Does this Language Provide Unlimited Power to Extract Minerals

Ownership and Title
1

Thanks in advance,

Our family has owned a piece of property in the Bastrop Area of Texas since 1968. We have finally decided to sell the property, which is currently going through escrow. As part of the sale, we are including 100% of the surface rights, which we own, along with 50% of the mineral rights, which we own. (This doesn’t seem to be a great area for gas/oil which is why we are comfortable selling the rights.)

Two separate tracts make up our property. On one tract, a mineral rights search shows when Tract 1 was sold to us in 1968, the RESERVATION included that we, the new owners, have 100% of the surface rights and 50% of the mineral rights, while the sellers retained the other 50% of the mineral rights… BUT, the following language was included in the RESERVATION:

While the family (us) owns a 100% interest in the surface estate, previous conveyances have given prior owners certain executive and surface rights. The grantors (Sellers at the time) reserved not only an undivided 1/2 interest to the mineral estate, but also the right and power to take all usual, necessary and convenient means of drilling for and taking away such minerals and the right and power at any and all times to grant oil, gas and mineral leases and to enter into development contracts therein or with respect thereto.

Now, there has never been any prior drilling, or exploration of any kind since we’ve owned the property since 1968. No neighboring properties have done so either. Our property has always been used for “nature” and the new buyers want to keep it that way as well.

The concern of the new buyers is that the heirs from the sale in 1968 may have authority to come on their land and start exploring or even signing leases without their consent.

If no drilling has taken place in the last 45 years (actually, since 1897 when first survey was done), is there a time limit to the authority of mineral rights owners?

Is there anything that we can offer the new buyers to alleviate their fear of purchasing our property?

Thanks again, Kris

2

Kris,

In 1968 the seller protected its right to exclusively deal with the mineral right retained. The sellers still have that right as to 50% of the minerals, if any. Since you are reserving 1/4 of all the mineral rights or 1/2 of the minerals you owned since 1986, you should protect yourself in the same manner. Any drilling and producing of non-surface mineable minerals must be done in accordance with laws and regulations in place at the time anyway so your surface buyer will have some protection against carte blanche surface use. Protect your future rights to deal with and access your minerals and avoid any transfer of executive rights.

Your potential buyer can get someone knowledgeable to provide an opinion as to the potential for future mineral development based on current technology and economics. If the potential is high enough, this may be a good time to buy the original seller’s mineral interest if they can be found.

3

Hey, Kris -

I am not an Attorney and suggest you consult one experienced in oil and gas matters for a question like this, as there are a number of issues involved.

Having said that and from my 35 or so years of experience as a professional Landman, however, I would say YES, it appears the language you quoted provides for “Unlimited Power to Extract Minerals”.

The issue involves the rights of Ingress and Egress (Google it), which are normally reserved or conveyed with any mineral interest severed from the land. Along with the mineral interests, the rights to test for, explore for, develop, produce and save minerals from the land (for sale) are also reserved or conveyed.

Any Surface Owner that owns at least some portion of the mineral rights certainly has the right to add a provision to an oil and gas lease forbidding or restricting any (unreasonable) operations or development involving the surface of the land.

But the other Mineral Owners, those who have reserved the rights of Ingress and Egress, likewise have the rights to have their minerals tested for, explored for, developed and produced. And their rights would more than likely override a Surface and only partial Mineral Owners’ efforts to protect his Surface from any operations whatsoever.

You or your Buyer could try and locate and buy out the other reserved or severed Mineral and Executive Rights Owners, but that could be a very expensive effort.

Beyond all that, every Surface Owner, whether they own any mineral rights or not, will always have Imminent Domain to worry about. There are neighborhoods in the DFW area with pipelines running through their front yards!

Hope this helps -

Charles

Charles Emery Tooke III Certified Professional Landman Fort Worth, Texas

4

NOT LEGAL ADVICE

ABSOLUTELY the “heirs from the sale in 1968” can execute a lease without the consent of the surface owner, and the Lessee therein can come on the property to explore. Would they do so without leasing the other 50%? I seriously doubt it, but technically, yes, it is possible.

No, in Texas, there is no “time limit to the authority of mineral rights owners.” Some states have “dormant minerals” statutes (North Dakota and I think Louisiana), but not Texas. However, there is such a thing as a “Term Mineral Deed” or “Term Royalty Deed,” in which the minerals or royalties are conveyed for a specific period of time or until a certain condition is met (such as the end of production on an existing oil-and-gas lease). That does not appear to be the case here.

“To alleviate their fear of purchasing” your property, you could convey to them the executive rights only to your 50% mineral interest, creating a Non-Executive Mineral Interest (NEMI), but then you give them control of your minerals’ destiny by giving them the authority to lease your minerals. I would be very hesitant to do that without some additional compensation from your Buyer. Also, based upon the reservation in 1968, wherein the Seller states that “previous conveyances have given prior owners certain executive and surface rights,” how can you be sure that you even own the executive rights on the 50% mineral interest in the first place?