Grantor vs Mineral rights owner

Landman Discussion
21

WHOA!

I do not flip minerals.

Don’t put words in my mouth, Charles. My dentist will advise that it is dangerous and not especially sanitary.

Have a happy ritual celebration full of debauchery.

Charles Emery Tooke III said:

Alex -

I always advise landowners (mineral owners) to never sell their minerals. That is not to say, however, that no one ever does.

There are any number of very experienced individuals and companies out there that buy minerals to sell (or “flip”) them for a profit. I have several friends, clients and client companies in the business and would imagine Mr. Cotten does as well.

If your ultimate goal is to purchase minerals, I am sure either one of us could put you in touch with a few. That way, you could spend your time and money focusing on determining where you want to invest instead of competing from scratch against more experienced mineral buyers.

Call if you want more information -

Charles

Alex Gitman said:

Buddy and Charles,

Thank you guys for answering my question that really helped. I have one more question for you guys. I am a member of Drillinginfo.com you may have heard of them before. With that tool I can look up grantors for each individual lease and expiration date. I do not currently own any mineral rights anywhere but really want to buy and invest into them. I was thinking of asking people whose lease has expired to see if they would be interested in selling their rights. My question to you would be have you come across this before and do you think its doable and possible?

Thank you very much.

Alex

22

Neither do I.

If you will read again more carefully, Buddy, I think you will see that I merely mentioned that we probably both know people in the mineral buying business and could possibly suggest someone for Alex to contact if he were interested.

Charles

Buddy Cotten said:

WHOA!

I do not flip minerals.

Don’t put words in my mouth, Charles. My dentist will advise that it is dangerous and not especially sanitary,

Best, Buddy Cotten www,cottenoilproperties.com

Charles Emery Tooke III said:

Alex -

I always advise landowners (mineral owners) to never sell their minerals. That is not to say, however, that no one ever does.

There are any number of very experienced individuals and companies out there that buy minerals to sell (or “flip”) them for a profit. I have several friends, clients and client companies in the business and would imagine Mr. Cotten does as well.

If your ultimate goal is to purchase minerals, I am sure either one of us could put you in touch with a few. That way, you could spend your time and money focusing on determining where you want to invest instead of competing from scratch against more experienced mineral buyers.

Call if you want more information -

Charles

Alex Gitman said:

Buddy and Charles,

Thank you guys for answering my question that really helped. I have one more question for you guys. I am a member of Drillinginfo.com you may have heard of them before. With that tool I can look up grantors for each individual lease and expiration date. I do not currently own any mineral rights anywhere but really want to buy and invest into them. I was thinking of asking people whose lease has expired to see if they would be interested in selling their rights. My question to you would be have you come across this before and do you think its doable and possible?

Thank you very much.

Alex

23

What I may do - since there is a pretty new case out there that I have not thoroughly vetted, is to include and expand my article and post it here as a blog post.

Thank you for your interest.

Charles Emery Tooke III said:

Super! And how does one go about obtaining a copy of your paper?

24

I look forward to it!

Buddy Cotten said:

What I may do - since there is a pretty new case out there that I have not thoroughly vetted, is to include and expand my article and post it here as a blog post.

Thank you for your interest.

Buddy Cotten www.cottenoilproperties.com

Charles Emery Tooke III said:

Super! And how does one go about obtaining a copy of your paper?

25

Sure, I will get the case for you:

http://scholar.google.com/scholar_case?case=12681144110400870450&hl=en&as_sdt=2&as_vis=1&oi=scholarr

Prior to Luckel v White, where you only looked at the granting clause as to mineral/royalty intent and distinction, the conveyance would have been mineral in nature, due to the granting clause. After Luckel, you must look at the 4 corners of the document and give equal weight, or harmonize the language.

In this case, French, the mineral estate was described in the granting clause, like 5 stories of a building, and one by one, they were all stripped away, except the top floor, the royalty interest.

The significance of a NPMI is that the royalty is computed as a fraction of royalty rather than as a NPRI, which is generally not a fraction of lease royalty (there are many exceptions to this, of course), but a fraction of production. For example a 1/5 NPRI is 20% of production. A 1/5 NPMI is 1/5 x (lease royalty).

There are volumes written on this stuff if you want to dig it out.

I have a huge advantage over many landmen, having examined and noted hundreds of title opinions written by wonderful commentators.

Charles Emery Tooke III said:

Hi, Buddy -

I am not familiar with the French v. Chevron case, nor have I ever heard of Non-Participating Mineral Interests being merely Mineral Interests stripped of everything except royalty.

26

Once had a woman want to sell her mineral rights in Weld County, Colorado. Run title and found a deed conveying all present and future production revenue of any kind to another individual, it also had producing wells on the tract and she wanted to sell her mineral rights. I always wondered if that was what you’d still call them. Bought minerals in Montague County, Texas that the executive rights belong to the other half interest owner. Gave the owner of the executive rights (he’s a CPA) a call and he says he leased them several years ago to someone, didn’t know who he was, lost the copy of the lease and does not know how many years the lease was for or anything else, he hung up the phone and would never answer it again. I never found a lease filed but always wonder if it wouldn’t just show up out of the blue someday and state for a term of indefinite years, talk about one taking their fiduciary duty responsibly. People can create a nightmare when given the opportunity.

27

That’s nothing! In Mallalieu Field, Lincoln County, Mississippi, I had a widow sell one of her halves, three of her quarters, 4 of her eights.

When questioned about it, she told me that she had all her sixteenths and thirty-seconds left.

28

You gotta love her.

Buddy Cotten said:

That’s nothing! In Mallalieu Field, Lincoln County, Mississippi, I had a widow sell one of her halves, three of her quarters, 4 of her eights.

When questioned about it, she told me that she had all her sixteenths and thirty-seconds left.

Buddy www.cottenoilproperties.com

29

Now that is FUNNY!

30

Charles,

Can I have your telephone number so I can call you?

Thank you

Alex Gitman

31

Here you go!

Charles Emery Tooke III

Certified Professional Landman

Fort Worth, Texas

fieldlandservices@gmail.com

713-408-2850 Cell

32

Executive rights are often reserved or conveyed in a sale of land, whereby either the grantor or grantee for one reason or another wishes to control the leasing process even though they do not own all of the minerals. Executive rights are heritable and conveyable.

33

If a mineral owner, who owns mineral interest, non-participating mineral interest, and executive rights (on other people’s interest) in the same tract of land, deeds that tract without reserving the non-participating and executive rights, are the non-participating and executive rights conveyed? If so, and the grantee through various deeds then acquires all the interest (affected by the severed non-participating and executive rights) would the grantee now own a non-severed interest in the tract?

James H. McConnell, CPL said:

Executive rights are often reserved or conveyed in a sale of land, whereby either the grantor or grantee for one reason or another wishes to control the leasing process even though they do not own all of the minerals. Executive rights are heritable and conveyable.

34

Cute!

Buddy Cotten said:

That’s nothing! In Mallalieu Field, Lincoln County, Mississippi, I had a widow sell one of her halves, three of her quarters, 4 of her eights.

When questioned about it, she told me that she had all her sixteenths and thirty-seconds left.

Buddy

www.cottenoilproperties.com

35

Joan Downey said:

Cute!

Buddy Cotten said:

That’s nothing! In Mallalieu Field, Lincoln County, Mississippi, I had a widow sell one of her halves, three of her quarters, 4 of her eights.

When questioned about it, she told me that she had all her sixteenths and thirty-seconds left.

Buddy

www.cottenoilproperties.com

36

I could speculate that the doctrine of merger of title would apply to form a unity of title in the tract in question.

The answer is not one of first impression, but is very fact specific.

Joan Downey said:

If a mineral owner, who owns mineral interest, non-participating mineral interest, and executive rights (on other people’s interest) in the same tract of land, deeds that tract without reserving the non-participating and executive rights, are the non-participating and executive rights conveyed? If so, and the grantee through various deeds, then acquires all the interest (affected by the severed non-participating and executive rights) would the grantee now own a non-severed interest in the tract?

James H. McConnell, CPL said:

Executive rights are often reserved or conveyed in a sale of land, whereby either the grantor or grantee for one reason or another wishes to control the leasing process even though they do not own all of the minerals. Executive rights are heritable and conveyable.