Anyone know about mineral rights?

[oregondebt]

Hi,

I am keen to file Chapter 7, but have been in limbo for over a year as I do not know what to do about minerals rights. My name is on 4 locations of minerals that I receive less than $100 each a year in Royalties on. My father left them to me and my sister, and I manage his estate and all dealings with the minerals. The income is so small and there are no other assets from my father, so the will was not probated (cannot afford to do so).

Does anyone know if the trustee will go after them, and if so, what is the process? Will they need to contact me to find my sister? I cannot locate my sister at this time, so this is really tricky.

Should I list them? Probably, but how? List the county they are in (OK and AK)? Or list the drilling company that operates in that land? They are worth so little. Should I stop stressing over it, and just wait and see what happens? They are worth so much less than my $50k of credit card debt, so I am fine with losing them. Please help!

[justbroke]

Does anyone know if the trustee will go after them, and if so, what is the process? Will they need to contact me to find my sister? I cannot locate my sister at this time, so this is really tricky.

I haven't dealt with this specifically, but Trustees go after something that's easy to sell. If the mineral rights have some value, the Trustee may take them and sell those rights in order to get money for himself and the unsecured creditors.

Should I list them? Probably, but how? List the county they are in (OK and AK)? Or list the drilling company that operates in that land? They are worth so little. Should I stop stressing over it, and just wait and see what happens? They are worth so much less than my $50k of credit card debt, so I am fine with losing them. Please help!

Yes, you should list them as they are your property.

[AngelinaCatHub]

In my humble opinion, your rights should be a bitty, bitty, income and not to be made a big deal. For what a Trustee wishes is big lump money, not a yearly trickle. That is my opinion and I rarely disagree with "Justbroke".

I would list it as miscellaneous income or just income and let it slide. If they question it, then address it. I doubt a Trustee would even know of this stuff, but ask your lawyer of course. That being said. STOP YOUR WORRY. Worry gets you no where except into a long ditch with a guy smiling down at you with a shovel.

I re-iterate, my opinion. 'Hub

[justbroke]

Perhaps my post could be read as though the Trustee actually wants the residuals from those mineral rights. 'Hub was clearer than I was. The Trustee isn't usually interested in "small" potatoes. I think the Trustee may still ask questions about it, but probably not interested in it.

But I repeat myself.

[alngfrthride]

Hello there,

I have not posted before, but I've been lurking awhile. I'm responding to this because I happen to know something about mineral rights -- my family has been involved in the oil & gas business for a long time, and I have worked on and off as a petroleum landman since I was 14.

What a landman does is do title research on who owns mineral rights, and then procure leases for oil & gas companies. So as it happens, this is right up my alley.

Mineral rights are property in much the same way as real estate, and they can be (and usually are in Texas & Arkansas) separate from the surface ownership to any piece of land. What you own is a fractional interest in the mineral rights; probably a very small one. (I've dealt with folks who own as little as a 1/1280th of the mineral rights under a tract of land before.) Your interest is completely separate from your sister's -- you both inherited 1/2 of your dad's interest, so she doesn't need to be involved at all. You would list as property owned that you have X interest in the mineral rights on Y tract of land; you can find the legal description in the lease you have with the O&G company who has the well on the property. As far as what the mineral rights are worth -- they are worth what someone will pay for them; ask your lawyer for an estimate; he should be able to tell you how to come up with one.

In addition to owning the mineral rights, you also have the income stream from the lease with the O&G company. That should be listed as income. In addition, the lease with the O&G company is a contract that is in effect as long as the well is producing. I don't know a whole lot about bankruptcy yet (my fiance is currently getting ready to file), so I don't know how an active contract is dealt with in the bankruptcy process, but you likely need to find a copy of the lease and let your lawyer look at it and figure out how to handle that.

If you don't have a copy of the lease, you can call the County Clerk in the county where the land is located and they should be able to help you find a recorded copy of the lease.

Hope that helps, one way or another.

[DeadManCrawling]

alngfrthride just provided more detailed info than I think nearly anyone else on this forum can offer.

Mineral rights is a very specialized niche of property and income. Do make sure you follow his advice and key your attorney into the details.

I have a similar deal with tribal lands in South Dakota, which are owned by my father. I will inherit them on his passing-we are Lakota Sioux-and am glad to read of similar agreements. Thank you alngfrthride for helping me to at least know what questions to ask.

[whipster1]

The hard part is finding a resale value for the rights. That is the only thing the trustee wants to know, would it be worth it to sell or easier to just abandon.

[justbroke]

The hard part is finding a resale value for the rights. That is the only thing the trustee wants to know, would it be worth it to sell or easier to just abandon.

You succinctly just wrote what I was trying to say. Thank you. (If it's too much trouble for the Trustee, they will abandon their interest in those rights.)

[oregondebt]

Thanks all. I have since discovered that I am the sole heir, but the minerals are still in my fathers name. A couple of them have me as AIF or POA. My SSN is not attached to these. I have been depositing the small royalty checks in a checking account with both mine and my fathers name on since he passed. My question is this - The trustee has asked to see statements of minerals. Can I omit taking him the ones that my name is not on? Will he check all deposits made to the account I have with my father? If so, how far back will he look? I feel like he would never find these minerals if I do not present them to him. Am I right? One last thing - 2 of the mineral accounts are in no-pay status pending me sending them the will and affidavit of heirship, can he get these if they are in that status?

I really appreciate any help!

[justbroke]

This is a very legal question that you're asking. I can't provide a definitive answer, but will respond anyhow. If it's not in your name, I guess it's not legally yours. Unless and until the rights are yours in title, I don't see what the Trustee would do. However, the Trustee can be unpredictable. While I would say show him them all, to show you're not hiding anything, at the same time, an Attorney may advise you to only show what's clearly yours.

As for the last two... I'm thinking the Trustee will figure out that these are un-probated or otherwise un-perfected personal property and might want to dabble in trying to get it "fixed" so that he could sell them outright. As I wrote before, I don't think he wants the residuals, but may want to sell them outright. However, it may be too much effort for the Trustee and he may abandon them in the end.

This is my personal opinion only. I haven't seen a case like this yet, although I have read about Trustee's running dairy and cattle farms for profit, until they were sold.

[OhioFiler]

I believe those mineral rights are assets which is significantly different than an income stream. I bet he will want to have them valued and then determine whether he should pursue them. Even though they are only producing $100 of annual income the asset value could be much higher.

I hope you are able to post the final outcome of this situation here.