Something completely different

Published on: November 13, 2017

No. 500

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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Published on: October 27, 2017

Publius

By John McFarland

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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Published on: July 24, 2017

Texas and Pacific Railway and Texas Pacific Land Trust – a History of Railroads in Texas

By John McFarland

Once 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.

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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Published on: June 1, 2017

In Honor of Memorial Day

By John McFarland

This was written by the late Joe Edwards, a Jazz pianist from Missouri:

World War II Love Story

It was a time of Harry James and Betty Grable; a time of seams in the ladies stockings, of Rosie the Riveter, ration stamps for gasoline, shoes, fuel oil, sugar and tires.

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Published on: April 17, 2017

Black Sunday

By John McFarland

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.

Published on: December 22, 2016

Cowboys and the Law – the “Cowboy Way”

By John McFarland

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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Published on: December 13, 2016

Texas Agriculture Law Blog

By John McFarland

Every year, the ABA Journal of the American Bar Association publishes a list of its 100 best blogs related to law topics. One of those on this year’s list is the Texas Agriculture Law Blog, published by the Texas A&M AgriLife Extension Service. The author is Tiffany Dowell Lasmet, an Assistant Professor and Extension Specialist in Agricultural Law at A&M. The ABA Journal reports that

Enviromnmental laws, animal safety, real estate and property issues, food safety and fracking are all issues that Texas farmers and ranchers have to contend with, and this blog does a great job of analyzing how recent court decisions or state legislation can affect them. Texas has long been on the cutting edge of energy law, and this blog also offers excellent examinations of how energy companies and agriculturists are dealing with their often-competing interests.

Check it out. Good information about ad valorem tax exemptions, hunting leases, solar leases, hydraulic fracturing, water law and more.

Published on: November 4, 2016

Will Rogers and Politics

By John McFarland

“Liberty doesn’t work as well in practice as it does in speeches.”

“Democrats never agree on anything, that’s why they’re Democrats. If they agreed with each other, they would be Republicans.”

“If you ever injected truth into politics you would have no politics.”

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Published on: August 8, 2016

Memes Promote Fracking

By John McFarland

I am not a social media guy, this blog notwithstanding. So I was surprised to learn of a whole category of social media I did not know existed, when I stumbled across www.fracfeed.com, a website sponsored by an organization called North Texans For Natural Gas. North Texans for Natural Gas describes itself as a “grassroots organization” sponsored by Devon Energy, EnerVest, EOG Resources, and XTO Energy, to promote the development and image of natural gas, particularly in the Barnett Shale area of North Texas. Fracfeed.com creates “memes” to promote its cause.

A “meme” is defined as “an idea, behavior, or style that spreads from person to person within a culture.” An internet meme is an activity, concept, catchphrase or piece of media which spreads, often as mimicry, from person to person via the Internet. One kind of meme seen on the Internet is an “image macro” meme, which according to Wikipedia takes the following form:

Behind the text is an image “typically drawn from a set of ‘known images’ that are understood by many Internet users.”

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Published on: April 29, 2016

Austin’s First African-American Lawyer

By John McFarland

Occasionally I find something interesting that has nothing to do with oil and gas law, and I file it under “something completely different.” John Browning, a Dallas attorney, law professor and historian, has written the story of a remarkable man, John N. Johnson, who was the first African-American lawyer in Austin and the first African-American admitted to practice before the Texas Supreme Court. Johnson also taught school and published a newspaper. Browning’s account of Johnson’s accomplishments also gives us a taste of what it was like to practice law in Texas at the end of the 19th century. Browning’s article, an excellent read, can be found here.