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Permalink Reply by Dion Warr, CPL on July 9, 2013 at 6:36

Camille:

If the lease from which the ORI was created is expired, the ORI is worthless.  Unlike mineral or royalty deeds which can contractually be tied to (made a burden running with) the land, overrides are created out of lessee's interest; once the lessee loses their interest by virtue of expiration of the lease, any subsequently created interest(s) created in that lease is lost as well.

 

I haven't researched the area fully, but looking at the STR supplied above, it would appear that your interest was created in leases ultimately owned or assigned by Johnson or in Johnson leases in favor of Nabors or possibly Sun in shallow production (Paluxy or Glen Rose).  There was a break in production in the wells within that section of several years prior to production being reestablished in James Lime by St. Mary (now SM Energy) in 2007.  Chesapeake operates a producing HA well in the section drilled and completed in 2011.

 

It's a long shot, but the lease may have been held by production from other properties leased on the operative lease.  As long as there was no Pugh clause on the lease, production from any listed property could serve to hold the entire lease, provided there were no releases which affected any of those properties.  If that is the case, you may be able to prove up an interest based upon this.

 

I say long shot because even though many of Chesapeake's leasing efforts in the Haynesville were based upon faulty or hastily run title, even in known areas of old established fields and production, resulting in gobs of bad leases being taken, St. Mary is usually known for employing brokers that are "doing it right" and were given the time and resources to adequately research both the mineral title and the mineral and production history prior to taking leases.  But anyone can slip.

 

As to why it's there - if there was evidence as to its creation at some point, it is possible that no one took the time to evaluate its continued status and existence over the years, and it has remained in the property inventory all this time, for fear of not including it (even though it is non-producing).  As I say above, if the lease which is burdened by the ORI is still shown to be in existence, the ORI can still be valid, even if the specific property to which you refer is nonproducing.

 

Good luck with it.

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Permalink Reply by Camille Potts on July 9, 2013 at 7:54

Dion,

Thank you for that informative post.  I will put it on the research list, but not at the top.

Camille

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Permalink Reply by Andrew on July 10, 2013 at 3:51

Camille,

To piggyback on what Dion posted, it's more likely than not that your ORRI is extinguished because the lease it was carved out of has probably expired. There was no production from that part of the Section from 1973 to 2005 or so. The only way your ORRI would still be valid is if the underlying lease covered lands outside of the SE/4 of the SE/4 of Section 7, there has been production from those lands continuously since the lease's primary term ended, and the lease did not have a pugh clause. Reviewing the underlying lease would probably quickly confirm if your interest is expired.

If it's any consolation, the recent wells in that Section aren't very good.

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