Replies to This Discussion

Permalink Reply by Bobi Carr ("parker") on November 22, 2008 at 9:42

I agree, but this wasn't a succession problem.

Permalink Reply by Dion Warr, CPL on December 8, 2008 at 6:37

Baron:

Working on three tracts like that right now... Not in HS area.

Client X acquires some HBP acreage (limited leasehold rights) from an operator (Y) who has been running for about 40 - 50 years. The last diligence work done (commissioned by Y) supplied to Client X is in the mid-sixties. At the time, Title Attorneys for X's ancestor in title does their homework (including ordering genealology in addition to the commissioned abstracts) and determines tracts are 100% leased. Some have leases with Pugh clauses, some do not.

Apparently over the years, the various owner/operators (the chain of which ends with Operator Y) work their own transfer orders based upon what mineral owners send in to the company (much of which is not placed of record). My Client X gets presented with TOs that are 40+ years old.

Title is updated, which doesn't help much, because in most cases, mineral owners that didn't feel the need to file proper conveyances before feel no need to do it now, or if they have any want to collect their revenue, they sent Affidavits of Death and Heirship to the Operators, which were either lost or not disclosed, and certainly were not filed of record.

Now, these mineral ownership of these tracts are populated by numerous heirs, many of which do not know each other, keep track of each other, or understand what is involved, other than great-granddaddy (or great-great granddaddy) owned a piece of land which was virtually worthless until copious amounts of oil and/or gas started coming out of the ground. We of course attempt to contact all those who may have an interest, find out about as many heirs as we can, and those who we cannot find, recommend that the company suspense the interest until they come forward.

Permalink Reply by The_Baron on December 8, 2008 at 10:17

You know its bad when you end up doing a geneology report. Good luck. My personal favorite is when you finally track down a long lost heir, only to discover they had just recently died and had eight kids scattered thoughout the country.

Permalink Reply by Dion Warr, CPL on December 8, 2008 at 10:35

That's funny! I just had that happen on one of these. The eight kids, too! LOL!

What's worse is when I end up with the heir with several siblings who dies without issue. The heirs with children issue dying intestate can generally be cured with an Affidavit from a brother, sister, niece, nephew, etc. and some corroboration from the family. I can do some work and get authority to cure that issue. It is hard to find the title examiner who would let such an affidavit pass for an intestate decedent with no children. The attorney almost always says that the heirs at law must provide the documentation, if not open a succession (or ancillary succession) to solve the problem.

Permalink Reply by Dion Warr, CPL on December 8, 2008 at 6:41

Parker:

As you well know, in many cases the practical solution (from an O&G perspective) is to lease all who may claim to own an interest, then suspense the royalties until the cross-claimants for the interest work it out themselves, and/or file a concursus. In this way, while the company may not know who has ownership out of the cross-claimants, they leased them all, and thus prove their claim to receive revenue as the WI owner.

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Permalink Reply by Iris on December 8, 2008 at 7:02

Dion Warr ...What is a concursus?

Permalink Reply by Iris on December 8, 2008 at 7:02

Ray-Cd3 Are you viewing 2009 with a 25% royalty factor?

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Permalink Reply by Dion Warr, CPL on December 8, 2008 at 9:13

Tiger:

Sorry I cannot respond as a reply to your reply of my post, so I have taken the liberty of doing so here. I defer to the Louisiana Code of Civil Procedure:

Art. 4651. Definition

A concursus proceeding is one in which two or more persons having competing or conflicting claims to money, property, or mortgages or privileges on property are impleaded and required to assert their respective claims contradictorily against all other parties to the proceeding.

These are filed by O&G companies under the general context (greatly simplified):

(1) We (O&G company) own these leases.
(2) The leases purport to cover the same tract of land or interest(s) therein,
(3) Under the terms of the lease(s), we are obliged to pay royalties,
(4) We have no idea as to whose claim(s) is/are valid,
(5) Therefore, we petition the court's permission to deposit the total royalties due under said lease(s) with the registry of the court and let them sort it out.

There are other reasons that this type of proceeding can be brought, but for these purposes, you get the general idea.

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Permalink Reply by Iris on December 8, 2008 at 10:33

Thanks Dion--a lot!

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Permalink Reply by barneyfife on December 8, 2008 at 8:10

I don't believe there will be much leasing going on in 2009. The price for 2009 is too high based upon drilling costswhich have not come down,until that happens you will not see much drilling or leasing. So you anti-leasers will be able to continue to hold out.

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Permalink Reply by RAY on December 8, 2008 at 11:46

never say never [so ];I dont plan to accept nothing less than 25% royalty.

CHK & the other big lessors will focus on drilling & not leasing in the coming future.......... that opens the door for smaller companies to come in .

They wont be able to pay the big bonuses like in the past, but they will probably offer the same or better % on the royalty.

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Permalink Reply by Snake Stewart on December 9, 2008 at 1:10

Glad to hear that Barney. Yea , its a shame these O&G's didnt know how much it was going to cost to drill this stuff. Maybe some of the people that got $25,000 per acre should give some back huh, so they can continue to stick money holes in the ground. Thanks, but no thanks. I will just wait till they get back on their feet. No need in kicking an industry when they are down is there.

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