Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on September 12, 2012 at 23:56

The large servitudes that I am familiar with are legacy timber tracts.  They have remained intact largely because the lands are rural, undeveloped and not bisected by roads or water courses that would divide the continuous servitude.  The challenge, IMO, with landowners joining together would be the need to create a similarly continuous servitude and the difficulty of individuals to act in concert to maintain it.

• ▶ Reply

Permalink Reply by The_Baron on September 18, 2012 at 4:40

Skip:

 

It would be possible for individuals to form an LLC, corporation and/or partnership of some sort. This would be similar to what Blackstone and Indigo are doing.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on September 18, 2012 at 5:06

Where ya been!  LOL!  Yes, I understand that it is possible.  However I took Andrew's supposition to be aimed at a group of unassociated mineral owners banding together to form a large, contiguous servitude.  Such a confab runs up against the usual challenge of convincing all the parties to organize and manage in a set, unalterable manner such as a sole manager or board.  Unless the ownership interests are limited in number, have the same or similar circumstances and goals and are willing to give up management control, it's an iffy proposition IMO.  They would all likely end up as Working Interests in prescription wells and I know you are aware how that can go.

• ▶ Reply

Permalink Reply by Land Rat on September 18, 2012 at 5:29

I agree, I can't really see where this would make sense except in the instance of a few very large landowners who are seeking to sell off their surface portions piecemeal or who have the means to develop on their own. 

I think this is why you see the existing large servitudes are held by large, fully-integrated and well-capitalized oil companies who acquired the lands through M&A. 

I suppose it could also work if a company wanted to lease all of the minerals at once and the development would interrupt prescription, but I can't really see the advantage of doing it this way.  If put into a corporate structure you run into passive income problems, etc. It could be a good way to hold a large amount of mineral acreage, but not be responsible for property taxes. 

• ▶ Reply

Permalink Reply by TangiHopeful on September 13, 2012 at 9:44

Something like this? http://southern.ducks.org/LAConservationeasements.php  I'm not sure of the legal distinction between easements and servitudes but it seems to me like an easement is more of a common law form of the Louisiana servitude. Of course I'm not sure how the existing conservation easements-such as Ducks Unlimited-would feel about an oil well in there but you never can tell these days with the cleaner drilling procedures used and the emphasis on preserving the environment. A conservation easement almost always stops permanent structures from being erected but it may not necessarily stop oil exploration. They can be tailored a lot of different ways. I'm also not sure of how many contiguous acres these things have. Some of them are pretty large though.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on September 14, 2012 at 0:21

TangiHopeful, Louisiana mineral law regarding mineral servitudes is quite different from conservation easements.  A servitude is created under Louisiana law whenever mineral rights are severed from the surface estate.  In addition to prescription there are numerous statutes affecting how servitudes are maintained and significant case law addressing litigation involving whether specific actions serve to maintain them.

• ▶ Reply

Permalink Reply by Andrew on September 14, 2012 at 6:03

Tangi,

You are on point that Louisiana has servitudes, not easements. However, the instruments creating "conservation easements" don't use the word servitude, even though that is in fact what they are. Specifically, they are personal servitudes giving a person or entity the right to use the land, but are not mineral servitudes. Often these "easements" don't allow for surface operations for mineral exploration, so they are kind of the opposite of what I am curious about.

I am considering a blog post to delineate between the three kinds of Louisiana servitude - predial, personal, and mineral.

• ▶ Reply

Permalink Reply by Andrew on September 14, 2012 at 7:59

I have added a post to my GHS blog about Louisiana Servitudes. You should check it out.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on September 14, 2012 at 10:09

Andrew, please post a link to your blog on Louisiana servitudes.

• ▶ Reply

Permalink Reply by Andrew on September 14, 2012 at 12:34

http://www.gohaynesvilleshale.com/profiles/blogs/what-is-a-servitude

It's awaiting approval for now.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on September 14, 2012 at 12:36

I'll look forward to reading it when Keith approves it.

• ▶ Reply

Permalink Reply by TangiHopeful on September 14, 2012 at 16:01

  Thanks guys. I'm having to sweep the cobwebs out of my brain. I am actually a retired, strictly personal injury attorney, which means I don't know spit from shinola about any other areas of the law. Actually, I'm not retired in the sense of "sitting on the porch drinking mint julebs" but I closed my office and am waiting to figure out my next job, and I am trying to learn geology in the meantime. Hopefully if the play takes off in my area I'll know enough by then to reopen and interpret leases intelligently. I'm done with the personal injury crap. 

  I remember in the months leading up to the bar exam I knew everything there was to know about servitudes and after the exams I forgot it all just as fast and never had to deal with them in my practice. I'll check out your update and refresh my memory on them.

  On another note, the reason I mentioned not ruling out land under conservation easements is because some the newer conservation easements are very flexible in what you can do. The more you burden the property the bigger the tax break received. If you just limit your land to "no permanent structure" but leave timber rights and mineral rights, your tax deduction is smaller. The more you burden the more you deduct. It does seem counterintuitive to have an oil well on a conservation easement but it is legally possible if it's not excluded in the language.

  Additionally, with the advent of horizontal wells, you can possibly get around the "surface rights" problem by just moving the rig off of the easement land. You might not get all of the oil out of a very large piece of land but you could get a lot just by encircling it and sending mile long laterals underneath it. There's no telling how long they could extend these laterals in the future. Of course, how economically practical that is from a legal and administrative point of view is probably the bigger question.

  I've been to a couple of seminars on these easements lately and now that they've taken most of the confusion out of the I.R.S. rules they are firming up to be good investments in some circumstances. I'm thinking about putting one on my land one day with minimal restrictions only, so I can still sell my timber, and hopefully-if Devon will straighten up and fly right-a little oil.

• ▶ Reply

• ‹ Previous
• 1
• 2
• Next ›
• Page