We received a Division Order for our parcel in a Producing well (Apollo 48 Unit 2H) located in Culberson County (Section 48, Block 59). The decimal fraction calculation was done by subtracting a fraction for Non-participating Royalty Interest burden. The Division Order Analyst claimed that this NPRI burden applies to all leases in Section 48. However, there is no such clause on our lease.
Does anyone in this particular Section experience the same? Or this is just customary. Thanks for your suggestions and opinions.
Great Forum bytheway; we have learned so much.
Whether the NPRI burden applies to all the mineral interests or just part depends on when it was created and the wording of the deed. For example, was it carved out when the minerals were still intact? Your lease will not impact an NPRI that was already carved out, unless you got a provision that they have to pay you royalties ignoring any NPRI’s, which is unlikely.
A non-participating royalty interest has nothing to do with the language in your lease… it was created in title (a conveyance) out of your mineral estate before the lease was taken. If I remember correctly, I believe that the State of Texas reserved a 1/16th NPRI in many lands within Culberson County - but it has been many years since I worked title in that county. Regardless, if there is a NPRI conveyed out of your minerals, then you negotiated a royalty rate in your lease and a portion of it must be paid to the NPRI owner that burdens your minerals. I hope this helps.
Just curious… Did your lease have a State of Texas seal at the top? If sec 48 is part of the State Relinquishment Act Lands, then the State is receiving half of the royalties… you act as Agent (sign the lease), but they own half of the minerals and are also a deciding factor in the negotiations of the lease (aka - final approval).
Your Lease does not have to mention the NPRI whatsoever for it to be intact and be a legitimate burden on the Mineral Estate. Probably what happened here is that somewhere back in time, before you acquired the property and perhaps before you even walked this Earth, a previous owner sold the Subject Property and reserved the NPRI or conveyed the NPRI by itself in a Royalty Deed.