Lawsuits in Ohio and Supreme Court of Ohio regarding Mineral Rights Holders

We received a lease check from Hess Oil last year as a payment for a five-year lease. Now they are drilling, but we are not receiving a royalty check. We have been told the oil companies in Ohio are holding royalty checks for those who own mineral rights but do not own the surface land. We are told they are waiting to see who gets the money until the State of Ohio Supreme Court makes a decision on if the recipient will be the mineral rights owners or the land owners. Does anyone have further information on this? Here we are paying mineral rights taxes to Harrison County, yet we may not even get any money from our mineral rights! If you have information, we will be most appreciative. 

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Permalink Reply by Mark Anders on May 4, 2015 at 7:48am

Technically, they are not withholding any royalties. That money is being put into an escrow like account. My assumption is that you signed a specific lease based on the DMA issue... aka contingency lease...

What you agreed to if you signed that type of lease is that you acknowledged that you know there is a DMA issue and you allow them to continue to drill while YOU sort it out. I bet the language puts the ball in your court and it is up to you to prove that you own the mineral interest by court of law, cross stipulation agreement etc.

What you need to do is to look at the OOP and the Exhibit and look for some type of contingency clause.

In the OOP, does it say anything about you getting an upfront bonus for the whole amount of acreage or did you get a mere $100 or 5% of your total bonus upfront?

Those kinds of details will give you insight.

Good luck!

Lastly, just know that if you did sign a contingency lease that you will have to wait a full 120 days after you prove the minerals are your for your bonus payment. 

Permalink Reply by Finnbear on May 4, 2015 at 8:46am

Lastly, just know that if you did sign a contingency lease that you will have to wait a full 120 days after you prove the minerals are your for your bonus payment.

Can you please cite the state of federal law which specifies that? I'm involved in a similar situation and would like to research that further.

Permalink Reply by Mark Anders on May 4, 2015 at 8:52am

It's not a state or federal law. It would be listed in your OOP that you agreed upon when signing your lease. This only applies to the company I worked for but seems to be the industry average.

If you signed a lease then to research it further just dig into what you signed.

Permalink Reply by Dott on May 4, 2015 at 10:09am

I just want to throw something out there on Terminology. When just new to inheriting OIl and Gas Rights (no surface)  from my parents I was using the term Mineral Rights when investigating what all of this meant.  Then I realized that we do not own the Mineral Rights (coal, ore,iron etc) just the Oil and Gas Rights as stated in our Deed. ( In Ohio you have to have a Deed for your Rights as it is considered property). Anyway my parents separated it out specifically. So that may be why some people are being charged taxes by the County Assessor even before Production and others are not, but I am sure it could also be the different Counties and their laws.

Permalink Reply by Philip Brutz on May 6, 2015 at 10:39am

Ohio Supreme Court Heard Oral Arguments in Corban v. Chesapeake

http://w***********/corban

Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A.
practice areas Oil, Gas & Mineral Law
May 6, 2015

The Ohio Supreme Court heard Oral Arguments in the third of many cases involving Ohio’s Dormant Mineral Act, O.R.C. § 5301.56: Hans Michael Corban v. Chesapeake Exploration, L.L.C., et al., 2014-0804.   An archived video of the Oral Arguments before the Ohio Supreme Court may be viewed here.

The next Oral Argument regarding the DMA before the Ohio Supreme Court is scheduled for Tuesday, June 23, 2015 in Jon Walker, Jr. v. Patricia J. Shondrick-Nau, Executrix of the Estate of John R. Noon and Successor Trustee of the John R. Noon Trust, 2014-0803.  The Oral Arguments in Walker will be streamed live at: http://www.supremecourt.ohio.gov/ 

Additional analysis of the Dormant Mineral Act litigation may be found here. 

NOTE: This general summary of the law should not be used to solve individual problems since slight changes in the fact situation may require a material variance in the applicable legal advice.

If you have any questions concerning the application of Ohio’s Dormant Mineral Act, please contact Attorney Gregory W. Watts or Attorney Ryan W. Reaves at 330-497-0700.

Permalink Reply by nc man on May 7, 2015 at 1:59am

THANK YOU, PHIL!

Watched it several times and felt the judges were somewhat leaning towards the mineral rights owners.

Their questions seemed to question the land owners knowing that the land they bought did not include the mineral rights. Then, since I really do not understand much about the o/g industry, I could be way off in my "understanding" of any of this!

Have marked my calender for the June 23rd. argument. Should, again, be very interesting.Certainly is an important subject to my situation.

Does each individual case have to go before a court to decide who is the rightful owner of the mineral rights? Or once these "arguments", that are before the court now, create the law for all of us in that same situation?

Cannot figure out how your research goes so deep and you come up with all the great legal "leads" you give us all. You're a genius! Wouldn't even begin to now where to look for this and all the other sites/info you have  brought to our attention, over the years!

I am always excited when I see your name on a response to a topic!

You're the BEST in my book!

Thanks, Phil!

nc man

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