whether to pay for the back half. That's not automatically bad, but price it like what it is, and weigh the extension bonus against getting the lease back and re-leasing it fresh, the same trade-off described under the primary term question below.

The time in which an operator has to commence drilling a well. The definition of commence and well vary and can be defined within your lease. Typically, a primary term is three years. Operators often ask for the option to extend the primary term, but an extension is not required and while the lessor hopes the lessee will drill a well and develop the minerals, it is not required. A lease simply gives them the right to do so within a certain period of time. So you need to weigh the benefit of a possible extension period bonus payment vs. the expiration of the lease and possibility of another operator entering into another lease with another bonus payment.

The secondary term is what comes after the primary term, and it's the part nobody puts a date on. The standard lease language says the lease lasts for the primary term "and as long thereafter as oil or gas is produced," and that thereafter is the secondary term: once there's production, the lease holds itself, month after month, for as long as the well keeps producing in paying quantities. This is what people mean by held by production, and it's how a lease signed before your grandparents were married can still be alive today. There's no expiration date to wait out, the lease ends when production ends or when a condition in the lease itself terminates it. Two things to know while you're negotiating, back when you still have leverage: some leases let a shut-in payment count as production, which can hold the lease with no oil, no gas, and no royalty check, so cap it (see the clauses question above), and without a Pugh clause and depth severance, one producing well can hold all your acreage and all your depths through the entire secondary term. The time to fix that is before you sign, because during the secondary term the terms are what they are.

No. Unfortunately, once a lease is signed, the terms are locked in until one of the conditions in the lease is met for expiration of the primary term or termination during the secondary term. A lease can hold your minerals for 100 years or more, so DO NOT SIGN SOMETHING YOU DO NOT FULLY UNDERSTAND. Contact an independent landman, oil and gas attorney, a member of a reputable organization, like National Association of Royalty Owners (NARO), or consult a reputable online forum, like mineralrightsforum.com where experienced oil and gas professionals as well as mineral owners will ask for, give, and/or receive advice. There are many oil and gas professionals who want to protect the mineral owner and will give you advice. If you feel more comfortable going through a more official path, contact an oil and gas attorney that is knowledgeable about the area in which your lease will cover. Every state has nuances and it's important to understand them when negotiating your lease.

He probably does know what he's talking about and he very well may be nice, but he's not your friend, he's an employee of the operator who wants to pay you as little as possible. Do independent research to ensure you're getting the best deal. At the very least, get a second opinion.

Don't sign anything, and don't feel rushed. That offer didn't come out of nowhere. Buyers send letters when they know something about your area, usually new permits or new wells nearby, and the deadline in the letter is a sales tactic, a real buyer will still be there next month. Before you talk numbers at all, figure out what you actually have: how many net acres, whether they're leased, whether they're producing, and what's going on around you. The buyer has already done that homework on your minerals, down to the well, and you shouldn't be the only person at the table who hasn't. Then get an independent opinion of value, because one offer letter is not a market. If you do decide to sell, two or three bids will almost always beat the first letter that showed up in your mailbox, and remember that first offers usually start low. That's not an insult, it's just how buying works. Also remember you don't have to sell at all. Minerals don't spoil, and if somebody sent that letter, it's because they think your minerals are worth more than they're offering. Putting a real number on an offer is work we do every week, if you want a second set of eyes before you answer.

Selling minerals is a real transaction, like selling land, so do it in the right order. Know what you own first: net acres by property, leased or unleased, producing or not, and what activity is around you, because buyers price all of that and so should you. Get your file together before you go to market (deeds and probate records, leases, division orders, recent check stubs), every serious buyer will ask for these during due diligence, and a clean file makes you money because it makes the buyer's title work easy. Get a value opinion before you solicit a single offer, you want your own number in hand before you hear anyone else's. Then go to market in a way that creates competition. You can talk to buyers directly, use a broker, or use a listing service, but whatever the path, multiple bids beat one phone call every time. Expect the winner to do title due diligence, and expect the closing paperwork to be a purchase and sale agreement followed by a mineral deed. Read both before you sign, and don't hesitate to have an attorney read them too. One more thing: talk to your CPA before you close, not after, because the tax treatment of a mineral sale is worth a conversation while you can still plan for it. Putting the value on minerals before an owner goes to market is exactly the read we do, if you want your number first.

Tying your DOI means checking the decimal on the division order against your own math before you sign, instead of trusting that the operator got it right. They usually do, but "usually" is doing a lot of work in that sentence, and a wrong decimal pays you wrong for the life of the well. The math is simpler than it looks: your net mineral acres in the unit, divided by the total acres in the unit, times your royalty rate. So if you own 20 net acres in a 640 acre unit at a 3/16 royalty, that's 20 divided by 640, times .1875, which comes to .00585938, and that decimal should match what's printed on the division order and later on your check stubs. Your net acres come from your deeds and probate records, the unit size comes from the state (in Oklahoma, the Corporation Commission), and your royalty rate is in your lease, or in the pooling order if you were pooled. If your math doesn't match their decimal, don't panic and don't sign, ask the operator for their calculation worksheet, they should provide it. Sometimes there's a good reason for the difference (only part of your tract sits in the unit, the well is a horizontal spread across more than one unit, or somebody carved a royalty interest out of your chain years ago), and sometimes there's no good reason and you just caught an error before it cost you money. Tying decimals is part of what we do every month for the owners we work with, if you'd rather hand off the math.

One place, and written down. That's the whole secret, because minerals get lost when the paper lives in six drawers across three relatives' houses. Keep the documents: deeds, probate and heirship records, every lease and every amendment, division orders, and your check stubs, including the detail pages that show wells, volumes, and deductions. If it came from an operator or a courthouse, keep it, paper copies in one fireproof box and digital copies in one folder, ideally both. Then make a simple list, one line per property. A notebook works, a spreadsheet works better: county and state, legal description, your net acres, the operator, the wells, your owner number with each operator, your decimal, and the royalty rate. That one page answers most of the questions that come up, and it's the first thing anyone helping you will ask for, whether that's a landman, an attorney, or the operator's owner relations line. Last, keep it current. When a new division order comes, a well changes hands, or an address changes, update the list the same week. Ten minutes now saves your kids the archaeology project later, and if you found this page because you're doing that archaeology project right now, see the first question at the top. Building and keeping that file straight is the first thing we do for every owner we work with, if you'd rather not start from scratch.