Who is the real owner?

#1

I thought I would put this up for discussion as I have a difference of opinion among 3 landmen and an attorney.

Lease covers 2000 acres in Texas originally executed in the 80’s. A few producing wells drilled and units total about 300 acres. Lease renewed multiple times covering total acreage in case new wells drilled at a greater depth or to different zones.

One of the mineral owners falls on hard times and does not pay the taxes on the producing wells as assessed by the County. County sells for back taxes and new owner begins to collect the royalties. Old Owner” is now deceased.

Existing producer is selling the company, lease is expiring this summer and new company wants to enter into a new lease. Wells are still producing. Two landmen say the “ older owner” lost everything and has no rights. Third landman says the rights lost were only in the units producing as that was all that was being taxed and all that the County could offer for sale. The outside counsel is of the opinion that this latter position may be correct but without researching it further has decided to let the new company deal with the ownership issue of non-held minerals.

So, who owns the 1700 acres on non-held production? I have not reviewed the lease to see if the producing wells cover only to the zones producing or, if it is silent as to any inclusion of other zones. Bonus for the interest in question would be about $4,000.

Anyone care to venture an opinion?

#2

This is a matter for an experienced oil and gas title attorney in the state where the minerals are located. This is a specialized area and will depend on state law, county law, case law, wording notice by mail and posting, and the exact terms of any court order related to the sheriff's sale. Did the mineral owner also own any surface? It may be affected by the fact that there was a single lease. However, the language of the lease renewals before the sheriff's sale may also matter.

#3

The third Landman is correct I believe. In order to know who owns the 1700 acres you would to see the lease and its renewals

#4

It appears to me that the reason why the Unitized 300 acres has not been carved out of the legal descriptions of the subsequent leases is because the original lease contained a depth severance clause.

We would need to see at least the original lease and also the Sheriff's Sale Deed in order to even come close to an accurate answer.

#5

Your attorney is right, it would take a lot of research to be sure what is in each lease, what each wells holds, spacing, depth, etc. Landman #3 seems to be the closes without researching.

You need an attorney that specializes in oil & gas laws.

How does the fact that someone lost his minerals affect you?

#6

There were six wells subject to the tax sales. The Sheriff’s deeds identified each well by its number and also included the zones of production for the completed wells. The original division orders for each well created 40 A. units.

The original lease had a special clause that wells must be drilled to the depth necessary to test a specific zone (Buda lime) but was silent as to what was held should the wells be completed back at a higher zone (which all were).

O & G Co admits the lease they took over could be construed to have been limited to the Buda or higher. Plus, the cost of legal and landman fees to carve out the six units outweighed the small cost to pay everyone. The lease bonus was for an extension of the original term rather than for delayed rentals which further muddies the water.

I am related to the owner who lost his interest in the tax sale. And, the family retained the Executive Rights to lease.