Andrew L. Grohe – Professional Landman
KNOWLEDGE, NUANCE & EXPERIENCE
Knowledge – Something old is new.
Blackacre “reserves 1/2 of the usual 1/8 royalty.”
For years this has been interpreted to be a 1/16 royalty interest, well not after the Texas Courts got a hold of it, now it is up in the air and may be interpreted as 1/2 of the lease royalty, stay tuned.
Nuance – Mineral or royalty reservation?
Whiteacre reserves “1/2 interest in and to all of the oil, gas, and other minerals that may be produced from the land” …
Many in American Association of Petroleum Landmen (AAPL) think this is a royalty reservation. It may be; however, this reservation has not been court tested.
Three things to consider:
- Reservations of large fractions 1/2 generally are interpreted to be minerals.
- Many oil & gas attorneys interpret this to be a mineral reservation.
- What if it is a mineral reservation? Better not let 1/2 of the minerals stay unleased. Better consult with your client and make a collaborative
Experience – A mistake is waiting at every step
Did the exploration company provide a plat with the correct lease block outlined? Did the surveyor stake the well on the proper tract? Were all the lease title interpretations correct? Was all probate found? Has a new mineral owner called looking for a lease? Was an onerous clause allowed into the lease? Did the run-sheet pick up all the germane instruments? Did superfluous run-sheet instruments cause the attorney make an incorrect interpretation? Is an old unit holding the drill site by the production of a well three miles away? Did you drill a well and miss the NPR interest under the drill sites? What are you going to do? All of the flaws mentioned can be corrected. Of course, it is better not to make them in the first place.
A wide range of land services are offered from lease to release.
Lease checks, title research and lease acquisitions are performed quickly and confidentially. Due diligence projects whether in-office or in-the-field are welcomed. Railroad Commission and General Land Office research is performed online or in their Austin offices.
South Texas and Gulf Coast are the areas where I have spent most of my career. I am well acquainted with the county clerk offices, their records, as well as the many abstract companies in the counties.
- GIS Mapping
- Database Input
- Multiple landmen available
Navigating Fiduciary Obligations
Trustees, Executors, Administrators, and Personal Representatives all share the fiduciary obligation to act in the best interest of the entity they represent. If the entity has oil & gas interest, the obligation and liability become more challenging. Fiduciaries need to stay on top of their assets.
What is the fiduciary being asked to do?
Many times the oil patch can seem like the wild, wild west. Is the document presented to the fiduciary a lease or does it convey the mineral and or royalty interest? Is the lease or offer to purchase conforming to market conditions on the ground? Is the company making the offer currently drilling a well on your tract with out mentioning it? The American Association of Petroleum Landmen advises their member’s to withhold information unless specifically asked. It is buyer beware; the golden rule does not apply. Is the company drilling an offset well or has one been drilled? Is your asset being drained by offset production? Should your asset be in an adjoining unit? Should you place the asset in the proposed unit? These issues need to be researched fully before a fully informed decision is reached.
Accuracy of information
It is surprising to see how many errors occur in Title Opinions and Division Orders. Is the operator or the pipeline company assigning the asset the correct interest? Has the mineral or royalty interest been interpreted correctly? It recently came to our attention that three 14,000’ wells were drilled on our new clients NPRI acreage. The major independent who drilled the wells completely left our client out of their title opinion and division order. The fiduciary needs to stay on top of all assets whether drilled or not. Over generations, ownership names and percentages may change. Have all the Probate proceedings and Certificates of Trusts been filed in all the correct jurisdictions? Possibly the asset was not properly described when acquired. Maybe one of many assets was overlooked and not placed in the trust. Would the trustor’s interests be better served with a more consistent revenue stream? Should the assets be sold?
The courts and legislature are placing more and more responsibility on the mineral and royalty owner and by extension the fiduciaries. For example, there is a two-year limitation on royalty recovery from the discovery date of an error in payment. My role is to provide pertinent information to the fiduciary, so he or she can consistently make informed and knowledgeable decisions.