repeat: stuck in an ancient lease

A question was posted regarding an ancient lease causing a section to be HBP by a well in another section. It got lost in infighting and bickering and very little if any helpful posting was done. I was asked to repost my response as I am also impacted by this lease, so that some helpful input would hopefully come along.
To get back to the origin of Jason's post:
1. In 1955 2 families owned large portions of S25, T15N, R115W, S30, T15N, R14W, S28, T15N, R14W, S19, T15N, R14W.
2. These families leased all of the acreage in one lease to Carter Oil Company in April of 1955.
3. Carter oil spud in a well, which began producing in June of 1955 in S18, T15N, R14W.
4. This oil is still producing today and has only shut down for 2 months 3 times and 1 month 4 times.
5. Section 28 was unitized in 1972.
6. The lands in S25T15NR15W and S30T15NR14W have changed hands multiple times over the years. Thus far I have found no reservation of minerals in any of those transactions.
7. The well started by Carter Oil and the leases attached thereto have changed hands multiple times and are now in the hands of Zadeck Energy.
8. There have been severeal releases filed over the years. We plan to look them up @ the court house tomorrow.
9. The people in S25T15NR15W and S30T15NR14W were informed last Wed. that we may be HBP by this 1955 lease that was discovered while title searches were being conducted for S28T15NR14W. To my understanding. If this is true and the minerals were never reserved with land transactions the people impacted may be able to receive royalties based on the 1955 lease (1/8 or 12.5%) however our hope is there has been a release filed at some poin due to the fact that there was never any development or production in S25T15NR15W or S30T15NR14W.
Those in the group who are not impacted by this have signed their letters of intent and are moving forward. Those of us who are impacted hope to resolve it but feel blessed by the possitive change in our community and the friendships made during this whole process.
Any professional input would be welcome but can we please leave the infighting to another post?

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Permalink Reply by Dion Warr, CPL on August 26, 2008 at 2:12
Susie:

I do, but I am currently swamped. I keep the forum open on my desktop during the day and thus I can answer a few posts, but mineral history work takes undistracted time to do properly.

Currently, I do not subscribe to Desoto Ph. COC.
Permalink Reply by insomniacnla on August 25, 2008 at 7:08
It is Sec. 28 in 15n 14w instead of Sec. 18
Permalink Reply by yahoo777 on August 25, 2008 at 12:21
HOW DO I FIND OUT IF SECTION 21,TOWNSHIP 15NORTH, RANGE 14 WEST IS HELD BY A SERVITUDE? i AM SO IN THE DARK ABOUT ALL THIS, BUT I'M NEED TO LEARN WHAT THIS IS ALL ABOUT. MY CHILDRENS FUTURE DEPENDS ON IT!
Permalink Reply by Susie Brown on August 25, 2008 at 15:08
I have heard s 21 T15 R 14 was held by old production, but that is not confirmed. Have a friend who lives there and she is checking it
Permalink Reply by Rick on August 26, 2008 at 6:35
Kassi, I am a little unclear exactly what HBP (Held By Production) constitutes. Does this mean that landowners in the sections you mention or any other sections that are HBP, get no mineral lease bonus and no mineral lease royalties as the HS grows? If so, who does the money go to. I am starting to think this might affect thousands of people in DeSoto, Caddo, Sabine since these parishes have been heavily drilled in the past.
Permalink Reply by Kassi on August 26, 2008 at 11:13
It is my understanding that if the mineral rights were never reserved over the years and we land owners own our minerals we would be entitled to royalties based on the 1955 lease i.e. 12.5% instead of the going rate today. We would also be held to the terms of the 1955 lease which definitely does not have all of the environmental and land owner protections I negotiated into ours. If, on the other hand the minerals were reserved we would get nothing at all.
Permalink Reply by Steve on August 26, 2008 at 10:59
Dion

There is a possibility that this could be a divided lease.

This lease was subsequently assignmed in part. Carter assigned the portion lying within Section 28 to Sinclair. In this assignment, Carter retained all depths deeper than 7690' and retained a 1/8 override.

RS 31:130 reads as follows:
A partial assignment or partial sublease does not divide a mineral lease.
Acts 1974, No. 50, §130, eff. Jan. 1, 1975.

It clearly states that a partial assignment does not divide the lease, however, in my best undertanding, the only way to divide a lease is with a partial assignment. By that I mean that if the Lessee assigns a portion of the lands leased this divides the lease, so this brings the question, "What is a full assignment?" I can only come up with a two possibilities:

1. an assignment of all depths as to a portion of the leased premises, retaining no override or WI.

or

2. an assignment of a portion of the leased premises conveying the full complete WI instead of a percentage of the WI, regardless of whether ORRI or other depths are retained.

It would seem that the reason for a divided lease to create a situation somewhat like a "Pugh" clause is because of the fact that the assignor no longer has the ability to operate the portion of the lease that has been assigned, therefore the divided lease must now be maintained as two separate leases. If this is the correct reasoning, then it would seem that an assignment that conveys a full WI in the lease would not be considered "partial" regardless of the retention of the deep or an ORRI.

On the other hand, it could be argued that by the Lessee retaining any portion, they are acting prudently to operate the whole lease, regardless of whether they actually have a WI.

I am not sure which is the correct assumption, or if this has been thoroughly court tested. Any court cases that address the issue would be greatly appreciated.
Permalink Reply by Grillin' - MmmMmm on August 26, 2008 at 11:30
my interpretation is that the lease remained with Carter for all depths below 7690' which would cover the HS interval. And production on the portion partially assigned would indeed "hold" the entire lease. So if I lease from you 100 acres and then subsequently assign shallow rights in the N/2, then production in the N/2 shallow section would hold the entire 100 acres, not just the N/2 and not just the shallow rights. Or, if I drill a well and produce it in the S/2, the entire 100 acres would be held, including the N/2. But I don't have near enough details to make a pure interpretation.
Permalink Reply by Kassi on August 27, 2008 at 10:11
From all the research I am doing you are right. The good news is I have traced the land transactions and the mineral rights were never reserved so we have our mineral rights. The bad news is we are held in production from the 1955 lease and the RN Hall well. That means 12.5% royalties that costs can be deducted out of, no environmental and land owner protections and they can drill as close as 200 feet from our homes. Some of us interviewed with Jim Roberts on channel 3 today in hopes of informing others that this could happen to them.
Permalink Reply by Kassi on August 27, 2008 at 11:04
I have it advertised now so we will see how it goes.
Permalink Reply by Kassi on August 27, 2008 at 11:32
That is part of what I want to start CANLLA for.
Permalink Reply by dennis thompson on August 27, 2008 at 12:30
First I would like to thank Kassi for all the work she has done on our behalf. I live on the end of lesa at the southwest corner on section 25 in Stonewall.Do we know for sure that they owned all the land that is stated on the lease? Is there a way we can find out exactly what they owned? Anything I can do let me know.

Thanks again Dennis

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