Lis Pendens - Agave Natural Resources - Royalty Leases

An action has been filed in the 143rd JD styled XXXXX v Agave Natural Resources, LLC, et al, according to a Lis Pendens just filed by an attorney in Midland representing certain mineral / royalty owners who have been duped into granting "Royalty Leases" in Reeves County. I'm not going to provide the details - you can find it yourselves, but thought I'd bring this old problem back up for discussion.

See Cause No 17-02-21868-CVR

The action, according to the Notice, involves the validity of certain "oil and gas royalty leases" wrongfully procured by defendants and oil and gas royalties paid to defendants as a result of such misconduct.

Further, it alleges "the invalidity and illegality of oil and gas royalty leases and proceeds paid to defendants thereunder"...

I've read the Plaintiff's Original Petition - it's a doozie. It alleges Common Law Fraud, Unconscionability and Conspiracy.

It appears that the instruments in question are the same as those discussed in this forum involving Ridge Natural Resources LLC.


Thank you,Thank you, Thank you.

I have strongly lobbied against Top Leasing to the Forum and all my clients. Your research just adds another reason to avoid.

It is amazing what greed does to the human brain.

Gary L Hutchinson

Minerals Managment

What is top leasing? That term is unfamiliar to me, but since my family just leased in Reeves Co I’m a little concerned!

The "Oil and Gas Royalty Lease" in question is NOT a "Top Lease", although it appears that Agave, et al try to sell them as such.

Kathleen, in a nutshell a Top Lease is a lease executed by a mineral owner which only becomes effective if and when a current oil and gas lease expires at the end of it's term. They have been discussed in detail elsewhere in this forum - quite ably by Gary L. Hutchinson.

The Oil and Gas Royalty Leases in question here are instruments which effectively convey a 3/4 interest in the grantor's royalty interest. The "Lease" looks at first glance like a standard Oil, Gas and Mineral Lease. Many of them have been taken from owners of Non Participating Royalty Interests. Others cover lands that are already subject to a valid and subsisting Oil and Gas Lease, and usually exclude older existing wells from the conveyance.

In every instance I've looked at, there are new wells permitted and or drilling at the time the Royalty Leases are taken. In some cases there has turned out to be more money in suspense than what is paid for the "Lease."

Bobby Grace

How do we see a copy of this cause?

Thanks for putting my mind at ease. I’m learning lots but find I’ve just touched the tip of the iceberg!

You go to the District Clerk's office and ask to see the file.


I have been in this business 40 years. have bought leases and minerals --mostly for companies, but eventually for me, and most of that time to turn to companies. Have participated in many wells. Many I wish I had not!!! ONE THING I HAVE ALWAYS DONE IS NEVER LOOKED BACK!!! I made decisions as they arose and never once looked back. This to say: lease your property, sell your property, minerals or surface----never look back.

Here is a copy of the petition.

507-20170221PETITIONStepkenandMcFarlinv.HawaAgaveNaturalResourcesSmajstrlaandEspuelaLandMinerals.pdf (278 KB)

Wade, Thanks for posting this.....

Clint Liles

These guys have dug in - they now boldly try to buy 3/4 of your royalty interest! - and admit it. I'll post copies soon.



Dear Mr. Grace,

Oil and Gas Royalty Leases have been around for decades and decades. I think that this whole case is going to come down to - "was anything misrepresented?'"

A conveyance of minerals or royalty on Texas properties by mail is subject to certain regulations to help reduce fraud. SEE TEXAS PROPERTY CODE SUBCHAPTER F. REQUIREMENTS FOR CONVEYANCES OF MINERAL OR ROYALTY INTERESTS Sec. 5.151. The Statute provides a vehicle for recovery. But, we will see as to this case.

If you want to sell a portion of your royalty on a term basis, the Oil and Gas Royalty Lease is NOT the way to do it. I will post on the blog the reasoning why a Royalty Lease places the Lessor in jeopardy.

I represented a group of people who DID want to sell 3/4 of their royalty. I asked the buyer why he used such a jake leg agreement. He said, "They sign easier when they think that it is a lease." I said, well, we will do a term royalty. And, by the way, the term is up and it is not in production, so the clients made a good decision. It is not always a bad idea to sell a portion of your interest to lock up a winner.

If you read an Oil, Gas and Mineral Lease, you might think that is a lease. But it is not. It is a conveyance of 100% of the minerals, in the nature of a determinable fee (where the fee transfer can be terminated upon the occurrence or nonoccurrence of certain events) with the Lessor being entitled to a cost free share of production (royalty) and the possibility of reverter.

An oil and gas lease is considered both a conveyance and a contract.

All legal types feel free to jump in.

Did the Defendants do anything wrong? I don't know. That is up for a court to determine. It may well settle prior to trial. Actually one or more or the Defendants is a member of this board. No, I will not say who it is, other than it is not me.

The bottom line is that if you do not 110% know what you are doing, find someone who will represent you and get their help.


Buddy Cotten


I agree with everything you've said. And yes, as I understand this particular case, the plaintiff is alleging fraud for the defendant's having represented the transaction as a lease. The plaintiffs owned NPRI's under an existing new well, and were in suspense by the purchaser. There was over $100,000 in suspense, and the NPRI owners / plaintiffs were paid something like $10,000 for 3/4 of this.

The purchaser, Anadarko, has suspended Agave et al's interest for the time being, and may very well be liable for having paid Agave et al the money in suspense, and payments since.


The reason the Anadarko has placed funds in suspense is because there's a lis pendands in effect on the property.

Sadly, to my knowledge, the courts will not protect a person against making a bad or dumb deal. Let the buyer beware, or in this case, let the seller beware.

Buddy Cotten

Buddy, While you are correct that royalty deeds, both permanent and term deeds, have been around for a long time, this royalty lease scam is a new wrinkle as far as I have seen. I think it is clearly designed to make people think they are signing some type of top lease.

Hi, Wade.

There is an old expression that there "is nothing new under the sun." While I don't necessarily agree with that, I have seen instruments entitled "Oil and Gas Royalty Leases" for years, with the biggest flurry beginning in the depression through the mid 1950's. I saw them in some east Texas counties and on old oil domes in Mississippi - Little Creek, McComb City and the Mallalieu Oil Fields come immediately to mind.

Then they disappeared until (for me) about 4 years ago. Then a number of my clients received offers in the mail. As you know, the title of the document means next to nothing. As I mentioned in my earlier comment, the royalty buyer told me that he used them because the royalty was easier to buy if it was structured as a what appeared to be lease, rather than a determinable conveyance.

Would you like to collaborate on a blog post on Royalty Leases?


Buddy Cotten

Buddy, Thanks for the background, and yes, would be glad to co-write an article.