Law Commons^™

The Cost Of Unstable Property: Oil, Gas, And Other Confusing Mineral Interests, Chad J. Pomeroy

Faculty Articles

Most people think of property as a thing: a chunk of land or a piece of personal property. Most lawyers, hopefully, have a more sophisticated view and think of property as a set of rights that exists with respect to a thing and governs how one interacts with that thing vis-a-vis other people. But even that nuance is not refined enough for an oil and gas lawyer. Such a practitioner does, of course, view ownership as a set of rights, but the thing at hand is not just a piece of real property or the part of the land that …

The Texas Supreme Court's Evolving Mineral-Deed Jurisprudence In The Shale Era: The Implications Of Wenske V. Ealy, Laura H. Burney

Faculty Articles

The twenty-first century oil and gas boom in the Lone Star State stimulated the industry and enriched Texas landowners. However, the technologies credited with igniting this boom, hydraulic fracturing and horizontal drilling, could not prevent the historic boom-to-bust cycle. Instead, the production unleashed from shale plays in Texas and other states created a world-wide glut, sinking oil prices from highs above $100 to a low of $26 per barrel. Yet, thanks in part to plays in West Texas, "Shale 2.0" is underway. The booms have blessed and cursed Texas, leading to a variety of legal disputes. Disputes that have plagued …

The Legacy Of The 1/8th Landowner's Royalty And The Texas Supreme Court: Has Hysaw V. Dawkins Resolved The Double Fraction Dilemma, Laura H. Burney

Faculty Articles

Lawyers, landmen, landowners, and producers face a long list of perennial problems when interpreting or drafting documents that affect mineral estates. I have written extensively about these problems, including the "fixed or floating" non-participating royalty issue addressed in a recent Texas Supreme Court case, Hysaw v. Dawkins. In that case, three siblings, who were beneficiaries of their mother's will, disputed the appellate court's holding that the double fraction 1/3 of 1/8 created a "fixed" 1/24th non-participating royalty interest (NPRi), rather than a "floating" 1/3 NPRi. The dispute arose when one sibling leased her land and negotiated a 1/5th landowner's lease …

Oil, Gas, And Mineral Titles: Resolving Perennial Problems In The Shale Era, Laura H. Burney

Faculty Articles

Mineral deeds present a list of perennial interpretative problems, which create uncertainty about ownership rights in mineral estates and the proceeds from the sale of oil and gas production. Consequently, the following issues arise: (1) deeds with conflicting fractions; (2) the “mineral or royalty” question; (3) the application of the common law “rule against perpetuities” to non-participating royalties, a common interest in the oil patch; (4) the meaning of “minerals”—does it include oil and gas?; (5) the executive’s duty to lease; and (6) deed interpretation versus “reformation.”

States with long histories of production and case law have grappled with several …

The Texas Supreme Court And Oil And Gas Jurisprudence: What Hath Wagner & Brown V. Sheppard Wrought?, Laura H. Burney

Faculty Articles

According to the Texas Supreme Court, a lessor’s interest remains pooled even after her lease terminates. The Court’s November 2008 opinion in Wagner & Brown, Ltd. v. Sheppard provoked strong reactions among oil and gas law practitioners, academics, and others involved in the industry. In fact, the court received nearly a dozen amicus curiae briefs signed by more than 20 attorneys—many of whom typically represent producers—urging it to reconsider. Not persuaded by these concerns, the court finalized its opinion on June 5, 2009. So now the question for players in the oil patch is: What hath Wagner & Brown, Ltd. …

Interpreting Mineral And Royalty Deeds: The Legacy Of The One-Eighth Royalty And Other Stories, Laura H. Burney

Faculty Articles

Mineral and royalty deeds are notoriously difficult to interpret. Courts complicate the interpretive process in at least two ways. First, they produce opinions that fail to appreciate and explain unique oil and gas concepts. Second, they render deed records unreliable. A variety of title problems flow from this instability. However, a common trait is frequently encountered: the influence of the one-eighth royalty provision typically used for decades in oil and gas leases. Unfortunately, courts have failed to acknowledge this influence. For this reason, title litigation will continue to loom under the legacy of the one-eighth royalty, and title examiners will …

Determining The Legal Ramifications Of Express Oil And Gas Lease Provisions: Do The Rules Of Document Interpretation Provide Predictability?, Laura H. Burney

Faculty CLE

The oil and gas lease has served as the basic contract for the petroleum industry since 1853. Throughout the decades, the “typical” oil and gas lease clauses have been developed and revised in response to judicial decisions. To provide an update on the evolution of today’s oil and gas lease, it is necessary to review selected court decisions construing lease clauses.

Theoretically, the rules of document interpretation should provide a reliable guide when courts are asked to determine the legal ramifications of express lease provisions. However, review of relevant cases, including recent decisions and older cases providing unique lessons about …

Hydraulic Fracturing: Stimulating Your Well Or Trespassing?, Laura H. Burney

Faculty CLE

Many courts may determine hydraulic fracturing to be an impermissible trespass. Hydraulic fracturing is a common method used to increase production from oil and gas wells. However, the extent of wellbore fractures can only be determined by theoretical calculations. This reality affects the application of the legal doctrines of the rule of capture, common law trespass, and implied covenants in the oil and gas lease. When these controversies reach the court, a traditional policy conflict is also at play: whether to protect property rights or to encourage oil and gas production.

Without express legislative endorsement of fracturing as promoting valuable …

A Pragmatic Approach To Decision Making In The Next Era Of Oil And Gas Jurisprudence, Laura H. Burney

Faculty Articles

A pragmatic approach to oil and gas law is the most effective way for the judiciary to address arising issues in that area of law. As in the Great Era of the Oil and Gas Industry, new and recurring questions will continue to confront courts in this next era of oil and gas jurisprudence. Because policies have shifted and technology has evolved, it is imperative to reassess the approaches used by courts in answering these questions. In order to respond effectively to questions posed by shifting policies and new technologies in the next era of oil and gas jurisprudence, courts …

“Oil, Gas, And Other Minerals” Clauses In Texas: Who’S On First?, Laura H. Burney

Faculty Articles

Stability and certainty of land titles encourages development of mineral resources and means individuals need not resort to judiciary for interpretation. Unfortunately, uncertainty prevails because Texas courts complicate the interpretive process and frequently need the assistance of nonlegal sources for comparison, explanation, and enlightenment. Clarity demands that courts adopt a definition of the “ordinary and natural meaning” test similar to that proposed by Dean Eugene Kuntz; burying the surface destruction test by retroactively applying the former.

The surface destruction test produced a title examiner’s nightmare. Despite the Texas Supreme Court’s determination to rectify this in Moser v. United Steel Corp. …