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Help! Mineral Rights

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Pajamafied John

03-14-2008 14:02:13

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We thought the wifes W.Va. family farm had been sold about 10years ago. She just found out she is the majority owner of a parcel left over from the old farm. A gas company did a title search for property they want to drill and extract on and found the wife owns it. What are the pitfalls regarding mineral rights lease, coal gas etc? I/we know nothing about this and have just recieved a contract in the mail. An aside, good deer hunting in this country. Used to hunt it back when the family owned it all.

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Dan in Houston

03-15-2008 19:00:01

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

Check out the discussion on gas drilling that was posted here on 2/8/08. Also check out the following resource:
Link

I also own mineral rights and gas royalty on the old family farm in WV. If you own the mineral rights, it can be a good deal. If someone only owns the surface rights, expect them to fight the deal.

Since WV taxes mineral rights, you need to see how the ownership is recorded at the courthouse and who has been paying the taxes. Hiring a lawyer is always good advice, but depending on how much land your wife owns, you can spend more on the lawyer than you might ever get in royalties. Most people who don't understand the oil and gas business assume everyone in it is a crook. Not necessaryily so, but educating yourself is always a good idea. Anyone in the family or friends own any gas royalties back in WV? If so, ask them their experiences.
Don't get your hopes up, there is always a chance that the well will be dry and it will all come to naught.

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Mark - IN.

03-14-2008 20:23:18

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

Like the others have said, talk to a lawyer first...your lawyer, not theirs.

I remember back in the late '70's there was this oil vein that stretched from somewhere in mid-Illinois, through Indiana, up to somewhere around Kalamazoo, MI. and these guys were paying farmers and land owners to drill and put small derricks up on their properties. I knew a couple of guys back then that did that. In return for going out and shutting the pumps off when the holding tanks got full or near full, they got a monthly check from whatever oil company(s) was/were doing that. Then for whatever reason, they all stopped and most of the derricks disappeared. Some are still out there rusting away though, like just off of I-80 between LaPorte and Michigan City, IN. I have no clue what happened. Maybe the oil dried up? Maybe EPA got involved and said "No more of that"? Maybe the oil company(s) went under. Who knows.

Good luck just the same. If it puts change in your pocket or buys the wife a new dress, and your lawyer asks "Man, what are you waiting for?"... Just don't blame the outcome on me.

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glennster

03-14-2008 19:07:31

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

john i agree with the other posters here, dont sign nuthin till you see a good attorney. i own mineral rights on my farms, one has a coal vein 90 ft below surface. here is my personal opinion. i own the land, i am not selling or leasing out the mineral rights so some clowns can come in and tear everything up. if you are not that connected to the land, you can always sell it, and go thru a 1031 property exchange and buy land of equal or greater value than the present land, and defer capitol gains.

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Bill in Colo

03-14-2008 18:19:16

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

Donot sign a standard oil and gas lease. Revised to your standards. accept nothing less than 15% gross royalty and ask for 17 to 20%.Make sure the shut in fee is as high as the annual rental rate.
Do internet search for the National assoc. of royalty mineral right owners

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RayP(MI)

03-14-2008 18:06:13

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

FIND THE BEST OIL-GAS ATTORNEY YOU CAN FIND. DON"T SIGN ANYTHING UNTIL EVERYTHING IS PROPERLY RESEARCHED AND DOCUMENTED! (Yes, I know I"m SHOUTING.) Those lease people are some of the slippriest people in all industry.

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buickanddeere

03-14-2008 17:59:41

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

1st pay the back taxes before the the property goes to the county auction.

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Janicholson

03-14-2008 17:17:11

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

Minerals include way many things. If you lease the property's mineral rights (best bet), be sure to specify in clear and limited terms what is to be drilled for, and what can be extracted, and for how long. Be specific to include an adjustment of royalties based on value of well head production into the future. (in the event that producing wells are drilled, the wholesale price of the commodity may double, make sure your payment also doubles.
Remember undefined "minerals" include sand and gravel, you could end up owning a pit in the ground! JimN

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Ultradog MN

03-14-2008 19:50:08

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Re: Help! Mineral Rights in reply to Janicholson, 03-14-2008 17:17:11

One of the parcels I own is a mostly mined out gravel pit. Before I bought the thing I read over the title and noticed the mineral rights had been kept in perpetuity by a family who owned it in the 1920s. Talked to an attorney to see if I could mine the last few yards that remained of gravel and he said yes. Unless specified, gravel was not usually one of the minerals retained in that kind of a claim. In this country they were mostly interested in iron ore and/or other metals.

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Charlie M

03-14-2008 16:19:25

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

Around our area, the company that wants the mineral rights gets a signed agreement from the land owner and pays the land owner by what is agree upon. However I believe once the rights are sold they are gone forever. Definitely need to run any agreement by a lawyer. I once bought a piece of railroad property and part of that agreement was the railroad held on to any mineral rights even though there was no known reason to do so. They just covered themselves for any future finding, no matter how small. If a company wants the rights bad enough its almost impossible to stop them.

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2x4

03-14-2008 15:25:30

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

oil & gas companies in WV have been cheating landowners for 110 years, so they know every trick, you know nothing. Guess who's gonna lose? You must hire an expert atty. Of course, never sign the first offer. They will give you free gas from the well if you demand it. If you would move back there, that alone would be worth thousands. Biggest problem will be finding an atty. who doesn't work for them. They purposely hire every atty. there is in town to keep you from getting good info.

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Pajamafied John

03-14-2008 16:40:55

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Re: Help! Mineral Rights in reply to 2x4, 03-14-2008 15:25:30

Thanks 2x4. That is a help. One thing I definately know is that the locals/attny's are wired and have the inside info.The outsiders gotta try to research where they can. I figured a lot of folks here would have some experience. Me, I have none

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Bill(Wis)

03-14-2008 14:34:18

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 14:02:13

Who's been paying the taxes on it?

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Clouseau

03-14-2008 14:44:23

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Re: Help! Mineral Rights in reply to Bill(Wis), 03-14-2008 14:34:18

It sounds like a phony story to me. If it were true he would be bee lining it to an attorney that specializes in oil leases, not asking for advice from some of the weakest minds around.

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noncompos

03-14-2008 15:56:28

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Re: Help! Mineral Rights in reply to Clouseau, 03-14-2008 14:44:23

I resent that....I didn"t say it wasn"t true, I just said I resented it...

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Pajamafied John

03-14-2008 16:46:27

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Re: Help! Mineral Rights in reply to noncompos, 03-14-2008 15:56:28

No, There aint no weak minds here. That is why I asked. The last 2 original owners (aunt and uncle) died last summer. My wife had a 1/8 owmership prior but didn't realize it. If you doubt the story just keep quiet and let people that know something help me out. I get plenty of crap elsewhere.

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flashback

03-14-2008 17:05:13

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 16:46:27

I own a piece of land in northern ohio along with several others. We found out that A GAS COMPANY HAD SLANT DRILLED UNDER OUR PROPERTY. I was done from an adjoining property. After much argument, we now get a royalty check every month albeit pretty slim. I believe you can lease them the mineral rights for a period of time during which they would have to pay the lease. Somehow(its been a long time) we ended up owning a certain percentage of the producion and they sell it and pay us. I think selling the mineral rights would allow them to drill under your property with no recompense to you in the manner they tried to do to us. They dont have to come onto you property to drill under it Jack

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Pajamafied John

03-14-2008 17:26:48

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Re: Help! Mineral Rights in reply to flashback, 03-14-2008 17:05:13

The lease they sent was for test drilling, including on a slant. They pay a percentage of the production from any wells drilled. It doesn't sign over the mineral rights (as I understand it) but I believe is a right to drill and prospect and produce.But I am sure there are a lot of things I do not understand here. There is something about getting rid of water and salt water in the lease. Not sure what that is about but if I want to put a cabin there later I don't want the well water poisoned with salt water. This begs the question. Why would salt water be mentioned as a by product of gas drilling in W.Va?

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2x4

03-14-2008 21:14:23

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Re: Help! Mineral Rights in reply to Pajamafied John, 03-14-2008 17:26:48

deep in the earth, salt has filtered down over the millinia & also the sedimentary rock layers are sediments from the old sea bed. Some rock layers are impervious to the salt water & it collects in pools on top of these layers. Drilling goes thru these pools & the salt water is exhausted thru the hollow drill stem into catch pools on the surface, where the drilling co. must haul it off to be re-injected in special wells. That is required by law & has nothing to do with you. Its their responsibility. In the old days they blew it out into the air & it killed all greenery in surrounding acerage.

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Pajamafied John

03-14-2008 17:24:49

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Re: Help! Mineral Rights in reply to flashback, 03-14-2008 17:05:13

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Spook

03-14-2008 16:17:52

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Re: Help! Mineral Rights in reply to noncompos, 03-14-2008 15:56:28

LOL!!!

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