Notice of Abandonment

Hello Everyone,

I am new to this whole thing and didn't even realize we had any interests in the O&G boom that has taken hold here. This past Saturday our family discovered that we own Oil and Gas mineral interests in Noble County. These were inherited from my grandfather. The family members affected were all sent a certified letter from an attorney representing the real landowners that wants to declare the interests abandoned. We have done some checking and see that we can file for an affidavit of preservation. Has anyone else encountered this problem? Does anyone have any advice?

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Permalink Reply by mandyriffic24 on May 21, 2012 at 6:17pm

Just an update on where things stand right now. The attorney that I am using filed an Affidavit of Preservation on our family's behalf today. The attorney who drew up the Notice, made some critical errors which in essence have made it faulty according to the attorney. His plan is to have the Affidavit on file. Then once he tells the Coal Company's lawyer about the errors on the Notice, that our rights will be preserved.

Our issue at hand now is the O&G Company that is trying to get us all to sign a lease in a rather short period of time. There are a total of six of us involved and the rep from Rex Energy is planning to have us each sign an individual lease. Is anyone else familiar with this?

Permalink Reply by Jack Straw on May 21, 2012 at 6:54pm

Thanks for the update.

I bet that you have had a busy week.

Good to learn that you have an Attorney who is getting right after things (and doing the right things).

We are holding our breath.

RE "Our issue at hand now is the O&G Company that is trying to get us all to sign a lease in a rather short period of time."

I would be inclined to question their need to be in a hurry; actually, I would be inclined to question your need to be in a hurry.

If you sign now, they will not pay any bonus until the matter of ownership is fully settled.

If you delay a bit, they will not pay any bonus until the matter of ownership is fully settled.

My guess (and remember it is just a guess) is that REX fear that a competitor might show up with a better offer.

RE: "There are a total of six of us involved and the rep from Rex Energy is planning to have us each sign an individual lease."

This sounds a bit like a divide and conquer situation.

If they get any one of the six of you to sign, the situation would be muddied and all of you could be tied up (what REX likely desires).

My suggestion would be to propose to the other five individuals that they allow you and your attorney to represent the entire group; with the promise of keeping everyone in the loop as matters evolve.

Then they can each decide whether (or not) to individually agree with what you and the Attorney ultimately come up with.

You have gone right after matters, you have found an Attorney who appears to be doing a fine job of representing your group's interests - you have likely saved their bacon.

There is truth in "Together we stand, divided we fall.".

Again, good luck.

                             JS

   

Permalink Reply by Frank Walker on May 22, 2012 at 12:29am

There is excellent thinking in the above writing.  First, it is a blessing only six parties are involved.  Nevertheless, the ruthlessness of your adversary should not be underestimated.  I surely agree with "divide and conquer".  They might seek out the "weakest link" among the six parties and try to exploit it.  By "weakest link" I mean the party in the poorest financial shape, the party that would prefer less money now to a great deal more money in future.

It might even be worth considering, if necessary, propping up your "weak link" financially, if such a "weak link" exists.  Above all, you do not want the relative financial distress of just one or two parties to dictate a poorer outcome for everyone.  In unity there is great strength.  Speak with one voice.  Don't allow yourselves to be split!  And don't think for a moment the company will not try.

Permalink Reply by Finnbear on May 22, 2012 at 1:08am

There should be no reason that one lease can't be created with six signature lines. A recent offer from Gulfport to my family has 4 signature lines, one for me, my brother, my mother, and my father, as we are all listed on the deed. To simplify things later in life, if you have more than one parcel, you should have one lease per tax parcel number. This allows a lease to more easily follow ownership should you ever elect to sell that parcel. When you have multiple owners on one parcel, you should have one lease for that parcel with each owner listed on the deed as a signatory to that same lease. That way you are "all on the same page" so to speak. I believe the reason they want an individual lease for each of you is the odds are in their favor that they can get one of you to jump and sign early. Once this happens, they have your land tied up and can use that first signer to browbeat the rest of you into going along. You as the owners need to present a united front when dealing with Rex (or whoever you end up signing with). Let Rex Energy know that you will all sign TOGETHER once your attorney has the minerals ownership issue is resolved and the lease terms are satisfactory to you as a group.

Permalink Reply by Todd Charles on May 22, 2012 at 2:04am

Please, under no circumstances, let the O&G company (or anyone else) divide your family or interest in your oil & mineral rights. Stand united - it's your only leverage.

Permalink Reply by mandyriffic24 on May 22, 2012 at 2:43am
Well I feel similarly about sticking together. Our situation is somewhat complicated. We as a family own 50% of the mineral rights out of 106.4 acres in the center of a much larger chunk of land that is all surface owned by the Coal Company. This coal company has apparently already made some sort of deal with Rex Energy according to their rep Matt. He has made it out like they're all ready to drill there and are only waiting for us. This Matt has also went on to say that since we only own such a small percentage, Rex will already have all of the surrounding acreage and we only own the mineral rights, not the surface land that we don't really have anything to negotiate. Now, out of that 50%, my Great Aunt gets 25%, the remaining 25% is to be divided down 4 ways and then one of those 4 gets divided down one last time. So I don't know if this is the main reason for Matt wanting to do all seperate leases and quickly? He also emailed 2 of us a copy of the lease to review...is this common?
Permalink Reply by Jack Straw on May 22, 2012 at 4:04am

RE: "This coal company has apparently already made some sort of deal with Rex Energy according to their rep Matt."

I would suggest that you request from REX that they provide you with a copy of the lease that they have negotiated with the Coal Company (with all ammendments and memorandums). If they claim it is confidential, tell them that this is nonsense and that if they want your trust they need to earn it. You want to be sure that you get (at least) as good a deal as the Coal Company has been able to negotiate. The Coal Company (like REX) have a long history of writing and negotiating leases, I would expect that the Coal Company have ended up with a good lease, one that you might wish to emulate.

RE: "He has made it out like they're all ready to drill there and are only waiting for us."

If that is the case, they should have all the documents ready to submit for a well permit; ask to obtain a copy of this information. Ask to obtain a copy of the proposed well plat(s); by now they should know what they plan to drill (and exactly where they plan to locate the well pad(s)). How many well from the pad(s)? How far out do they intend to drill the horizontal legs?  Again, if they are indeed "all ready to drill", there should be much information available that they should be able to make available to you. If they cannot or will not provide this information, it might indicate that they are blowing smoke with repect to the desire for urgency.


RE: "we only own the mineral rights, not the surface land that we don't really have anything to negotiate"

I strongly disagree with their statement, as detailed above.

With respect to an O&G lease, the surface means squat; it is the subsurface rights that really matters - and that is what is important, and that is what they need to lease in order to proceed. You have much to potentially negotiate, you have every right to negotiate.

 

RE: "106.4 acres in the center of a much larger chunk of land".

It is very likely that the physical location of your 106.4 acres is critical to the plans they have made to exploit the minerals. This should enhance your ability to negotiate.

 

RE: "So I don't know if this is the main reason for Matt wanting to do all seperate leases and quickly?"

My guess is that they want to rush things as quickly as possible so that your family group does not have time to think matters fully through. Once a lease is signed you become passive observers; until you sign, you have an active position in negotiating what is best for the family. I can see the benefits of moving the process along; but not in a rush - always insist in having enough time to think everything through - enough time to understand all minutae - enough time such that your Attorney can review. Just like a trip to a Car Dealership, they want to push the deal and get your signature before you think things through.

RE: "He also emailed 2 of us a copy of the lease to review...is this common?"

I see nothing unusual in that.

 

I agree with Finnbear's comments; in particular:

"Let Rex Energy know that you will all sign TOGETHER once your attorney has the minerals ownership issue is resolved and the lease terms are satisfactory to you as a group."

I agree with Todd's comment: "Stand united - it's your only leverage."

I do strongly recommend that all six of your family stick together and sign on one lease. A lease that is agreed to by all and reviewed by your Attorney.

 

All this is IMHO,

                          JS

 

Permalink Reply by Jim Litwinowicz on May 25, 2012 at 3:55pm

Jack;  I agree with almost all of what you advised expect for the following "You want to be sure that you get (at least) as good a deal as the Coal Company has been able to negotiate. The Coal Company (like REX) have a long history of writing and negotiating leases, I would expect that the Coal Company have ended up with a good lease, one that you might wish to emulate."

I would think that the coal company's main concern was maximizing its profits. I am sure they got the best financial terms they could but I'm willing to bet they didn't do as much about protecting the land from surface activities. I would think they are not so concerned about things like water protections, multiple pipelines, compressor stations, regional storage ponds, equipment and material storage, and more.

A landowner would be much more likely to put an emphasis on protecting the surface, even at the sacrifice of some of the monetary terms. The coal company lease would be helpful and may even be a good starting point but thats all it would be.

Permalink Reply by Jack Straw on May 25, 2012 at 4:13pm

Jim, it is my understanding that the family in question only own the subsurface O&G.

The O&G was severed and retained by a previous generation when the surface and coal were sold. 

It is the Coal Company that currently owns both the surface and the coal rights.

Any surface issues/damages would be a matter for the Coal Company.

 

JS

 

Permalink Reply by Finnbear on May 22, 2012 at 5:46am

Go through that lease with a fine tooth comb or have your attorney explain it to you thoroughly. It may be enforcable if only one of you signs. You need to stick together on this.

Permalink Reply by Jack Straw on May 22, 2012 at 6:59am

RE: "Matt has also went on to say that since we only own such a small percentage, Rex will already have all of the surrounding acreage ....."

The above argument on the part of REX has no merit.

A small percentage of what has the potential to be a very large number is a LARGE number.

There is the potential for royalties to be paid for the next 40+ years.

The unit will likely be no larger than 1280 acres, the unit your acreage ends up in might be less than 640 acres. If you are an obstacle to their being able to proceed, your acreage is of critical importance. I do not regard your Family's percentage as small; it is certainly not insignificant.

If your interest were not so important to them, they would not be attempting to bring such pressure upon you.

It is important that you and your Attorney move forward rapidly in establishing your ownership. However, I do not see the need to proceed at a mad speed with respect to lease; take all the time you need on the lease - you only have one chance to get it right.

 

All IMHO, with Best regards,

                                                 JS

 

Permalink Reply by jett on May 22, 2012 at 6:54am

Mandy, Can you print these replies off and share them with your family members? Maybe they need to see for themselves what knowledgeable people are recommending.

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