My sister, Karen (above), and I have inherited mineral rights in several counties in WV, but mainly in Marion County.  We have had landmen representing XTO/Exxon Mobil calling for a couple of years about a particular 110+ acre parcel where we own a 50% interest.  No surface land, just the O&G.   The surface land has been divided into about a dozen properties since our ancestor purchased an interest in the mineral rights on 113 acres in 1897.  Our ancestor’s brother owned the other 50% and now a single heir on that side of the family owns that 50%.  We know this person’s name, but that is all.

I had a TX O&G attorney review the proposed lease documentation last year.  I asked for conceptual changes, rather than sharing the full lease document mark-up.  XTO said "no" to everything, but the boss called yesterday to see what it would take to get us to sign.  Our WV attorney is not an O&G person, but has an awesome paralegal who has done title work for us.  I am unenthusiastic about negotiating against myself as XTO is trying to orchestrate.

We would appreciate hearing any thoughts you have to share with us.  We sold one property a couple of years ago, but this will be our first lease.  If you prefer to comment to me privately, please email me at LSM4Kids@Yahoo.com.

We have asked for $1,500/acre bonus and 15% royalty.  XTO is at $1,100 and 13%.  This is an increase from their opening offer of 12.5%.

We asked for a provision stating that there will be no deductions from the royalty for treating, transporting, marketing etc.

We asked for a Pugh clause and a horizontal severance clause.  6 months ago the landman said they would ask their client for a Pugh clause if we agreed to a 3-year extension to the proposed 5-year lease.  Yesterday, the landman said they would pay the bonus ($1,100/acre) again if they chose exercise the 3-year extension.  We feel that bonus should be larger since we will all know how the property is producing at that time, but have not discussed this with the landman.

We asked that the $1/acre Shut-In payment be increased to $50/acre and for the annual extensions under this provision to be limited to two.

We also asked for a provision stating no warranty is given by us, express or implied.  We are inheriting these properties from someone who died in 1904 and no one in the family knew about them.  We have done reasonable title work, but expect to be able to rely on XTO's title work for the period prior to the time we became owners.

Thanks!