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Permalink Reply by Snake Stewart on August 26, 2008 at 10:45

HBP = Held by production. Meaning that no matter the initial lease term once you begin receiving royalties , you are held by production for as long as there is production. There are other stipulations and it depends on the wording of your lease but that is the brunt of it. As for the other terms I really don't know enough to even comment on. Sorry , Snake

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Permalink Reply by Tricia Baker on August 26, 2008 at 11:07

Please keep in mind "production" is a term used loosely. Moving dirt from one spot to another could be considered drilling depending on which side of the fence you are standing on. I had an interesting conversation with my brother in law who does this for a living.

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Permalink Reply by Iris on August 26, 2008 at 11:35

Thx to all of u that have answered.....property has been in family for 80 years....just wondering after what happened to Kassi's group (blog)...how many more if, and, & buts, need to look into....+did not understand terms...thx Snake, Jim06, & Patricia...

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Permalink Reply by Dion Warr, CPL on August 26, 2008 at 14:10

Tiger:

I gather you probably picked these terms off of my post. Sorry about the jargon.

HBP - Held by Production - Usually refers to lease status; with respect to oil and gas, refers to those leased lands and/or depths retained under the terms and provisions of the lease as maintained by production of oil and gas from the lands leased or on lands pooled therewith. If the subject lease has no Pugh clause, all lands described in the lease are generally held by production if any portion of the leased land has oil and gas being produced therefrom (or from lands pooled). HBP is also used sometimes to denote the status of mineral rights; technically this refers to a mineral servitude or portion of a mineral servitude which has been interrupted by production.

Tax Roll Title - A slang term used in the O&G business to denote an owner verification technique which involves comparing a limited mineral title examination of a tract of land to the record owner(s) of said tract as shown in the tax rolls or parcel listing produced by the Parish Assessor. It is used by landmen and abstractors as a shortcut to quickly ascertain prospective mineral ownership and assembling of lists of potential lessors, but is generally only effective in areas which have had a relatively stable title history, little if any recent oil and gas production in the area, or properties in which the chain of ownership of most tracts reveal little if any mineral reservations.

Ten-year title - Another O&G and/or abstractor specific term which refers to running title back from current record owner a minimum of ten years to attempt to verify any current mineral servitudes which may exist (as mineral servitudes which are not interrupted by production or good-faith attempt to recover oil and gas, and not otherwise limited in term will prescribe in ten years according to the Louisiana mineral code - LA R. S. 31). Also if use in quieting record title (in that the record owner by deed is generally considered to have his title perfected by record ownership and open and notorious possession for ten years if no adverse claim exists. Only marginally better than "tax roll title" as contemplated above in establishing mineral ownership.

Thirty-year title - Another O&G and/or abstractor specific term which refers to running title back from current record owner a minimum of thirty years to attempt to satisfy a search for surface and/or mineral title as contemplated above; in addition, of particular use in quieting acquisitive and liberative title (in that a property owner is generally considered to have his title perfected by open and notorious possession of a tract of land for thirty years if no adverse claim by anyone, even if by record owner, had been made during said thirty-year interval. Has some use in settling lease description issues insofar as property boundaries in that "land under fence" or "lands actively maintained" can be reasonably leased without record title as to all of the described property. It is better than "tax roll title" as contemplated above in establishing mineral ownership, only that a longer period of time is examined in determining the mineral owner.

Fifty-five year title - Largely confined to real estate. In much the same manner as above, this is a research of a tract of land from current record owner to at least fifty-five years into the past. This type of title will generally settle any surface encumbrances of longstanding, particular mortgages (in that uncancelled mortgages found in the record older than 55 years are generally considered to be unenforceable.)

Why would you need to worry about them? If your land is subject to an oil and gas lease that is HBP, you are unable to lease your land (as it is already under lease). The title techniques outlined above, and their use by various land crews and abstractors explain why situations like Kassi's occurred. An incomplete mineral title was run at the time of the O&G landman contacting Kassi and her neighbors (now her group). Because the landman or abstractor running their property did not run full title or apparently have a mineral history of the property and surrounding area, they did not discover the 1955 lease holding her property until the negotiations were over and the lease was about to be signed.

Because of many reasons, the least of which being that the lease to be signed had a no warranty of title provision (which meant that once Kassi were paid, the company could not seek a recoup of monies if they took a bad lease), someone actually went back and did a more intensive search of the records, and found the old lease, which was verified as probably being HBP after a mineral history check was performed. If Kassi had a more standard lease (in which Lessor explicitly warrants title), which would have been executed, the O&G company could have later demanded a refund of all monies paid under the terms of the lease upon learning that she and her associates had no mineral rights.

One should worry that the lease brokers, landmen, and abstractors are not taking enough time (or are not given enough time due to current competition and demand) to fully verify mineral title, and that if you are approached to lease, without a "no warranty" provision in your lease, this could happen to you as well. Most landowners that are presented such large sums of money per acre are generally going to spend some portion of the proceeds, and would be hard pressed to refund said money in full on demand should their mineral title fail.

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Permalink Reply by Susie Brown on August 26, 2008 at 14:51

Do the companies who have given people 30 day drafts usually run a mineral title during that time? Have you ever heard of a co. going back to homeowner to ask for money back

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Permalink Reply by Snake Stewart on August 26, 2008 at 15:00

Yep !

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Permalink Reply by MSE on August 26, 2008 at 15:03

Dion Warr,
I am rapidly developing an ulcer over this thing. Yes, I's also in section 30 and things are getting drearier by the minute. Please, tell me there is at least hope of this lease being broke?! At this point in the game, it's not even about the money anymore (although that definitely would be nice). I've been living here for many years always thinking I owned my mineral rights and now all of sudden I don't. From what I see in the old contract, we are not protected from anything.

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Permalink Reply by Dion Warr, CPL on August 26, 2008 at 17:17

MSE:

I am not an attorney, but I would think that one's ability to break the lease as to the non-productive lands would be to seek redress over lack of development as to the lands lying outside of Section 28. As I said before, given the stakes, one would expect that the successors and assigns of Carter Oil would have a vested interest in defending this lease as valid in its entirety; the road to "break the lease" will likely be a long one.

You are correct in your assessment of the older contract, in that older leases simply required some exploration and development, good faith operations and/or production in order to maintain a lease in its entirety. No Pugh clause meant no automatic termination of non-productive acreage. No depth restrictions meant production from any depth would be sufficient to hold all depths.

Remember, the existing lease may not impair you from owning your minerals (as being under lease, or merely owning land that has been force-pooled is not sufficient to maintain a mineral servitude). Not that this may be any consolation, but you may just own the minerals subject to the lease.

Good luck to you all.

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Permalink Reply by P.G. on August 26, 2008 at 17:37

If your not an attorney, you must have stayed in a Holiday Inn last night, huh?
You seem very detail oriented in your posts!
I'm learning a lot from your explanations.

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Permalink Reply by Bobi Carr ("parker") on August 26, 2008 at 22:32

PG,

Only my guess but I would assume that Mr. Warr is a Certified Professional Landman (CPL).

In my opinion, a CPL, will have much better answers about minerals than most attorneys.

If you see someone posting on this board with that designation, take notes.

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Permalink Reply by Snake Stewart on August 27, 2008 at 0:24

Not all CPL's are created equal.I take notes from all sides of this play.Even an opinion that I completely disagree with can give me something to think about. Learning can't take place without thinking.People that you do not agree with can sometimes be the best teachers.

It doesn't take long to see if someone is a people person or not.The person that you were possibly thinking about when you penned this post wasn't. At least on this site he wasn't.Although I do not completely agree with the manner in which that situation was handled , it certainly wasn't my call to make and I respect "H" for his decission because it was his to make. It would have been a tough call to make.

Mr. Warr and myself will probably never sit down and have lunch together but that doesn't mean I shouldn't glean all I can from his wisdom and experience on his side of the fence.He has shown a great deal of professionalism and courtesy toward those of us with the questions that only he or someone with his experience can answer.I thank Mr. Warr for showing that professionalism.

Having CPL at the end of your name gives you the distinction of being a landman but it certainly doesn't entitle that person to some sort of higher ground in my book.That must be earned and Mr Warr has done many things to move in that direction.The only thing that isn't leaning his way right now is the fact that he is a "stinkin' lanmans".

P.S. That last part was a joke Mr. Warr and I hope you didn't find that too offensive. I was a Snake when you met me tho ! HA! HA!

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Permalink Reply by Bobi Carr ("parker") on August 27, 2008 at 6:31

This time a actually wasn't referring to someone in particular.

I had at one time considered becoming a landman. I have met many that I have respected. One lady in particular that was of great help to me personally. Anyway I looked at the educational requirements that are needed to become a CPL. That is all that I was referring to.

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