Hey there, time traveller!
This article was published 30/4/2014 (1152 days ago), so information in it may no longer be current.
BIRTLE — After drillers struck oil recently in the new Birdtail Field, south of Russell, on land where retired farmer George Wady owns mineral rights, you might think he’d be buying the rounds for awhile.
You might expect to hear stories of him lighting stogies under no-smoking signs, and driving a new Cadillac with Oil of Me vanity plates.
Well, not quite. While Wady’s name is on the title to the mineral rights, which means he receives royalty payments from any oil extraction, he owns only 25 per cent of the rights. A distant cousin owns another 25 per cent, shares they inherited.
And some lady in California he has never heard of owns 50 per cent.
Apparently, back in the 1940s, a land speculator from the United States — they were called "land men"— trekked across Manitoba trying to buy up mineral rights from cash-strapped farmers. He bought half the rights from Wady’s great uncle. The great uncle passed down 25 per cent to Wady’s father, who passed them on to Wady. The rights purchased by the speculator were similarly handed down in his family.
That’s not such an unusual case. Trust companies also ventured into Manitoba buying up mineral rights on long-term speculation before oil was discovered. Small-town lawyers would accept mineral rights in lieu of payment on a legal bill, too.
In other cases, mineral rights have simply been handed down in families and fragmented with each successive generation. Some rights have been split 16 ways.
Then those mineral rights vanish to the four points of the Earth. That’s when the oil industry calls Greg Meidinger, of Scott Land and Lease Ltd. in Calgary, who specializes in tracking down oil rights.
"That is becoming a larger issue for exploration companies as generations pass. Those mineral rights were quite often divided up among many children," Meidinger said in a telephone interview.
Meidinger is being kept busy lately tracking ownership of land titles in Manitoba’s newest oil fields, the Manson Field, north of the Trans-Canada Highway near the Saskatchewan border, and the Birdtail Field, south of Russell.
"Those are mineral rights that didn’t have any value at the time, and often they were just forgotten about," Meidinger said. "We’re pulling titles that are still in grandpa’s name from the 1920s and ’30s, and quite often grandpa even moved down to the United States. So we’re tracking beneficiaries to these estates and mineral titles around the globe."
Meidinger’s job has taken him as far away as India to find title holders. He has tracked mineral rights holders to virtually every province in Canada, every state in the United States, and every country in Western Europe, he said.
A typical case, including legal work, takes about two months. But some cases have taken a couple years, when wills going back generations need to be probated. An oil company can’t drill until it finds the title holder.
"When we do find them, a lot of these people don’t even know they own the mineral rights. Then we have to explain to them we’re not trying to selling them anything, but that they own a real property asset in the Province of Manitoba."
It sounds like Ed McMahon carrying those giant sweepstakes cheques when Meidinger shows up at someone’s door.
"Sometimes we have to say the mineral rights could be very valuable but we also temper our approach because we don’t want people getting their expectations too high."
Only once in 20 years has he not been able to track down a mineral rights holder. In such a case, a provincial government sets up a trust fund and holds the royalties in case an owner shows up. The Manitoba government holds such royalties for up to five years, and currently has $200,000 in trust.
The search often requires wading through multiple layers of estates to find beneficiaries. Meidinger calls them "orphan" titles that wound up "in grandpa’s safety deposit box or under the mattress, and were just forgotten about." In some cases, the last holder of mineral rights may not have had any children. "Then we go to the brothers and trace their families down."
The process involves a lot of time and legal costs for oil companies. That can discourage some companies from drilling an exploration hole, he said. "We do this across all provinces, but Manitoba has a higher percentage of freehold minerals."
That’s because much of Manitoba was settled before the federal government took over the rights in the 1890s (and transferred them to the Western provinces in 1930).
Meidinger said provinces now limit how often mineral rights can be split "to make those properties negotiable. If something is fractured into one-hundredths, it’s not negotiable anymore." In Manitoba, properties can’t be split more than 16 ways.
Not every drill hole turns up black gold. One family now living in Winnipeg with mineral rights in southwestern Manitoba has had holes drilled on the land with no results.
Even for George Wady, the well he has 25 per cent title on is a modest producer, averaging about 20 barrels per day.
» Winnipeg Free Press