Information About Executory Rights & Bonuses in Oil and Gas Law
Call us at 800-929-1725 for an appointment to learn more about executory rights and bonuses as they affect your situation. In this video, Attorney Ray Kerlick discusses executory rights and bonuses in oil and gas law. Mr. Kerlick has also posted a video with information about oil and gas division orders.
This is a summary of Mr. Kerlick’s video covering executory rights and bonuses for oil and gas.
Hi, my name is Ray Kerlick. I’m an attorney in the law firm of Wadler, Perches, Hundl and Kerlick in Wharton, Texas. We serve counties all throughout rural Texas, and we get a lot of questions about oil and gas law. The purpose of this video is to provide some information totally on a general nature and without providing any specific legal advice to anyone. If someone watching this does have a legal question or a legal dispute, please contact an attorney to discuss the specific facts of your situation.
Today I want to talk a little bit about executory rights and bonuses. Most people have heard of oil and gas lease bonuses, but let’s talk a little bit about what that means. Whenever an oil company wants to drill a well on your property, they are required to either purchase the mineral interest from you or to get a lease of your interests in the minerals under your property. That lease is different than most leases that you’ve heard of before. The lease essentially gives them the right to go in and take out all of the oil and gas from underneath your property. It’s for a specified term and a specified royalty or percentage, that the oil company will pay you for the oil and gas that they get out of the ground. To tempt you into signing this lease, typically the oil company will offer what they call a “bonus.”
The place where it gets confusing is where there are multiple property owners of the same piece of property. And the question that’s often raised to us is, “Who is responsible or who needs to be paid the bonus?” And the answer is it depends. It depends on how the interest is held. There is no law that governs bonuses. Bonuses are strictly a rule of negotiation.
However, the general rule is only people who have to sign a lease would be required to be paid a bonus. And so that comes down to what’s called executory rights. Executory rights means having the right to sign. Many people have the right to royalties for minerals under their property, but don’t have the right to sign the bonus. We’ll talk about those rights in a different video, but those people do not have a right to sign the lease, only the executory right owner does. Therefore, because they’re not signing the lease, these people typically do not get a bonus. The bonus, again, is simply a temptation or a reward for signing a release with a given oil company.
Wadler, Perches, Hundl & Kerlick have three offices in Fort Bend County and Wharton County to serve you. Our main office is in Wharton, TX, and we have another Wharton Couty office in El Campo, TX. Our Fort Bend County office is in Richmond, TX. Call 800-929-1725 to make an appointment at any of our offices or use our contact form to send us an email.