Texas Oil & Gas

Front 1

Oil & Gas: What are the limitations on the rule of capture?

Back 1

1. Right to be protected from negligent operations.
2. Stored gas not subject.
3. Right to enjoin or seek damages for willful injury to the resevoir.
4. Duty to refrain from unlawful or wasteful production.

Front 2

Oil & Gas: What is the mineral interest owner's right to grant leases called?

Back 2

Executive right.

Front 3

Oil & Gas: What is a landowner's royalty?

Back 3

A fractional share of productin payable to the lessor in the royalty clause of the lease.

Front 4

Oil & Gas: What is the nonparticipating royalty?

Back 4

A royalty carved out of the lessor's mineral interest; entitles holder to share of productin. Holder does not have right to lease or participate in bonus and rentals.

Front 5

Oil & Gas: What is an Overriding Royalty?

Back 5

Royalty carved out of the lessee's interest.

Front 6

Oil & Gas: What is a production payment? (aka oil payment)

Back 6

Right to a sum certain, payable solely out of productin and free of obligation to share in costs of production.

Front 7

Oil & Gas: For what damages is a good faith trespasser liable?

Back 7

Value of production, less drilling and production costs benefiting the rightful owner. Dry holes don't count as costs.

Front 8

Oil & Gas: For what damages is a bad faith trespasser liable?

Back 8

Same as a good faith trespasser, but may not deduct costs.

Front 9

Oil & Gas: What remedies from trespass is the lessor entitled to? Lessee?

Back 9

1. No more than the value of his royalty.
2. Leasehold value, minus trespasser's costs.

Front 10

Oil & Gas: If an owner waives suit for trespass and sues in assumpsit (implied K value), what is the remedy?

Back 10

Geophysical trespass: Value of K that should have been obtained.
Dry hole: Value of the lease bonus that should have been paid.

Front 11

Oil & Gas: What are the elements of slander of title?

Back 11

1. Malicious and knowingly
2. Asserts a false claim to the land
3. Which deprives owner of a specific sale.

Front 12

Oil & Gas: What is the remedy for slander of title?

Back 12

Damages between market value of the property at time of slander and its value at trial with the cloud removed.

Front 13

Oil & Gas: How does the relation-back doctrine apply to adverse possession?

Back 13

Title severed after adverse possession begins has no effect on the adverse possession - it relates back to the beginning of possession.

Front 14

Oil & Gas: When must both the life tenant and the remainderman consent to a lease? What do each receive?

Back 14

When both have legal interests.
1. LE: Delay rentals, interest from bonus & royalty.
2. RM: bonus & royalty on LE's death.

Front 15

Oil & Gas: What is the "open mine" doctrine?

Back 15

LE entitle to all bonus, delay rentals, and royalties paid under a lease in effect to creation of the life interest.

Front 16

Oil & Gas: What interest is created by the O&G lease?

Back 16

Possessory interest in mineral fee for fixed years + "and so long thereafter as oil, gas, and other minerals are produced."

Front 17

Oil & Gas: What is the upfront money called?

Back 17

Bonus

Front 18

Oil & Gas: What does the delay rental clause do?

Back 18

Negates any implied duty or covenant to drill during the primary term, by allowing the lessee to delay drilling by paying the lessor a stipulated sum.

Front 19

Oil & Gas: What is the shut-in royalty clause?

Back 19

Allows the lessee to maintain a lease if the wells are "shut in" (not actually producing) though capable of producing, by payment of a shut-in royalty. Well must actually be capable of producing.

Front 20

Oil & Gas: What are the four common implied covenants?

Back 20

1. Covenant to protect against drainage.
2. Covenant to market.
3. Covenant for reasonable development.
4. Covenant to further explore.

Front 21

Oil & Gas: What must the lessor show in order to prove that the implied covenant to protect against drainage has been breached?

Back 21

1. Substantial drainage.
2. A rsbl prudent operation would drill to protect against drainage.
3. Damages (royalty lessor would have obtained had well been drilled.

Front 22

Oil & Gas: If a lessor attempts to impose a duty to drill on a lessee, what must he show?

Back 22

That the lessee can recover oil or gas having a value in excess of all rsbl costs of drilling, producing, and marketing the oil or gas.

Front 23

Oil & Gas: What is the "executive right"?

Back 23

The right reserved by a grantor of a mineral estate to lease the mineral estate to others.

Front 24

Oil & Gas: When does a lessor or a surface owner have a right to damages to the surface estate?

Back 24

1. Use of servient estate is excessive or not rsbl necessary.
2. Use does not benefit the development of oil&gas from under the leased tract.
3. Use is contrary to lease provisions, statutes, ordinances, or other regs.

Front 25

Oil & Gas: Under the accommodation doctrine, when must the mineral owner accommodate existing surface uses?

Back 25

1. Use of surface substantially interferese with preexisting surfaces use of the lessor, and
2. alternate methods are practicable, and
3. alternative is available on the leased premises.

Front 26

Oil & Gas: What does a community lease serve as? (Only example in TX law)

Back 26

An implied agreement to pool.

Front 27

Oil & Gas: What are the four factors indicating whether an ambiguous grant is a royalty interest and not a mineral interest?

Back 27

1. Deed says it is a royalty.
2. Grant is fraction of O&G produced & marketed.
3. described as cost free
4. Grantee does not receive any mineral holder rights such as right to lease.

Front 28

Oil & Gas: What are the four factors that indicate whether an ambiguous grant is a mineral interest and not a royalty interest?

Back 28

1. Deed says it conveys a mineral interest.
2. Grant is fraction of oil and gas "under the land"
3. Grant is fraction of O&G "in, under, and that may be produced from the land"
4. Grantee's interest is cost-bearing and includes right to lease.

Front 29

Oil & Gas: What is special about a tract that is a "voluntary subdivision"?

Back 29

Tractowner cannot receive automatic permission to drill one well.

Front 30

Oil & Gas: What is a voluntary subdivision?

Back 30

A subdivision made:
1. After O&G discovered
2. By O&G lease.
3. With intent to circumvent R37.

Front 31

Oil & Gas: What is the statutory difference between an oil well and a gas well?

Back 31

1. Gas well: produces less than one barrel per 100K cubic feet of gas.
2. Oil Well: Produces more.

Front 32

Oil & Gas: How is "pooling" and "unitization" different?

Back 32

Pooling combines small tracts into a single unit large enough to qualify for a permit for one well. Unitization combines separate tracts into single unit to develop and produce an entire field.