Replies to This Discussion

Permalink Reply by HMI on October 31, 2010 at 3:42

Wow! 15 pages of discussion on the topic. I guess I have some reading to do again tonight. Skip, you're like omnipresent and omniscient when it comes to this forum. :-)

Thanks again.

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Permalink Reply by Skip Peel - Mineral Consultant on October 31, 2010 at 3:59

HMI, I merely remember past discussions and retrieve them from the archives. Every member should know how to do so. On the Main Page under the current discussions, click "View All". Then enter one or more key words in the search box and click on the magnifying glass. You may have to try several key words to find the topic you are searching for and there may be a number of topics that contain the key word or words you are using. Scroll through them and look at the discussion title at the bottom of each entry. You're welcome.

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Permalink Reply by Dion Warr, CPL on November 2, 2010 at 7:51

HMI:

All references to the Fair Drilling and related proceedings notwithstanding, it would be recommended not to forget that as to the interruption of prescription of a mineral servitude, any well drilled on the burden tract would serve to interrupt prescription as to the entire of the mineral servitude, while unit operations not on the burden tract would only serve to interrupt prescription as to that portion of the servitude located within said unit. Thus, if you would be contemplating selling a parcel of land located within one or more units, one would want to support the operator in making the burden tract available for use as a wellsite under which the resulting wells would be completed.

If such is not of high probability, you may wish to consider to consider a covenant in your contract such as one contemplated by Article 75 of the Mineral Code:

La. R. S. 31:75 - Right to contract regarding rules of use

The rules of use regarding interruption of prescription on a mineral servitude may be restricted by agreement but may not be made less burdensome, except that parties may agree expressly and in writing, either in the act creating a servitude or otherwise, that an interruption of prescription resulting from unit operations or production shall extend to the entirety of the tract burdened by the servitude tract regardless of the location of the well or of whether all or only part of the tract is included in the unit.

Apologies if I am starting to make your head hurt.

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Permalink Reply by HMI on November 2, 2010 at 8:56

No, no ...not making my head hurt at all. I'm reading with great interest all the posts on the topic. I backed out of the sale with this particular buyer. It wasn't coming together as originally specified and I was tired of dealing with that particular scenario. The buyer was stretched and that's not a prime circumstance for selling a property like this one. Plus, I'm not just "in a hurry" to part with the property. If the right deal came then yes, if not I'm comfortable hanging on to it.

If I'm reading correctly from the various posts, it appears that there is some flexibility in the terms of prescription in period shorter than 10 years but not beyond the 10 years. Am I understanding that correctly? And that there is some latitude as to what can be classified a good faith effort towards development of the minerals and thus interrupt the prescription period? Interesting that prescription can be interrupted on the whole of a tract, even if parts of that tract are external from the unit where the activity occurred. Very interesting ....

Thanks again. Dion, what's your day job if I may ask?

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Permalink Reply by The_Baron on November 2, 2010 at 9:24

HMI:

Prescription can be shortend, but the courts have held that in no case can it be more than 10 years.

However, prescription can be interrupted by acknowledgement.

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Permalink Reply by HMI on November 2, 2010 at 9:28

So like the timber companies and such, the question comes to mind, "Why don't people form large groups or assocaitions and put their property under the umbrella of a servitude covering what would be a very broad "tract" in an effort to have their prescription period interrupted somewhere in the "tract" and thus lengthen their holding period? Bad idea? Impossible? Just tossing it out there ....

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Permalink Reply by Dion Warr, CPL on November 2, 2010 at 10:19

HMI:

One can; however, in doing so, these groups of smaller owners would have to periodically act to maintain the servitudes created (either by cross-conveyancing or by interruptions of prescription by acknowledgment). In productive areas the effort and filings required to maintain such servitudes in continuity can be quite daunting, particularly in areas where production is sufficient to maintain portions of such servitudes, but not the entire. Additionally, it requires continuing cooperation of the parties (since these parties would have to freely contract with each other as the occasion requires) which is generally only possible outside of the short term by close-knit groups (closely-held subsidiaries, family members, etc.), and courts have nearly always (can't say always, IANAL) summarily rejected any attempt for one or more party(ies) to compel a third-party to acknowledge or act in accordance of any covenant or restriction which circumvents the Mineral Code as to the rules of prescription.

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Permalink Reply by Dion Warr, CPL on November 2, 2010 at 10:42

FYI - The MC articles allowing owners (or co-owners) to create a single contiguous mineral servitude are Articles 66 and 67:

La. R.S. 31:66 - Right of owners of contiguous tracts to create single servitude

The owners of several contiguous tracts of land may establish a single mineral servitude in favor of one or more of them or of a third party.

and

La. R.S. 31:67 - Right of co-owners to create single servitude in partition of land

Co-owners of land constituting a continuous whole may partition it and reserve a single mineral servitude in favor of one or more of them.

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Permalink Reply by HMI on November 2, 2010 at 10:48

So what if a group of landowners (all contiguous) decided to form this "tract" and one of the owners has a recent producing well on his land completed just prior to the formation of the tract? Would the prescription period be interrupted every time the operator came in to work on the well or how would that work?

Permalink Reply by Dion Warr, CPL on November 2, 2010 at 11:22

HMI (no more replies avalable under your thread):

I have a feeling that you're going to want to talk to someone that can provide you more than entirely marginal, non-legal legal advice - but in the form of an insufficiently qualified non-lawyerly POV, the owners of the various tracts could do so, provided that they did not incorporate only a mineral serivtude owner being held by the producing well (otherwise, you would be attempting to merge a prior created servitude within another servitude so as to contravene the public policy are infringe upon the right of another (in this case, the innocent possessor of the surface from which the mineral rights have been severed) so as to prevent him from possibly obtaining his mineral rights by prescription of the original servitude by enlarging the servitude to encompass other rights which may serve to perpetuate the combined servitude).

Sorry about the gibberish, but to simplify - owners of both the surface and minerals of the various tracts in their ownership may certainly contract to create a single servitude in my reading, again, as long as said "modification does not affect the rights of others and is not contrary to the public good (R.S. 31:3)". Reworks or additional operations are covered under Article 32:

La. R.S. 31:32 - Interruption by additional operations

When prescription has commenced anew following the cessation of drilling or mining operations, it may later be interrupted by a good faith attempt to complete the well or mine or place it in production conducted in accordance with the general principles stated in Articles 29 through 31.

Again, I can cite this for purposes of discussion, but for a real live situation - consult an attorney.

Permalink Reply by Dion Warr, CPL on November 2, 2010 at 10:25

HMI:

Yes, parties may contract to shorten the term of prescription. They may also set a fixed date of prescription (but must do so carefully, otherwise the generic reading of such actions can be simply to apply the rules of prescription subject to a shortened term of nonuse (e.g., a generic mineral reservation shortened to three years would simply prescribe after three years' non-use, but would be reset to zero again per MC upon such good-faith use of the minerals).

As far as good-faith use, the rules of contract, IMHO, (IANAL) would yield to the MC as far as my interpretation of Article 3:

La. R. S. 31:3 - Freedom of contract and limitations thereon

Unless expressly or impliedly prohibited from doing so, individuals may renounce or modify what is established in their favor by the provisions of this Code if the renunciation or modification does not affect the rights of others and is not contrary to the public good.

As far as my day job (and yes, feel free to ask): I am an independent petroleum landman. I regularly work with title attorneys, perform due diligence work and title curative.

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Permalink Reply by HMI on November 2, 2010 at 10:30

Thank you Dion. Would it be a requirement that such parcels of the greater "tract" be "contiguous" or can they be seperated by non-contiguous parcels?

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