Replies to This Discussion

Permalink Reply by Kepler on June 13, 2008 at 6:17

You can sell the surface separate from the minerals, but if no production occurs within 10 years of the sale, then the mineral rights revert to the surface owner. This is different from Texas where mineral rights can be permanently severed from the surface. Kind of screwy.

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Permalink Reply by SBossierGuy on June 13, 2008 at 6:40

Thanks OutofState - So if there is production on my property when I sale it and I retain mineral rights, I 'd have the mineral rights for as long as there was production + 10 years of non production?

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Permalink Reply by Snake Stewart on June 13, 2008 at 7:16

Depending on your lease you may not even have to be paid a royalty for said period of time before the ten years starts counting.I think that some leases stipulate that even an attempt to improve or work well can keep someone under lease.Check me on that but I feel sure that I have come across this online.

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Permalink Reply by Skidmark on June 13, 2008 at 6:47

I have some questions regarding a hypothetical situation that could result from the 10-year rule.

In May 2000 Farmer bought a few hundred acres that may be in this play. Seller reserved 1/2 of the minerals. There has been no production, and neither Farmer's 1/2 nor Seller's 1/2 has been leased.

This situation obviously raises some issues of strategery for Farmer. Should Farmer try to negotiate with Seller to release his 1/2 to Farmer? Assuming Farmer's net acres are enough to block unitization, should he just wait out the 2 years?

I'd also be curious to hear anyone's thoughts as to how an E&P or a broker would deal with such a situation.

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Permalink Reply by SBossierGuy on June 13, 2008 at 6:52

I'd say wait - why not?

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Permalink Reply by Skidmark on June 13, 2008 at 6:58

Farmer would incur some risk by waiting -- a dry hole in his area, gas could drop below $6 (where it was as recently as September 07).

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Permalink Reply by Snake Stewart on June 13, 2008 at 7:19

Could seller hurry and lease his half to keep farmer from getting total 100% mineral control? That could turn out to be a sticky situation

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Permalink Reply by stan m on June 28, 2008 at 8:31

could the person that sold surface but retained mineral rights sell the mineral rights to o&g co. If so is 10 year rule still in affect with party that bought the mineral rights if no production had taken place?

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Permalink Reply by olddog573 on June 13, 2008 at 7:08

i was under the impression rights transfer after 10 years unless a well is put on property. if no well is on surface after 10 years, check transfers to surface owner at that point in time. am I wrong? are there any lawyers on this site?

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Permalink Reply by SBossierGuy on June 13, 2008 at 9:02

All, I found the statue that deals with this: Louisiana RS 31:16.

"The basic mineral rights that may be created by a landowner are the mineral servitude, the mineral royalty, and the mineral lease. This enumeration does not exclude the creation of other mineral rights by a landowner. Mineral rights are real rights and are subject either to the prescription of nonuse for ten years or to special rules of law governing the term of their existence. "

A lawyer's comment would be nice here. I ain't one, but I take the above to mean that production has to occur, not necessarily a well on the property, but in the unit.

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Permalink Reply by DrWAVeSport Cd1 on June 13, 2008 at 14:08

Everyone needs to remember: Leasing and Conveying mineral rights are two totally separate deals. Leasing, you can have your mineral rights back after certain criteria are met, i.e., no production fo 10 years, etc. However, a "conveyance" is a complete transfer of OWNERSHIP! ...of your mineral estate to a company/or another individual. "You have no rights to it from this point on."

With leasing...you will retain your mineral rights once a 10-year period of no production is met, the mineral right (in Louisiana) reverts back to the surface right owner.

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Permalink Reply by Skidmark on June 13, 2008 at 14:29

I believe SBossierGuy's interpretation is correct. In Louisiana, a person can convey (or retain) ownership of minerals separate from the surface; however, if there is no production for ten years after the separation, the conveyed (or retained) minerals prescribe to the surface owner.

This is different from most other states. In Texas, for example, the mineral estate may be owned for an unlimited period separate from the surface estate, regardless of production.

(I realize I've basically repeated what OutofState wrote, in a more concise fashion, 8 hours ago.)

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