Does anyone know if a Texas Mineral or Royalty conveyance Deed can be based upon a Net Decimal Interest in a Well / Unit that is being conveyed? The transaction involves a portion of a Decimal Interest that Grantor owns.
I’ve never seen it done that way. A conveyance of any real estate, including mineral interest, should include a legal description of the land and the whole or the portion of undivided interest being conveyed. The decimal interest on the revenue statement is the proportion that your net royalty acres in the property represent in the unit. The legal description could be created so that it would only include the portion of the property included in the unit. I wouldn’t recommend making a conveyance using the Decimal Interest as the description of what is being conveyed.
In my experience, the use of a NRI in the conveyance can be useful to provide notice to the operator of what exactly is being conveyed especially if the Grantor is only conveying their interest in a particular well or unit. It is a good idea to couple the use of a NRI with a legal description and make sure that the granting language reflects what you are conveying, i.e. interest in that particular revenue from that well/unit or the underlying mineral interest or just a royalty interest, etc. Also watch out for catchall language that specifies an NRI but ends with “All interests I own in _____ County”.
Documentation of an assignment of a wellbore-only interest vs. a deed for minerals are very different, whether one is assigning all or only a portion of the interest owned. In either case, assignment of only a portion of the interest conveyed must be carefully worded. The safest approach is to state the fractional interest being conveyed, such as one-half of seller’s interest, whether in the wellbore or royalty stream or minerals, coupled with a good legal description. One problem with specifying the exact decimal arises if it is later determined that the seller owned less than he thought. Such as an NPRI burden which was not accounted for in the original DOI determination or the reinterpretation of earlier deeds. If the seller warranted title, then he can have real legal or financial mess.