Leader Blues

Wednesday, April 05, 2006

SAT 4-5-6 EDITORIAL >> They’re selling mineral rights

Log Cabin Democrat, Conway — Two frequent questions around Faulkner County these days are (1) “Have you leased yet?” and (2) “Did the check go through?”

Leasing of land, specifically mineral rights, for the drilling of natural gas wells is the hottest topic from one end of the county to the other. Fayetteville Shale seemingly is right up there with free lunch. Things are moving, and royalty payments from completed gas wells are starting to flow in monthly.

If there is a downside, it’s for people who thought owning land was all they needed to get on the bandwagon. And for those who thought or assumed they owned the mineral rights under their land and are finding out they don’t.

A fairly common occurrence in this activity is a leasing person negotiating an agreement with a landowner along the lines of, “I’ll pay you $300 an acre for a five-year lease on your land.” The landowner eagerly replies, “I’ll take it.’’ ``Sign here.” The leasing agent then issues a draft — not a check — for the agreed upon amount.

But, as David Heffington of First Security Bank in Greenbrier explained, the leasing folks then do the courthouse research as to who actually owns the mineral rights on that land.

Mr. Jones may have honestly thought he owned mineral rights, but it may turn out he bought the land in 1962 from Mr. Smith who knew nothing about mineral rights. Mr. Smith had inherited the land from his grandfather who bought the land way back when from a railroad company that sold only the surface acreage, not the mineral rights.
It does get complicated.