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RATIFICATIONS

Often times an owner of an interest in the mineral estate will be asked to sign a Ratification.  This may be a ratification of an oil and gas lease, a unit agreement, a pooling agreement, or some other form of agreement.

In Texas, non-participating royalty owners’ interests cannot be pooled without their express written consent.  If acreage in which a non-participating royalty owner owns an interest is to be included in a pooled unit, the owner may be called on to ratify the lease on the lands, which lease contains a pooling provision, thus allowing the non-participating royalty owner’s interest to be pooled.  Before signing the Ratification, a non-participating royalty owner should ask where the well is to be located on the pooled unit.  If the well is to be located on the lands in which the non-participating royalty owns an interest, if the ratification is not signed, the royalty owner will be entitled to be paid on a lease basis rather than a pooled basis.  The difference in interest and revenue could be substantial, with the non-ratified, lease basis royalty generating greater revenue.

If the well on the pooled unit is to be located on lands other than the lands in which the non-participating royalty owner owns an interest, it is recommended that that the non-participating royalty owner execute the Ratification.  If the Ratification is executed, permitting the owner’s interest to be pooled, the owner will share in production from the pooled unit.  If the Ratification is not executed and the well is located on lands other than the lands in which the owner owns an interest, the owner will not receive or be entitled to receive any income from production if the lease on the lands in which he owns an interest has not been ratified.