Help explanin Unusual Clause in Mineral Deed,

Help with Mineral Deed wording

I have an older Mineral Deed for a net half acre of 80 gross acre plot (0.5/80) that has following boilerplate legalize language:

The Mineral Deed provides the legal description of the property -----“containing ½ mineral acres, more or less together with the right of ingress and eqress at all times for the purpose of mining, drilling, exploring, operating and developing said lands for oil, gas, and other minerals, and storing, handling, transporting and marketing the same therefrom with the right to remove from said land all of Grantee’s property and improvements.”

“This sale is made subject to any rights now existing to any lessee or assigns under any valid and subsisting oil and gas lease of record heretofore executed: it being understood and agreed that said Grantee shall have, and enjoy the herein granted undivided interest in and to all bonuses, rents, royalties and other benefits which may accrue thereunder from and after the date hereof, precisely as if the Grantee herein had been at the date of the making of said lease the owner of similar undivided interest in and to the lands described and Grantee one of the lessors therein.”

“Grantor agrees to execute such further assurances as may be requisite for the full and complete enjoyment of the rights herein granted and likewise agrees that Grantee herein shall have the right at any time to redeem for said Grantor by payment, any mortgage, taxes, or other liens on the above described land upon default in payment by Grantor, and be subrogated to the rights of the holder thereof.”

“TO HAVE AND TO HOLD The above described property and easement with all the singular rights, privileges, and appurtenances thereunder or in any wise belonging to said Grantee, herein, his heirs, successors, and assigns forever, and Grantor do hereby bind themselves, their heirs, executors, administrators, successors and assigns to warrant and forever defend all and singular the said property unto the said Grantee herein his heirs, successors, and assigns against every person whomsoever lawfully claiming or to claim the same or any part thereof.”

My question concerns a sentence which is typed in below the witness dates and their signatures.

“This grant shall be for a term of 10 years and so long thereafter as oil, gas or other hydrocarbon is produced from said premises or lands unitize therewit”

The term of ten years is clear however the “and so long thereafter as oil, gas, or other hydrocarbon is produced from said premises or lands unitize therewit” leaves me somewhat mystified. I am pretty sure that as long as a producing well is operating the mineral deed remains in my name, however does this clause cause the deed to immediately revert back to the Grantor if the well is plugged? If a second well was drilled and produced gas/oil after plugging the original well am I entitled to Royalties from the second well? How much time must elapse to have the mineral deed default back to the Grantor? Or can this line be interpreted to mean that any time after the ten year initial period, if oil, gas, or other hydrocarbon is being produced, my mineral deed is valid. Note this mineral deed is located in the State of Michigan which has a twenty year law which causes the mineral rights to reattach to the surface owner if there is no mineral activity within the 20 year period. Mineral rights can be maintained by the Mineral Owner using a “Notice to Retain” beyond the 20 years of inactivity.

Dear Patrick.

At the end of production after the initial 10 year period, your interest is extinguished. This is what is called a determinable fee.

Even more scarey, is "The minerals will revert in 10 years, unless at the end of 10 years, oil and gas is being produced"

In this case, production on the 3,627th or so day, vests the grantee with the full rights granted.

Buddy

Let me make sure I understand your answer. If oil or gas was being produced during the initial ten year period and the well was capped after producing on the sixth year, still within the ten year period I the Grantee continue to maintain ownership of the minerals (date of mineral Deed signed June 30, 1979, well begins production in 1980 last production 1983, plugged Aug. 1986) Are you saying that this production vest me to full mineral rights regardless of the future number of years from the original Deed signing? Or are you saying that I lost the mineral rights because there was no production going on during the last day of the tenth year?

A new well was permitted 1993 (thirteen years from signing of original mineral deed) last production on this well was March 1998, plugged Aug 1999. Did I the Grantee continue to maintain Mineral rights even though it was beyond the ten year period?

A third well was permitted in 1993, production began in 1995 and continues today. This well is continuing to produce since 1995, sixteen years from the original Deed signing and six years after the ten year “determinable fee”. Am I still the Mineral Owner and entitled to royalty payments?

My interest in this subject is that I have not been receiving royalty on the last two wells and am not sure if I am entitled to royalty as I am not sure I am even a owner of the mineral rights.

Thanks



Patrick J. Reddy said:

Buddy

Let me make sure I understand your answer. If oil or gas was being produced during the initial ten year period and the well was capped after producing on the sixth year, still within the ten year period I the Grantee continue to maintain ownership of the minerals (date of mineral Deed signed June 30, 1979, well begins production in 1980 last production 1983, plugged Aug. 1986) Are you saying that this production vest me to full mineral rights regardless of the future number of years from the original Deed signing? Or are you saying that I lost the mineral rights because there was no production going on during the last day of the tenth year?

A new well was permitted 1993 (thirteen years from signing of original mineral deed) last production on this well was March 1998, plugged Aug 1999. Did I the Grantee continue to maintain Mineral rights even though it was beyond the ten year period?

A third well was permitted in 1993, production began in 1995 and continues today. This well is continuing to produce since 1995, sixteen years from the original Deed signing and six years after the ten year “determinable fee”. Am I still the Mineral Owner and entitled to royalty payments?

My interest in this subject is that I have not been receiving royalty on the last two wells and am not sure if I am entitled to royalty as I am not sure I am even a owner of the mineral rights.

Thanks

I don't understand who the grantor is in Buddy's question. I assumed that he was the grantor but in the second comment he referred to himself as the grantee??????

Robert it wasn't Buddy's question it was mine. I am trying to understand weither with this wording I lost the mineral rights after the ten years as the well was plugged and not operating and it wasn't until 1993 that a second well started production (13 years). I believe based on the Deed I would be considered the Grantee and the original Mineral Owner was the Grantor.

Robert E. Buie said:

I don't understand who the grantor is in Buddy's question. I assumed that he was the grantor but in the second comment he referred to himself as the grantee??????

I take it all back. With what could be a material alteration of the document, the document may not be valid. I did not read closely enough on where the placement of the term reservation was located. If the (apparent) addition was initialed by all parties, it is probably OK. Find a lawyer.

It does appear that title does however, at this point reside in the Grantee under the Mineral Deed, due to non production on the tenth anniversary of the effective date of the instrument (1979)

Buddy

I do not think the royalty payments justify my getting a lawyer at this time as I only owned ½ net acres on an 80 gross acre property

Thanks for identifying the legal term “determinable fee”. That has lead to a lot of interesting reading, still however clear as mud! It would appear the second part of the statement “and so long thereafter as oil gas or other hydrocarbon is produced from said premises or lands unitize therewit” would be considered a Condition subsequent. I was wondering the significance of the use of the word and instead of some other word such as or.

I am still confused by the second sentence of you answer as I thought I was the “Grantee”, which would mean I retained the mineral title even though the well was not producing on the tenth anniversary