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Permalink Reply by The_Baron on November 30, 2010 at 10:32

The only law I am aware of is the one requiring a minimum of 1/8 on STATE leases.

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Permalink Reply by The_Baron on November 30, 2010 at 10:36

The mineral board has authority to accept the bid most advantageous to the state and may lease upon whatever terms it considers proper. However, the minimum royalties to be stipulated in any lease, other than a lease executed by or on behalf of a school board, shall be:

(1) One-eighth of all oil and gas produced and saved.

(2) One-eighth of the value per long ton of sulphur produced and saved which shall yield not less than two dollars per long ton.

(3) One-eighth of the value per ton for all potash produced and saved, which shall yield not less than ten cents per ton.

(4) Five percent of all lignite produced and saved.

(5) Five percent of the value per ton on a dry salt basis for all salt produced and saved, which shall yield not less than ten cents per ton.

(6) One-eighth of all other minerals produced and saved.

B. The minimum royalties to be stipulated in any lease executed by or on behalf of any school board shall be:

(1) One-sixth of all oil and gas produced and saved.

(2) One-sixth of the value per long ton of sulphur produced and saved which shall yield not less than two dollars per long ton.

(3) One-sixth of the value per ton for all potash produced and saved, which shall yield not less than ten cents per ton.

(4) Five percent of all lignite produced and saved.

(5) Five percent of the value per ton on a dry salt basis for all salt produced and saved, which shall yield not less than ten cents per ton.

(6) One-sixth of all other minerals produced and saved.

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Permalink Reply by Harold5011 on November 30, 2010 at 17:06

I found an article that requires that leases from Louisiana successions be for no less than a 1/8th royalty. It seems to me that there is an article that states that if an O&G lease is for less than 1/8th in Louisiana, it is invalid. I have a vague recollection of this, but can't find the article. Along this line, I must say I don't recall seeing many 1/10th royalty leases in Louisiana, and none in the last 50 years.

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Permalink Reply by The_Baron on December 1, 2010 at 4:59

I can't say I have ever seen a lease for less than 1/8th. MAy I ask why you are looking for this, also what article are you refering too?

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Permalink Reply by Harold5011 on December 1, 2010 at 6:45

Code of Civil Procedure Article No. 3226: "The order of the court shall state the minimum bonus, if any, to be received by the executor or administrator of the estate under the lease and the minimum royalty to be reserved to the estate, which in no event shall be less than one-eighth royalty on the oil and such other terms as the court may embody in its order."

I remember attending a pre-Mineral Code seminar where a speaker stated that in Louisiana a lease has to be for at least a one-eighth royalty, or it was either void or voidable, or words to that effect. I think I knew a lot more then than I now know. I can not even locate my notes now.

The reason I'm interested is that I just came across a new lease (outside of the shale area) providing a landowner royalty of a 1/10th royalty, less transportation costs. I really need to know if it is valid or not, any I need to identify the Article number - or if the rule has evolved through jurisprudence??

I remember back in the day a lot of leases provided a set monthly $ figure for each "gas well" per month rather than a % of 8/8ths royalty, and there were a tremendous number of cases that addressed that issue statewide. Many of the leases with those monthly $s per gas well clauses were compromised, and many of the others with set $ figures, were converted to a straight one-eighth royalty.

Thank you.

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Permalink Reply by The_Baron on December 1, 2010 at 10:31

I don't see it under title 9, are you looking at the revised statutes or something else?

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Permalink Reply by Harold5011 on December 1, 2010 at 13:42

The only provision I found that really touches on a required minimum royalty in Louisiana is Article No. 3226 of the Code of Civil Procedure quoted above. I give up trying to find the provision or jurisprudence, must not exist. Therefore 1/16th leases must be fine except when dealing with successions and Hells Angles.

Has anyone seen the Bossier Parish lease to audubon for a .25% royalty?

Louisiana must be one of the few states that allow O&G leases for less than 1/8th.

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Permalink Reply by Steve Thibodeaux on December 1, 2010 at 6:46

audubon stoled mine for 1/16th royalties. I hope someone can find something about the 1/8 law.

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Permalink Reply by The_Baron on December 1, 2010 at 9:39

Stole it, really?

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Permalink Reply by Two Dogs, Pirate on December 2, 2010 at 9:38

Steve your lease is 3/16 not 1/16.

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Permalink Reply by Steve Thibodeaux on December 3, 2010 at 2:45

My fault. It was 3/16th. Was going under the assumption what someone told me.
Thanks for correcting me.

Do you know if 3/16th was a lowball figure or is it commonj

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Permalink Reply by Jack Blake on December 3, 2010 at 3:28

During that time when you accepted it was lowball. If they got you there, did you get a "cost free royalty"? I bet they gigged you there also.
You should still see significant royalty checks if they drill in your section.
JaCK bLAKE

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