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Last Tuesday the Texas Supreme Court heard arguments in three cases on oil-and-gas-related topics.

Murphy Oil v. Adams, No. 16-0505:

Our firm represents the Herbsts in this case.  Murphy owns a lease on their lands in Atascosa County, shown in blue below. While the Herbst Lease was in its primary term, Comstock drilled the Lucas A Well on the adjacent tract, shown in green.

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I ran across a blog post by Andy Nold, a surveyor, about his research into a large subdivision of land in Reeves County. It provides great incite into the challenges faced by surveyors in West Texas. Here is his post, with permission:

Today’s surveying challenge is the garden spot of northern Reeves County, Texas. Mont Clair is a dusty little burg miles from civilization and services that makes Orla look like a major metropolitan destination. Mont Clair was platted in 1911 over several sections of Blocks 57 and 58 of Township 1 of the T&P Railway Company Survey, bisected by the Pecos River Railroad (later the Panhandle and Santa Fe). Speculation on a great land rush brought by the development of canals and cheap farmland, Mont Clair joined many other now defunct towns along the railroad like Arno, Angeles, Dixieland, Riverton, and Patrole. Unfortunately, the sales of Pecos River water rights far exceeded the actual quantity of water that the river could provide especially with the development of dams and lakes in New Mexico that reduced the flow.

The subdivision plat was signed by J.L. Walker, president of the Pecos Valley Interstate Livestock Company whose principle place of business was Groesbeck, Limestone County, Texas. The partnership included L.B. Cobb, Jr., W.W. Brown, R.L. Reese, R.M. Cralle, L.L. Brown and F.F. Brown. The plat purports to be based on a survey made by L.B. Cobb. It is a very large map and has no recording information. The plat is kept in a big folder at the courthouse and all the deeds referencing it just cite “Lot #, Block # in the Town of Mont Clair, Reeves County, Texas as shown by the map or plat of said town of record in the Deed Records of Reeves County, Texas.”

The town is aligned to the railroad, occupying most of Section 18 and portions of Sections 13 and 19. The north town limits are annotated N 70°20’ E. The east line of Section 18, Block 57, Twp. 1 is annotated NS and the Pecos River Railroad slices through the east third of town on a 50-foot right-of-way. There is no call for any monumentation and no ties to the section corners. The blocks are 250’x250’ with 20-foot alleys and 60-foot street rights-of-way.

Several other sections adjoining the town lots and in the vicinity are also platted into farm lots, 80 equal sized lots on the typical section ringed with an apparent right-of-way of unknown dimension. It is my belief that the sections were presumed to be 640 acres oriented to the cardinal directions.

A Reeves County history says that a Post Office was organized for Mont Clair in 1911. I do not know if any buildings or residences were constructed at all. I have found nothing indicating a railroad depot was ever here, although several of the other ghost towns listed did have a depot at one point. Lot and farm sales must have been good because in 1952, G. E. Ramsey and G. E. Ramsey, Jr., sued over 1,000 property owners and won a judgment in a Trespass to Try Title suit.

http://law.justia.com/cases/texas/supreme-court/1961/a-7892-0.html

While the Ramseys did gain title to close to 6000 acres of land, some landowners successfully defended their title. Other landowners successfully sued for the return of their property a few years later. My company has been hired to locate 2 of the town lots and 2 of the farm tracts. You may wonder why anyone would be concerned about a few acres of scrub desert land that can barely support cattle or farming in the middle of nowhere. You might be surprised to learn that the commuter adjusted daytime population of the ghost town of Mont Clair is much greater than zero as various people pursue their daily occupations. The town sits atop the Delaware Basin oil shale formation which has some of the most active oilfields in Texas. I’m sure the landowners who sued to reclaim their property were more concerned about maintaining their mineral interests than the surface use.

In talking to one of the Reeves County officials, the plat has never been vacated. No field work has been scheduled yet but I am not optimistic about finding any evidence. We have previously tied the railroad right-of-way through this section and there are several different opinions about where the section corners are supposed to be as evidenced by multiple monuments at each corner. Continue reading →

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Dragon v. Trial, from the San Antonio Court of Appeals, No. 04-16-00758-CV, decided November 8, is a case that may be of interest only to title attorneys and landmen and those of us who delight in the minutiae of land titles. It is also, like many title disputes, the story of a dispute over land whose minerals have become fantastically valuable. The case involves 237 acres in Karnes County, in the heart of the Eagle Ford play.

TexasBarToday_TopTen_Badge_SmallIn 1932, the 237 acres was conveyed in equal shares to eight siblings. One of the siblings died, and the property was thereafter owned by the remaining seven. One of the siblings was Leo Trial. In 1983, Leo conveyed one-half of his 1/7th share to his wife Anna Ruth.

In December 1992, Jerome and Patricia Dragon purchased the property from Leo Trial and his siblings. They financed a part of the purchase with a 15-year note. Also, the grantors reserved the mineral estate in the 237 acres for a term of 15 years, after which title to the minerals would go to the Dragons. But Anna Ruth Trial did not sign the deed – an oversight that was not discovered until years later. Continue reading →

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Sent to me by a friend:

Edgar Freeman Smith was the youngest child of a circuit preacher. By age eleven he had to work in a coal mine to support his widowed mother. When he was eighteen they lost their home to foreclosure. People told him to learn a trade if he wanted to get by. Edgar’s ears were plugged to that. All he ever wanted to be was a lawyer.

He sweated all day and studied into the night. This was back when you could read for the law. After six years of reading, Edgar took the bar exam. He passed. Edgar Freeman Smith was a lawyer.

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Flare
My clients regularly complain of flares from wells on their property. Most leases don’t require royalty payments on flared gas, so their royalty is going up in smoke. Flares often don’t function properly, resulting in emissions of toxic gases. Flares make noise.

TexasBarToday_TopTen_Badge_SmallThe Environmental Defense Fund recently released an excellent report on flaring in the Permian Basin, Permian-Flaring-Report-2017.  EDF analyzed flaring and venting by 15 major producers in the Permian for the years 2014-2015. Here’s what they found (click on image to enlarge):

EDF-graph-flaring
On average, these operators flared at a rate of 3 to 4 percent of their production in these years, more than 80 Bcf of gas. At $3/mcf, that’s $240 million of gas.

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This is my 500th blog post. My first post was on March 23, 2009, the first of three posts about deductibility of post-production costs from royalties. Since then I’ve written about post-production costs twenty-three times.

I decided to start this blog as a way to provide information about developments in oil and gas law of interest to land and mineral owners. Lawyers have continuing education requirements and attend seminars in their specialty where they hear other attorneys present papers on current issues in the law. But there are few such seminars for land and mineral owners, and legal seminar papers are not designed for laypersons. I couldn’t find any other blogs that provided the content I wanted. So I ventured into the blogosphere, a territory I knew little about. It has been a fun and productive ride.

When I began this effort the Barnett and Haynesville shales were booming, the controversy over environmental effects of hydraulic fracturing was bubbling up, and lawyers were just beginning to grapple with the legal issues raised by horizontal wells. Since 2009 the shale boom has revived the domestic onshore oil and gas industry and in the process changed the international politics of global energy production and supply. OPEC and Saudi Arabia have tried unsuccessfully to stifle the shale boom. Talk of peak oil has disappeared. Global demand for oil continues to increase in the face of the now-incontrovertible evidence of hydrocarbons’ adverse effect on our atmosphere. There are five-day traffic jams in China, and India has passed China in the rate of growth of oil consumption, increasing 8.3% in 2016.

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Senator Dan Patrick and Speaker Joe Strauss have issued their list of interim charges for the next legislative session – issues that committees must study during the interim between sessions. Those interim charges may be found here:

SenateInterimCharges_2017_Round_1_FINAL

House-interim-charges-85th

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On this day in 1787 Alexander Hamilton, under the pen name “Publius,” published the first of the 85 letters to newspapers later named the Federalist Papers, written by Hamilton, James Madison and John Jay, to argue for adoption of the U.S. Constitution. We’ve been arguing about it ever since.

Hamilton wrote, in part:

I propose, in a series of papers, to discuss the following interesting particulars:

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Beginning in 2015, earthquakes in Oklahoma began to be linked with increased injections of water produced from oil and gas wells. State regulatory authorities were slow to react. Operators of large injection wells like Harold Hamm and his Continental Resources pushed back, pressuring the University of Oklahoma to dismiss scientists who were studying links between disposal wells and earthquakes. But the State eventually began monitoring seismic events in earnest, and the Oklahoma Corporation Commission began to order the shut-down of injection wells.  In September 2016 the Commission and the EPA ordered 54 disposal wells in Osage County shut in after a magnitude 5.6 quake on September 3. See Oklahoma’s interactive map displaying seismic events, here. The image below shows the number and intensity of earthquakes north of Oklahoma City in 2015:

OK-quakes-2015-1

Below are the quakes to date in the same area in 2017: Continue reading →

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