December 2013 Michigan State University Extension Oil and Gas Newsletter now available
The December 2013 Michigan State University Extension Oil and Gas Newsletter discusses a correction to mineral owner contracts, an MDNR FAQ session and royalty negotiations.
Information in this Issue
- Correction to Northern Michigan Mineral Owners Coalition contact information
- Michigan Department of Natural Resources answers questions about State of Michigan owned mineral rights
- Survey of oil and gas attorneys indicates significant positive financial results from lease bonus and royalty negotiations
Northern Michigan Mineral Owners Coalition (NMMOC)
Oil and Gas Frequently Asked Questions
I frequently receive questions from surface owners about areas of land where the State of Michigan is the mineral owner. The task of managing state-owned mineral rights is handled by the Department of Natural Resources Mineral Management Section. Julie Manson, supervisor of the Oil and Gas Lease Management Unit, answered the following frequently asked questions:
- What, if any rights does the surface owner have related to oil and gas production if the minerals are owned by the state?
- Is there a law that dictates the mineral estate is dominant? If not, how did the mineral estate become dominant?
- Does a split estate surface owner (one owner of the surface and another owner of the minerals) have the potential to lease the state owned mineral rights under their property? If so, how does that person become qualified to bid at a DNR auction?
- If the State of Michigan does not record their leases at a county recorder of deeds office, how can a person determine if the state owned minerals under their property are leased?
- If the state owned minerals are leased, can the surface owner obtain and copy of the lease? If so, how do they do this?
- How can a person determine if the state owns the minerals under their surface? Is there a map or registry available?
Oil and gas bonus and royalty payments
For the past three years, property owners in many areas of the state have been approached by oil and gas company officials with an offer to lease their oil and gas mineral rights. Because of the complexities of the oil and gas lease contract and its potential long-term life, Michigan State University Extension recommended that a knowledgeable oil and gas attorney with experience working for private landowners be consulted to assist in negotiation of the oil and gas lease. To begin the process of evaluating the financial impacts of this education, a survey was mailed to oil and gas attorneys during the summer of 2013. The survey measured oil and gas lease terms “before negotiations” and “after negotiations” to determine what, if any financial or environmentally related lease terms were negotiated to benefit their clients. The results of that survey regarding negotiation of the oil and gas lease bonus and the royalty are provided.
Complete versions of these articles can be found at http://msue.anr.msu.edu/program/info/oil_and_gas.