Bruce

A Well Proposal In Oklahoma - A Boon to the Mailman

A Well Proposal In Oklahoma - A Boon to the Mailman

Berlin's friend Bruce called her up on Friday, and after he finished ranting about planting his tomatoes before the last frost date, he got down to asking about well proposals and why he is receiving them in the mail for his Pittsburg County, Oklahoma mineral rights…

Splitting the Baby and the Pooling Bonus

The Oklahoma Corporation Commission has been regulating on the fly as to rule changes on multi-unit horizontal wells. One of the recent changes is that applicants now must offer a formation election if the applicant desires to force pool more than one common source of supply. Berlin thinks that this effects the unleased Oklahoma mineral owner more than the commissioners had originally intended... 

Spudding Before Forced Pooling

Bruce was a bit pissed when he called up Berlin today. Apparently, his fence line weaning efforts cost him about 6 hours of sleep after he found the fence knocked down and the calves back with their mommas.  After he calmed down a bit, he asked why so many operators are spudding their wells before a forced pooling order has issued and what his options are as an unleased Oklahoma oil and gas mineral owner named as a respondent in the pooling proceedings...

Is $10 Actually the Bonus Per Acre?

Oklahoma Mineral Rights Owners,

Berlin received another call from Bruce today. He was angry and slightly confused. Bruce was sure that some fly-by-night lease flipper was fixin' to cheat him out of his lease bonus. The Duncan, Oklahoma based outfit had offered him $1,100 per net mineral acre for a 3 + 2, oil and gas lease at a 3/16 royalty for some of his granddaddy's minerals in Beckham County, Oklahoma, which Bruce accepted...

Reversionary Mineral Interests: The Term Mineral Deed

Oklahoma Oil and Gas Mineral Owners,

Today, Berlin was approached by a fellow oil and gas royalty owner (let's call him Bruce) who needed some assistance as he just received an unexpected division order in his mailbox (nice problem to have by the way). After some researching we found that his father conveyed his Carter County, Oklahoma minerals via a term mineral deed fifty years ago. A term mineral deed is a type of reversionary interest. According to Black's the definition of reversion is:

In real property law, a reversion is the residue of an estate left by operation of law in the grantor or his heirs, or in the heirs of a testator, commencing in possession on the determination of a particular estate granted or devised. 

And a reversionary interest is:

The interest which a person has in the reversion of lands or other property. A right to the future enjoyment of property, at present in the possession or occupation of another. 
Bruce's father with the tie and cigarette. He sold his Oklahoma mineral rights on a term mineral deed to finance his "Summer of Love" exploits. The man knew how to smoke.

Bruce's father with the tie and cigarette. He sold his Oklahoma mineral rights on a term mineral deed to finance his "Summer of Love" exploits. The man knew how to smoke.

In landman terms, this just means that the property in question will automatically go back to the original grantor or the successors of that grantor's interest to the property when a certain condition is met. The conditions could include such mechanisms as a back in, an overriding royalty interest to working interest option and others which Berlin will cover at a later date. This reversionary interest in question today was simply a term that was written into a mineral deed.

Terms are very common in the oil and gas business. The most common instrument with a term is the oil and gas lease. However, conveyances of a fee mineral interest can also contain a term and that is what Bruce owned. Long story short, Bruce's father conveyed his minerals to a grantee in 1967 for a term of 50 years. Occasionally, the term of a term mineral deed may be perpetuated by production, but that was not the case here. Simply put, the minerals rights owned by Bruce's father would revert to his heirs (if they were conveyed the reversionary rights) 50 years to the day from the original effective date of the conveyance.

Often, reversionary interests with longer terms are lost in the inter-generational shuffle of heirs. In this case, Bruce is fortunate that the attorney who originally rendered the title opinion for the operator made a note of this term instrument so the operator was able to track it through the years. Bruce  is also lucky that the operator of the lease had drilled the original well in the 1970s and continues to operate the lease to the present day. This is uncommon.

If you have any further questions about reversionary or term instruments and your Oklahoma mineral rights, or you would like to discuss selling your mineral rights or oil and gas royalties (with or without a term) please contact Berlin or comment below.

More to follow,

Berlin