Recently BB Land has contacted us about mineral rights owned by my great grandfather, (when I say "us" there are many heirs!) Maybe more than I even know about. BB Land says there are about 150 heirs, my guess is at best 40 that are still living. I have already traced this family tree.  I only know that the property is in Ben's Run, WV area. We are being offered $2000 per acre and 15% royalties. Each heir owns a .025% portion of the land and 0.0125000 net acres of mineral rights.

I have decided NOT to sign any leases. I don't see it being worth my time for $250.00. Since I have about 20 heirs on my side of the family tree, and we all are not needing an extra $250. We can hold out for awhile. BB Land is telling us Pleasants County is not a "proven area" at this time. If it is not a proven area, why bother the heirs?? 

Any advice from anyone in this area would be nice.

Thanks Terry

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Pleasants may not be "proven" but the potential is awfully good.  Counties across the river, and Tyler County next door, are doing very well.  

You have a tiny net mineral acreage.  I usually advise people with that little to just ask for a larger bonus (come back at $1500 and see what the landman says) and higher royalty (try for 18%).  Also get No Warranty of Title, Indemnification, Gross Proceeds, and don't warrant that there were never any wells or leases on the property.  If you can get that, considering the size of your net, you're doing well.

I just told them I and my heirs are not signing till we get a better offer. Yes we have a small percentage in this parcel. But there is another parcel we haven't been told about yet by the land man that is 55 acres. I believe there is power in the numbers.

There definitely is power in numbers.  Just make sure that the company knows you want to lease, and try to do everything you can by email.  If you talk on the phone or in person, write down the conversation afterwards.  It could come in very handy later.

Since I am a disabled vet, and considered "deaf to conversation". There won't be any face to face meetings without a representative with me. Lawyer or relative.

Kyle, please help if you can.  I have asked this question before, without finding a clear answer. 

You mention to ask for gross proceeds.  How does gross proceeds work with hedging and kickbacks?  I believe hedging and kickbacks are not included in gross proceeds, which causes an inverse correlation between the E&P company's profits and the land owner's income.  That is, an E&P will achieve greater profits, the lower the value of the minerals it produces.  For example, if the company is hedged on its gas at $4, its profit is less if it produces and pays gross proceeds at $4, than if it produces and pays gross proceeds at $1.  This is, of course, because its royalty expense at $1 is far less than its expense at $4.  Given hedging, if gas were to go to $6, which would provide the higher royalty payments to mineral owners, E&Ps would not even produce because they are hedged at $4.  Can you please explain how to structure the lease agreement so that there is a direct correlation between the mineral owner's maximum income and the E&P's? 

Lastly, in the WV legislature sessions this year regarding forced pooling, I did not find any consideration on this matter, of which it seems to me, should be one of the highest priority considerations.

Leo

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