Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on June 30, 2014 at 7:38

Marc, if I am understanding your question correctly the current owner of the surface owns a half interest in the minerals and the other half is owned as a mineral servitude by another.  Each owner may act separately to lease their interest. The owner of the surface may negotiate a no surface use clause or language which limits use and defines compensation for surface damages.  The instrument of sale creating the servitude may impose conditions on the servitude owner, or not.  The relationship between co-owners in minerals are addressed in the LA Mineral Code as Correlative rights of owners of common reservoir or deposit.  The code is best left to experienced O&G attorneys for interpretation.   Is your specific case associated with potential development for the TMS?

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Permalink Reply by Marc Pellettiere on June 30, 2014 at 7:57

The verbiage from the Act of Sale, states 50% of mineral rights, there is no distinction between surface and subsurface, and I have been told this could create a problem. The surface owner has been offered a mineral lease, which he does not plan to sign. However he wants to make sure if the other party does sign a mineral lease they will not have any surface rights to the property? IE he does not want the other party coming in and saying "Which 50% do you want me to drill on...?"

I hope I am explaining the scenario well. Thank you for your time. And yes this property is located in the TMS.

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Permalink Reply by Skip Peel - Mineral Consultant on June 30, 2014 at 8:10

I don't think you are going to get replies that cover all the ramifications and special conditions associated with correlative rights.  If the lease is for the exploration of the TMS formation then we can discount all those conditions associated with vertical wells and stick to the practical aspects of how horizontal wells are drilled.  If the servitude owner leases their minerals they can be produced without a surface location on the subject tract and without the surface owner executing a lease.  The surface owner can decline to lease but may be force pooled into a drilling unit depending on other specifics.  They will still have the right to prohibit surface use as an Unleased Mineral Interest in the drilling unit.  If the company offering the lease is planning to explore by vertical wells then other conditions and codes become relevant.

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Permalink Reply by Marc Pellettiere on July 1, 2014 at 4:25

Thank you for the information. I spoke with an attorney yesterday and he showed me the LA mineral code 31:175, which states a party who owns a mineral servitude must own an undivided 80% or more to be able to conduct operations on the land unless they have the co-owners approval. I believe this protects the party who does not want to develop the mineral lease on the surface of the land. Thank you for all of your information. 

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Permalink Reply by Skip Peel - Mineral Consultant on July 1, 2014 at 4:59

31:175 will not protect the mineral owner from having their mineral produced.  If there was a small unit comprised of only the one tract with the divided interest, it would serve to do so.  However if the tract is force pooled in a unit with say 900 acres, such as units designed for horizontal development, 31:175 would not apply as the unleased half interest in the one tract would not represent 80% of the total unit acreage.  The co-owner would not be conducting operations, the unit operator would.  As I mentioned previously the owner of the surface can lease and stipulate no surface use or go unleased and be treated as an unleased mineral interest (UMI).

http://www.gohaynesvilleshale.com/UMI-Basics

Cautionary note.  There are plenty of attorneys who can read the mineral codes.  That does not make them an O&G attorney.  If you want to determine just what the attorney knows about LA mineral law ask how compulsory unitization would impact this situation.

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Permalink Reply by Two Dogs, Pirate on July 1, 2014 at 13:56

Louisiana mineral code is complicated and I am with Skip about consulting with a real oil & gas attorney not just someone that says they are an oil and gas attorney.

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