Mineral Deed vs. Royalty Deed

The following pertains to the state of Texas;

  1. At the top of a recorded document that conveys a Non-Participating Royalty Interest (NPRI) from Party A to Party B, is the title “Mineral Deed”. This NPRI only conveys a royalty interest. When this same interest (with the same wording in the body of the document) is later conveyed from Party B to Party C, at the top of that document is the title “Royalty Deed”.

If the wording in the body of a conveyance document describes an interest that would be considered a NPRI (it only conveys a royalty interest), does it matter whether the title at the top of the recorded conveyance document is shown as “Mineral Deed” or is shown as “Royalty Deed”? I’ve encountered this ……… and it’s been confusing to me.

Other than being confusing, are there any legal implications with what seems to me might be a case of a confusing title on a document?

  1. Related to Item 1 above ……. in a series of Division Orders (D.O.) over the years from various oil & gas companies (all D.O.’s pertained to the same mineral interest) the decimal interest shown on the D.O. has typically been labeled “RI” (which I assume stands for “Royalty Interest”) and not shown as “NPRI”. The wording in the body of the first conveyance in the chain of subsequent conveyances appears to indicate it is a NPRI conveyance……. and only a royalty interest was conveyed. The ability for future Grantees to sign leases was not conveyed.

From searching county records, no recorded leases have been found other than the lease referred to in the original conveyance from Party A to Party B. I am Party F. This seems to me to confirm that the Party A conveyed a NPRI (that did not allow for signing of any future leases) to Party B (and B’s heirs and/or assigns).

It appears to me that the “RI” designation on previous D.O. ‘s over the years simply got passed down in the Decks from O & G company to O & G company without being questioned ……… until the newly current O & G company went back to the source document (the conveyance from Party A to Party B) and found the wording describes a NPRI (for a royalty only).

Given that situation, would there be any legal consequences to this “mislabeling” (RI vs. NPRI) on previous D.O’s .…… or is the only negative that it caused confusion to Party F (me) who is trying to follow the paper trail and make sense of all of this?

As long as the description of the interest type (NPRI) in the body of the conveyance document is consistent among the chain of Grantor / Grantee conveyances, is there a need to be concerned that the “Type of Interest” on previous D.O.’s was shown as “RI” vs. “NPRI”?

  1. When signing a D.O. should I handwrite the following on the D.O.? “This instrument does not modify or amend the terms of any oil and gas lease. All royalties due and payable under any oil and gas lease shall be calculated and paid as provided in the Lease.”
  1. It is vastly more important what the “4 corners” of an instrument imply - that is if it has all the elements of a warranty deed but simply says “Deed” at the top… it matters much more what is in the document.
  2. An “NPRI” is a subset of “RI” – so…
  3. You can try it. Likely of no consequence.

My .02 – not a lawyer.

If the minerals are in Oklahoma there is no duty to sign and return an division order. Payment is still required. You must send a W9 to avoid substantial withholding. That being said, many prefer to sign and return a division order because they believe that it avoids a problem.

This is not legal / tax advice. No client-attorney is established by this post.

To clarify, this involved minerals in Texas. I appreciate the replies! Thank you very much.

In Texas, you do need to sign a division order to get paid. In answer to part 3, yes, I would add that phrase. (Not giving legal advice.) I would actually prefer to not use the company Division Order unless it conforms to the wording of the NADOA form. (National Association of Division Order Analysts). The company forms can be pages long and attempt to change the terms of the lease. The NADOA form is short and is much better for the mineral owner. I attached a copy so that you can compare. 0_NADOA_Division Order Model Blank Form 2017v 2.pdf (78.2 KB)

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Thanks very much for your helpful reply, M Barnes. Much appreciated.