Mineral Prescription scenario
Who would own the mineral rights in this scenario:
Party A sells a 10 acre tract of land to Party B on June 15, 1993.
At the time of the sale, Party A owns 100% of the mineral rights and there is no production since 1982.
As a part of the sale of land Party A conveys 1/2 of the mineral rights to Party B.
So at June 15, 1993 Party A owns 50% of the mineral rights and Party B owns 50% of the mineral rights and the surface tract.
On April 1, 1995 - Party B sells the 10 acre tract and conveys their 50% mineral rights to Party C.
No production has occurred since 1982 still.
So at April 1, 1995 - Party A owns their retained 50% of the mineral rights and Party C now owns 50% of the mineral rights and the surface tract.
A new well is drilled in 2004 and production begins in December.
Party A owned 50%, but the 10 year prescription period was done June 16, 2003. LA law says they revert to the current land owner. So that would be Party C. However, I see some language on the DNR site that says they revert to the current owner of land “only if they have owned the land that long”.
I assume that means they have owned the land for the full 10 years? In this example Party C would be a few months shy of the 10 years.
Thanks in advance.
Views: 288
Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on -
Your scenario focuses on "production" and ignores wells drilled that did not produce. Any "good faith" attempt to drill a producing well resets the ten year prescription clock. Provide me with that information and I'll provide you with my opinion. With the caveat that IANAL.
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Permalink Reply by ELLIS HUGH on
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Absent any other oil and gas activity, the minerals will prescribe to the current surface owner 10 years after the reservation.
So on June 16, 2003, Party C will own 100% of the minerals in your scenario.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Not in all situations, Ellis.
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Permalink Reply by Quattro on
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Thank you both for the reply.
Skip I got my answer. I went back and reviewed. I missed a small amount of production in 1997 from one of the “old” wells that would have reset prescription. Scrolling on an ipad too quick.
Again thank you both for the responses.
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Permalink Reply by Skip Peel - Mineral Consultant on
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You're welcome, Quattro. Louisiana mineral law is complicated and unlike that of any other historically producing US petro-state. Prescription of a mineral servitude trips a lot of people up even those quite experienced in other states. This happened often in the early Haynesville land rush. Here are several but not all the ways that servitudes do not prescribe from lack of production or good faith drilling attempts.
The lands inundated by the filling of Toledo Bend lake. Those minerals were severed from the lands but the owners were given imprescriptable mineral servitudes. The lands taken for I-49 were likewise given imprescriptable servitudes. And the lands taken into the mine plans for the Dolet Hills and the Ox Bow lignite mines were also given imprescriptable servitudes. When those lands are released from the mine plans, the ten year clock will begin to run again. I have a client that forced Petrohawk to recognize her mineral servitude was still in effect when they drilled a HA well on a section released from the mine plan. Petrohawk's landman looked into the imprescriptable nature of lands taken into the mine plan and had to agree that her servitude was still in effect. Petrohawk was ignorant to Louisiana mineral law and just missed it.
There are other means that servitudes can be divided by being bisected by road and railroad rights of way. Anyone dealing with a mineral servitude needs to engage the services of an experienced O&G attorney familiar with Louisiana case law regarding mineral servitudes.
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