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Every year I look forward to receiving William Osborn‘s holiday photo. William is an Austin oil and gas attorney, an amateur historian, a historic preservationist, an alley gardener, an all-around renaissance man, and my cousin. Every December for the last twenty-five years he has sent a photo to his clients and friends documenting the history of the oil and gas industry in Texas, along with an article explaining its historical context written by William. He has collected all of those photos and articles on his Texas Compound website, and you can view them here. Below is one of his photos:

1993-Photo
Of this photo, William wrote: “On July 29, 1918, the Fowler Farm Oil Company S.L. Fowler Number 1, located on the northern edge of the Wichita County community of Burkburnett, blew in at a rate of 2200 barrels of oil per day from a completion depth of 1,734 feet. Within three weeks there were more than 50 drilling rigs operating in the immediate area. The Fowler Farm Oil Company drilled a second well on the same lease and then sold its entire interest in the tract to the Magnolia Petroleum Company for the sum of $1,800,000.00.” By June 1919 there were more than 850 producing wells in “the world’s wonder oilfield.”

William, whose interests include the history of railroads in Texas, has also built the Texas Compound on Highway 290 West, west of Austin. Since 1986 he has moved several historic buildings onto his compound, including a Santa Fe Railroad Depot from Dumas and Texaco bulk fuel warehouses from MCamey and Spur. He has also restored several old railroad cars on the property, including three “Texas Zephyr” railroad passenger cars and two Southern Pacific “Sunset Limited” passenger cars.  William’s Texas Compound website includes historical photos of his restored buildings and passenger cars. A visit to his compound is worth the trip. He has also written a history of Jim Crow laws and Texas Railroads, “Curtains for Jim Crow: Law, Race, and the Texas Railroads,” published in Southwestern Historical Quarterly, which can be found here, along with his other writings. Below is a historic photo from William’s collection showing the inside of the coffee shop in Southern Pacific Railroad’s “Pride of Texas.”

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I got the idea to start this blog after I made a presentation to a landowner group in which I distributed a checklist for negotiating an oil and gas lease.  Soon thereafter, I began receiving calls from people who had found the checklist on the internet. The organization that sponsored my presentation had posted it on their website, and people searching for help on negotiating a lease found it.  I decided that I should investigate this internet thing more closely, and that led to my decision to start this blog.

I have updated my checklist, and you can find the new and improved version here:  Checklist for Negotiating an Oil and Gas Lease

And on a sadder note, I would like to mourn the passing of Tommy Nobis, the best linebacker ever to play for the University of Texas. He played for UT 1963-65, and was a member of its 1963 national championship team.  He had a great professional career with the Atlanta Falcons, where he was the franchise’s first draft pick in 1966 and was known as “Mr. Falcon.” He still holds the record in the NFL for most tackles in a season, at 294.  Nobis died December 13. He attended the football banquet at St. Stephen’s Episcopal School in 1965 where I was a sophomore and played defensive guard and center. My jersey, like Nobis’s, was number 60. He and I both sported a flat-top haircut, and for the rest of my high school football career my nickname was “Nobis.”  Requiescat in pace, Tommy.

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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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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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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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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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TP-ticketOnce the largest landowner in Texas with 3.5 million acres of land, Texas Pacific Land Trust now owns 888,333 acres of land in West Texas. The Trust is owned by holders of “shares of proprietary interest” traded on the New York Stock Exchange. TPLT’s story is a window into the history of Texas and railroads in the 19th century.

Texas and Pacific Railway was created by federal charter in 1871. Its charter was to build a southern transcontinental railroad between Marshall, Texas and San Diego, California. Railroad companies were given land grants in exchange for building rail line, and the U.S. Congress granted T&P twenty sections of land per mile in California and forty sections per mile through the territory that is now Arizona and New Mexico. The State of Texas (where there were no federal lands) agreed to grant T&P twenty sections per mile for the portion of the line crossing Texas. The panic of 1873 caused financial difficulties, and by 1876 only 444 miles had been built. In 1879, Jay Gould bought the company and began laying track west. Gould merged T&P with Southern Pacific Railway, and by 1881 it had built a total of 972 miles of track, entitling it to 12.4 million acres of land. But because it had not built all of the line within the time required by its charter, T&P was awarded only 5,173,120 acres, later reduced to 4,917,074 acres – 3.5 million of that in Texas.TP-map

In 1888, the T&P went through bankruptcy and receivership, and the bondholders who financed the railroad were awarded the land in Texas that had been granted to T&P. The bondholders created a trust, Texas Pacific Land Trust, to liquidate those lands for the benefit of the bondholders, receiving 3.5 million acres of land. The certificates of trust issued to the bondholders were later listed on the New York Stock Exchange. The mineral estate under the land was spun off into a separate entity and later sold to Texaco, now Chevron. TPLT owns a royalty interest in almost 500,000 acres of its land.

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Friday was the anniversary of Black Sunday, in 1935, the worst dust storm in the Dust Bowl days of the Texas Panhandle. The photo below is of Pampa, Texas on that day.

My parents were married in 1929, after their high school graduation. They farmed outside Friona, Texas, in the western Panhandle, and lived through the Dust Bowl. Friona is in Parmer County, all of which was originally part of the XIT Ranch, sold by the State of Texas to a British syndicate to finance the construction of the state capitol. By the 1930’s the Capitol Land Syndicate had sold off much of the ranch to farmers, with financing. The Syndicate built a hotel in Friona where prospective buyers would stay after arriving on the train. Parmer County did not suffer the out-migration of farmers experienced by much of Oklahoma and North Texas because the Syndicate agreed not to foreclose on farm mortgages if farmers would stay on the land. Other photos of the Dust Bowl can be seen here.

DustBowl6

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I recently read a biography of R.B. Masterson, famous cattleman, written by his son-in-law Z.T. Scott in 1930. Scott listed as Masterson’s first outstanding quality his honesty. “Schooled in the days when a man’s word was his bond and elaborate contracts with legal perplexities were unthought of, his sense of honor and justice made valid every promise; and no man may point to an agreement broken or a pledge unkept.” The cowboy way.

Our firm represented a cowboy, a rodeo team roper named Clint Sanders, in a dispute with another roper,  Eric Randle, over “mount money.” The Waco Court of Appeals recently affirmed a judgment for Sanders, for $39,501. In affirming the judgment, the Court of Appeals quoted fictional cowboy hero Hopalong Cassidy, who suggested that agreements made the “cowboy way” are held to a higher standard. “The highest badge of honor a person can wear is honesty. Be truthful at all times”; “If you want to be respected, you must respect others. Show good manners in every way”; and “Only through hard work and study can you succeed. Don’t be lazy.”

Mount money is known in the rodeo business as the share of winnings a roper pays to the owner of the horse he rides when he borrows another cowboy’s horse. Randle’s horse came up lame and he borrowed Sanders’ horse Tex, and won $158,000. But Randle denied he owed Sanders any mount money. The jury found that he did.

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