Oil and Gas Law and Taxation
Authors:
Anderson, Owen L. / Dzienkowski, John S. / Lowe, John S. / Peroni, Robert J. / Pierce, David E. / Smith, Ernest E.
Edition:
1st
Copyright Date:
2017
22 chapters
have results for Hemingway Oil and Gas Law and Taxation
Preface 6 results (showing 5 best matches)
- This volume is a major revision of Hemingway Oil and Gas Law and Taxation (fourth edition) published in 2004. For over four decades, courts, lawyers, and commentators have turned to Hemingway for guidance on oil and gas law and taxation. We trust this revision will be a worthy contribution to the tradition of publishing a useful one-volume treatise addressing oil and gas law and taxation that is valuable to the judiciary, the practicing bar, in-house counsel, students, and oil and gas industry professionals. This volume is unique for its coverage of traditional oil and gas law and federal income taxation of oil and gas.
- As a one-volume treatise covering the substantive law of oil and gas and federal income taxation of oil and gas, this work is intended to serve as a comprehensive introduction and guide to users. Although we believe this volume contains sufficient detail to assist users in a variety of circumstances, it does not and cannot cover materials in the same depth as do multi-volume treatises.
- Collectively, we bring over two hundred years of experience in teaching and writing in oil and gas law and taxation. Each of us have authored casebooks in our respective areas and thousands of pages of scholarly work. We are also fortunate to have close connections to the practicing bar, landmen, accountants, and negotiators in the oil and gas industry. Professors Anderson, Lowe, Pierce, and Smith are responsible for Chapters One through Nine. Professors Dzienkowski and Peroni are responsible for Chapters Ten through Twelve.
- In addition to an updated discussion of the law, users will note that we have revised the organization and much of the analysis of the prior editions. We believe this new organization is more logical and will be more useful to all users. The revised analysis reflects the collective, and occasionally diverse, wisdom of the authors.
- Professor Lowe thanks Dean Jennifer Collins and the Dedman School of Law for supporting this revision, as well as Donna Gaubert, Travis Cox, and Alexander Turner for their technical and research help.
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Chapter 8 The Oil and Gas Lease—Implied Covenants 319 results (showing 5 best matches)
- Owen L. Anderson, John S. Dzienkowski, John S. Lowe, Robert J. Peroni, David E. Pierce, and Ernest E. Smith, Hemingway Oil and Gas Law and Taxation, 404 (4th ed. 2004).
- “Although profitability is an element of the covenant, few cases discuss what constitutes a reasonable profit.” Owen L. Anderson, John S. Dzienkowski, John S. Lowe, Robert J. Peroni, David E. Pierce, and Ernest E. Smith, Hemingway Oil and Gas Law and Taxation 408 (4th ed. 2004).
- (citing Richard W. Hemingway, The Law of Oil and Gas (3d ed. 1991)).
- Hartman Ranch Co. v. Associated Oil Co., 73 P.2d 1163 (Cal.1937)
- The broadest issue often addressed in an implied covenant context is the degree of competence the lessee must employ in its lease activities. The lessee must exercise reasonable care in exploration, development, and production operations. Although some early cases held that the judgment of the lessee could not be reviewed as to the manner and method of exploration, development, and production,and prudent person standard familiar in tort law because an oil and gas lessee is presumed to have special skills and expertise regarding oil and gas operations. Moreover, the standard changes with improvements in oil and gas technology and scientific knowledge.
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Chapter 6 The Oil and Gas Lease 608 results (showing 5 best matches)
- The issue is discussed in more detail in the predecessor text, Owen L. Anderson, John S. Dzienhowski, John S. Lowe, Robert J. Peroni, David E. Pierce, & Ernest E. Smith, Hemingway Oil and Gas Law and Taxation § 6.1 (4th ed. 2004).
- Oil and gas in the United States are developed using a document called an oil and gas “lease.” Courts, however, generally avoid applying landlord/tenant law to the oil and gas lease. As discussed in § 6.1(B), the interest granted will be either a conveyance of the minerals or conveyance of a
- Granting clause provisions are spread throughout the typical form of oil and gas leases. The clause that identifies what is being granted is found in the first paragraph of most form documents. Although the granting language should dictate the nature of the interest granted, most courts instead rely upon general classification rules to declare that the oil and gas lease either creates a conveyance of a mineral interest, a license, or a Absent an overriding classification rule, the following language creates a right to use the land to obtain oil and gas: “[Lessor] does hereby grant, lease and let unto Lessee exploring, prospecting, drilling and mining for and producing oil and gas . . . .” In addition to the various easements to enter the leased land to do things, it includes the right to produce and take oil and gas from the leased land. This is a but under Texas classification law it is deemed a conveyance of the oil and gas in place.
- Professor Hemingway, in a predecessor of this text, was critical of the court’s analysis in . He believed courts should apply the same view of “production” in defeasible-term deeds that they apply to oil and gas leases. While jurisdictions like Oklahoma may conclude that a terminable deed should be construed more strictly than an oil and gas lease, because many of the factors that the courts take into account in balancing equities do not exist in the case of a non-possessory terminable interest, the reverse argument is also strong. See, e.g., , where the court reasoned that more liberality should be shown a defeasible-term owner than a lessee because the defeasible-term owner is at the mercy of the acts of the lessee. We believe the Ludwig analysis makes sense: First, the defeasible mineral and royalty interest owners do not undertake the investment and risk of developing the oil and gas. Second, the very nature of their interests put them on notice that they will terminate in the...
- It is axiomatic that there is no standard form of oil and gas lease. Seemingly similar form documents often vary in significant substantive ways. Although individual lease language varies widely, oil and gas leases are uniform in structure. For example, all oil and gas leases will have a granting clause, habendum clause, and royalty clause. Traditionally most oil and gas leases have had a delay rental clause, which today is often eliminated in favor of a “paid up” lease clause. All oil and gas leases have clauses designed to excuse, under defined circumstances, the production requirement of the habendum clause.
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Chapter 7 The Oil and Gas Lease—Royalty Clauses and DIvision Orders—Other LEssor Benefits 454 results (showing 5 best matches)
- Maurice Merrill, Covenants Implied in Oil and Gas Leases §§ 85 and 86 (1940). Professor Hemingway also submitted that the “better approach would seem to be whether such costs are conceived to be within the implied obligation of the lessee to market the products from the lease . . . [and to] charge all such costs to the lessee that . . . are within such an implied obligation.” Richard W. Hemingway, Law of Oil and Gas § 7.4(F), p. 411 (3d ed. 1991).
- See the following commentary by Professor David E. Pierce: 2014 Survey on Oil & Gas: Kansas, 1 Texas A&M Law Review 79 (2014); Recent Developments in Nonregulatory Oil and Gas Law: Beyond Theories and Rules to the Motivating Jurisprudence, 58 Institute on Oil and Gas Law and Taxation 1–1 (LexisNexis 2007); Exploring the Origins of Royalty Disputes, 23 Petroleum Accounting and Financial Management J. 72 (2004))The Renaissance of Law in the
- Casinghead gas gets its name from its tendency to accumulate in the space between the well casing and production tubing in an oil well. Casinghead gas originates as gas held in solution with the oil in a reservoir and may also consist of gas that comes out of solution and migrates into a gas cap. In the not unusual situation where one party owns the crude oil and casinghead gas rights and another party owns the remaining gas rights, determining the ownership of particular gas can be difficult. In
- Beware that statutes and regulations may specially define terms like oil, gas, and casinghead gas for particular purposes, including taxation and conservation regulation. See, e.g.,
- In modern oil and gas leases, gas royalty is most commonly owed on a fraction of the value of gas that is produced and saved. As indicated in the prior section, older leases often contained a flat-rate gas royalty clause. The previous section notes that, absent a contrary lease provision, the weight of case law classifies casinghead gas and gasoline as oil and that royalty is payable for these products under the oil royalty clause. Regarding condensate, the weight of case law, absent a contrary lease provision, holds that the liquid components of gas production are considered part of the gas stream and that royalty is payable under the gas royalty clause. Unlike casinghead gas, no cases have held that condensate is not covered by the lease.
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Chapter 10 Federal Income Taxation of Oil and Gas Interests and Transactions—Acquisition of Properties, Geological, Geophysical, and Development Costs 376 results (showing 5 best matches)
- Chapters 10, 11, and 12 address the topic of the federal income taxation of oil and gas interests and transactions. These chapters discuss the application of federal income taxation law to the acquisition, development, and disposition of oil and gas interests and to production from oil and gas properties. In other words, the discussion is presented in a transaction sequence beginning with the search for oil and gas and the development of oil and gas properties. These chapters start with the concept of what constitutes an economic interest and then cover the acquisition and leasing of lands and mineral interests, the treatment of development expenditures, the financing of development, and joint development. These chapters have little or no coverage of tax matters that are of general application or that are beyond the scope of this work, including the corporate tax provisions of Subchapter C of the Internal Revenue Code (the “Code”), the partnership tax provisions of Subchapter K of...
- Although many differences exist between the taxation of general business ventures and the taxation of oil and gas ventures, one can identify three major oil and gas tax doctrines that depart from standard principles of federal income taxation. These are: (1) the pool of capital doctrine, which provides nonrecognition treatment for transfers of mineral interests in return for services, equipment, and capital; (2) the election to deduct intangible drilling and development costs, which would otherwise have to be capitalized under general tax principles; and (3) the election to recover one’s investment in the mineral reserve through a percentage depletion calculation that is not tied to, or limited by, the taxpayer’s adjusted basis in the mineral reserve (under current law § 613A, in the case of oil, gas, and geothermal properties, this latter special benefit is available only to independent producers and royalty owners).
- This book addresses the federal income taxation of oil and gas development because this area of taxation has very specialized rules that largely apply only to mineral development. Some of these specialized rules arise because of the peculiarities of how the oil and gas industry discovers, develops, and produces minerals. Others of these specialized rules were purportedly developed to support the energy policy goals of national security and encouraging domestic exploration, development, and production of oil and gas.
- The most up-to-date work in this field is Robert Polevoi & Cecil L. Smith, Federal Taxation of Oil and Gas Transactions (LexisNexis; 2016 ed.). Two other works that appear to be updated from time to time are Oil and Gas Tax Reporter (CCH; Patrick A. Hennessee ed.) (formerly Ernst & Young’s Oil and Gas Tax Reporter); and Income Taxation of Natural Resources (KPMG; Robert A Sweich ed., 2014 ed.) (formerly Burke & Bowhay, Income Taxation of Natural Resources). There is one other leading treatise that has not been updated for many years, but still contains an excellent discussion of much of the material that is briefly discussed here. See Alexander Jay Bruen, Willard B. Taylor & Erik M. Jensen, Federal Income Taxation of Oil and Gas Investments (Warren, Gorham & Lamont; 2d ed. 1989). For a more conceptual discussion of the subject, see John S. Dzienkowski & Robert J. Peroni, Natural Resource Taxation—Principles and Policies (Carolina Academic Press 1988).
- The economic interest concept has a long and varied history, and is central to the field of oil and gas taxation. The determination of whether a taxpayer has an economic interest or some lesser interest such as an economic advantage affects the right to depletion, the question of to whom income from mineral production is taxable, and the character of income from the disposition of a mineral property as capital gain versus ordinary income. The concept of an economic interest was developed because the traditional notion of legal title to property was not adequate to determine which parties should be accorded the various incentives provided by oil and gas tax law. Thus, many oil and gas transactions are structured to give a taxpayer an economic interest in the minerals in place.
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Chapter 9 Transfers by the Lessor and by the Lessee 271 results (showing 5 best matches)
- Id. at 654–55 (quoting Richard W. Hemingway, The Law of Oil and Gas § 9.10, at 642 (3d ed. 1991)).
- Richard W. Hemingway, The Law of Oil and Gas 557 (3d ed. 1991).
- Compliance with the Statute of Frauds is a basic formality imposed on a contract to assign an oil and gas lease. The Statute of Frauds in most states is worded broadly enough to encompass all oil and gas lease transactions, including an agreement to grant an oil and gas lease, to assign an oil and gas lease, and the creation of various interests out of the oil and gas lease, such as an overriding royalty
- John S. Lowe, Owen L. Anderson, Ernest E. Smith, David E. Pierce, and Christopher S. Kulander, Forms Manual to Cases and Materials on Oil and Gas Law 104 (6th ed. 2015) (AAPL Form 675 Oil and Gas Lease, ¶ 8).
- John S. Lowe, Owen L. Anderson, Ernest E. Smith, David E. Pierce, and Christopher S. Kulander, Forms Manual to Cases and Materials on Oil and Gas Law 104 (6th ed. 2015) (AAPL Form 675 Oil and Gas Lease, ¶ 8).
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Table of Contents 92 results (showing 5 best matches)
- Federal Income Taxation of Oil and Gas Interests and Transactions—The Oil and Gas LEase
- Federal Income Taxation of Oil and Gas Interests and Transactions—Acquisition of Properties, Geological, Geophysical, and Development Costs
- (A)Major Differences Between General Principles of Taxation and the Oil and Gas Tax Rules
- Federal Income Taxation of Oil and Gas Interests and Transactions—The Pool of Capital Doctrine—Sharing Arrangements
- (B)Fundamental Questions in Analyzing the Taxation of an Oil and Gas Transaction
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Summary of Contents 35 results (showing 5 best matches)
- Federal Income Taxation of Oil and Gas Interests and Transactions—The Oil and Gas LEase
- Federal Income Taxation of Oil and Gas Interests and Transactions—Acquisition of Properties, Geological, Geophysical, and Development Costs
- Federal Income Taxation of Oil and Gas Interests and Transactions—The Pool of Capital Doctrine—Sharing Arrangements
- The Oil and Gas Lease—Royalty Clauses and DIvision Orders—Other LEssor Benefits
- § 2.2“Minerals” as Including Oil and Gas
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Chapter 1 The Mineral Estate 205 results (showing 5 best matches)
- Although non-ownership may be a satisfying theoretical approach, in the early years of the oil and gas industry states adopting the non-ownership view had to cope with legal gaps that the ownership-in-place concept avoided. In many instances courts in the non-ownership states held that oil and gas interests were not covered by statutes or common law doctrines dealing with conveyancing, liens and other security interests, and taxation. As a result, legislatures often passed remedial legislation to place those interests in substantially the same position as if they had been corporeal interests in realty. As the foregoing discussion indicates, there is considerable diversity of views as to the legal nature of the landowner’s interest in oil and gas and of the interests that may be created in them. In virtually every oil and gas producing state early court decisions adjudicated narrow questions ...body of law. Once adopted, the concepts of the initial decisions have been applied...
- There are many other arrangements that a mineral owner can make; a mineral owner might, for example, participate in oil and gas development through a limited partnership or as a party to an operating agreement. Alternatives to oil and gas leases have become more common as oil and gas have become more valuable and mineral owners have grown more sophisticated. The relative duties and benefits for mineral owners under alternative arrangements may vary markedly from those created by an oil and gas lease. Because executing an oil and gas lease is the most common method that mineral owners use to obtain oil and gas exploration and development, we will limit the discussion in the following sections primarily to the rights and duties created by an oil and gas lease.
- In fact, neither the analogy to underground water courses nor to wild animals was apt. Unlike migrating underground water, oil and gas are found in closed reservoirs. Only owners of land over the reservoir can produce. Although capable of transmigration, oil and gas are not free-moving but move in accordance with the laws of physics. Until the reservoir is pierced by drilling or disturbed by natural occurrences, the system is essentially static. Once a well is drilled into the reservoir, oil and gas move toward the area of low pressure at the well bore. Although courts have now generally discarded the analogies to water or wild animals, the early decisions left a heavy imprint upon concepts relating to ownership and development of oil and gas.
- Today states with commercial production of oil and gas are primarily divided into two groups: (1) those that recognize ownership of oil and gas in place beneath the surface of the ground as though they were a part of the land itself, similar to ownership of hard minerals—the so called ownership-in-place theory; and (2) those that reject ownership of oil and gas in place, but recognize that one who owns land has an exclusive right to use that land to search for and reduce oil and gas to possession—the so-called non-ownership theory.
- Both ownership-in-place states and non-ownership states recognize that landowners must reduce oil and gas to possession to gain ownership of it. This is the “rule of capture”: the owner of mineral rights in a tract of land acquires title to the oil and gas produced from wells drilled on the land, though part of the oil and gas may have migrated from adjoining lands. Whatever the theory of ownership, production converts oil and gas from real property to personal property owned by the capturer.
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Chapter 12 Federal Income Taxation of Oil and Gas Interests and Transactions—The Pool of Capital Doctrine—Sharing Arrangements 171 results (showing 5 best matches)
- The difficulty in applying Abercrombie to sharing arrangements generally is that, however correct the decision may have been on the facts before the Court, the statements in the opinion emphasizing the common law concept of ownership tend to weaken the tax concept of economic interest, so important in oil and gas taxation—to the Government as well as to taxpayers. If Abercrombie is interpreted too broadly, it will discourage sharing arrangements created out of the exigencies of the oil and gas business and necessary, in many cases, to development of oil and gas property. We interpret Abercrombie narrowly, as indeed, the Service—prior to the instant case—has consistently interpreted it.
- Id. at 79. For commentary on Rev. Rul. 77–176, see John S. Dzienkowski & Robert J. Peroni, Natural Resource Taxation—Policies and Principles 528–30 (1988); Patricia Hendrix Chicoine, Comment, New Tax Treatment of Oil and Gas Farm-Outs: A Threat to Domestic Production, 15 Hous. L. Rev. 387 (1987); Karyn A. Friske, Revenue Ruling 77–176 Revisited, 28 Oil & Gas Tax Q. 147 (1979); William M. Linden & L. Price Manford, How to Avoid the New Ruling Which May Currently Tax Oil and Gas “Farmout” Deals, 47 J. Tax’n 76 (1977); Emily A. Parker, Contribution of Services to the Pool of Capital: General Counsel Memorandum 22730 to Revenue Ruling 83–46, 35 Inst. on Oil & Gas L. & Tax’n 313 (1984); Gary A. Vogt, New Approach to Obligation Well Farm-Out Arrangements: 26 Oil & Gas Tax Q. 1 (1977); Arnold C. Wegher, Taxation of Earned Interests—The Impact of Revenue Ruling 77–176, 24 Rocky Mtn. Min. L.
- The argumentative justification for liberality in taxation of oil and gas is that such liberality encourages and emboldens the fiscally timid to exploit the resource. It rewards the risktaker. Here Humble risked the exploration and development costs. If tax emoluments are to be granted, it would be cynicism in the name of economic bravery to give the tax break to the economic observer.
- The lack of give in rigid, traditional common law notions of title and ownership, which must be adjusted to the realities of converting fugacious oil and gas into productive property, make the oil man’s job and the Commissioner’s job less than a happy lot. In making the adjustment, two related fundamental principles must be applied in order to do justice to the taxpayer and to give the tax collector his due. First, substance must take precedence over form. Second, the tax concept of “economic interest” and not the common law concept of title must control the division of taxable income in the development and operation of oil and gas property.
- In Situation 2, a corporation retained an attorney to work on a corporation’s acquisition of oil and gas properties. The attorney conducted title examinations for the mineral properties and drafted lease agreements to enable the client to acquire some mineral interests. In exchange for the work, the attorney received an overriding royalty interest in the oil and gas to be produced under each lease.
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Chapter 11 Federal Income Taxation of Oil and Gas Interests and Transactions—The Oil and Gas LEase 450 results (showing 5 best matches)
- It is an incident of every oil and gas lease, where production operations are carried on by the lessee, that the ownership of the oil and gas passes from the lessor to the lessee at some time, and the lessor is compensated by the payments made by the lessee for the rights and privileges which he acquires under the lease. But, notwithstanding this incidental transfer of ownership, it is evident that the taxation of the receipts of the lessor as income does not ordinarily produce the kind of hardship aimed at by the capital gains provision of the taxing act. Oil and gas may or may not be present in the leased premises, and may or may not be found by the lessee. If found, their abstraction from the soil is a time-consuming operation, and the payments made by the lessee to the lessor do not normally become payable as the result of a single transaction within the taxable year, as in the case of a sale of property. The payment of an initial bonus alters the character of the transaction no...
- The question of whether a transfer of an oil and gas property would be treated as a “sale” or a “lease” for tax purposes arose quite early in the case law. In the owner of lands in Texas executed oil and gas leases in return for royalties from production and a cash payment of $57,000. He reported the cash payments as gain from the sale of capital assets in his 1924 and 1925 tax returns. The Service contended that the payments were ordinary income resulting from a lease of the oil and gas property. The Supreme Court upheld the government’s argument on this issue and concluded that the transaction was not a sale for federal tax purposes, even though Texas followed the ownership theory of oil and gas leases and treated an oil and gas lease as a present sale of the oil and gas in place. The Court looked at the legislative history underlying the capital gain preference and concluded that Congress adopted such preference to relieve taxpayers from “excessive tax burdens on gains resulting...
- Although state laws vary as to whether the execution of an oil and gas lease results in a sale of the mineral estate, for federal taxation purposes such state laws are not determinative. To determine whether a sale or lease has occurred for tax purposes, the courts examine the economic substance of a transaction.
- In the Tax Reduction Act of 1975, Congress enacted special limitations on the percentage depletion deduction for oil and gas production. Section 613A effectively repealed percentage depletion except with respect to certain domestic natural gas production and with respect to a limited amount of domestic oil and gas production by so-called independent producers and royalty owners. Specifically, § 613A eliminated percentage depletion for (1) oil and gas properties owned by integrated oil producers (i.e., producers that engage in significant retailing or refining operations); (2) proven oil and gas properties transferred after 1974 (with certain exceptions), although this provision was repealed in 1990; and (3) foreign oil and gas properties. In addition, Congress reduced the applicable rate of percentage depletion on oil and gas production, imposed certain quantity limitations on the amount of oil and gas production eligible for
- argued that under Texas law title to the minerals in place immediately passed to the lessee and therefore a sale resulted. The Court rejected the argument on the ground that it was the intent of Congress that the taxation statutes be given a uniform application in order to create a nationwide scheme of taxation, and that the Texas oil and gas leases created no different economic consequences than those from states following the non-ownership theory of oil and gas leases. Accordingly, the Court held that the cash payments were bonus payments, which, like royalty payments, are consideration for the execution of a lease and are ordinary income subject to depletion to the lessor.
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Title Page 9 results (showing 5 best matches)
- OIL AND GAS LAW AND TAXATION
- Distinguished Oil and Gas Scholarand Professor of LawEugene Kuntz Chair in Oil, Gas and Natural Resources Emeritus
- A RevIsion of Hemingway
- Norman R. Pozez Chair in Business and Transactional Lawand Professor of Law
- Dean John F. Sutton, Jr. Chair in Lawyering and the Legal Processand Professor of Law
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Chapter 2 Conveyances of Interests in the Mineral Estate 380 results (showing 5 best matches)
- a one eighth (being all the Royalty retained by us) undivided interest of, in and to all the oil, gas and minerals on, in and under the . . . lands . . . granting to the said J. M. Talley, his heirs and assigns, the right of ingress to and upon said lands for the purposes of securing, storing and removing oil and gas, and the right of occupancy of said lands for and only for the purposes of storing, securing and removing oil and gas.
- a deed granted “all oil, gas and other minerals” plus “sole right to explore, develop, produce and market” them. The deed also contained a reservation of an undivided 1/2 interest “in and to the oil and natural gas.” Successors to the grantees executed a lease and were paid a bonus of $146,530.80. Grantors sued for ½ of the bonus. The trial court gave summary judgment for grantees for all the bonus and ½ of the delay rentals. On appeal, the court held that the grantors were entitled to 1/2 of all lease benefits. The court cited both Hemingway and Kuntz to the effect that all rights not conveyed specifically are reserved. In , the court construed a deed that conveyed an undivided “one-half of net proceeds from the sale of such minerals at fair market prices.” It was held that the language did not include a proportionate share of the bonus and rentals. The court cited Hemingway.
- The grantors herein reserve unto themselves all oil, gas and minerals in and upon the hereinabove described lands, together with rights-of-way over, through and across the said lands for the purpose of developing and removing the same, less and except an undivided one-half interest in an undivided one-sixteenth interest in and to said oil, gas, and minerals that may hereafter be produced from the said lands.
- Professor Lowe wrote about these issues and cited other articles at OilGasLaw,” Oil Gas
- in determining whether the phrase “all of the oil and gas and all of the constituents of either in and under the land hereinafter described in all possible productive formations therein and thereunder . . .” included coalbed methane. According to the court, the question “is not whether coalbed methane, for all purposes and in all cases, ‘gas’ ”; but whether “a gas lease executed in 1986, before the widespread commercial production of coalbed methane in West Virginia, signed by a lessor who owned the land, coal, oil and gas, conveyed to the oil and gas lessee the right to develop the coalbed methane, absent any specific language on the issue.” The court noted with approval the lower court’s conclusion that a lease should be construed as of its date of execution; that it may contain a “latent ambiguity,” and that a court can look to extrinsic evidence, including common industry practices and the absence of any coalbed methane development in the area at that date in determining if...and
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Chapter 5 The Oil and Gas Lease—Acquiring and Developing LEases from Owners of Less than the Fee Simple Absolute 351 results (showing 5 best matches)
- In the oil and gas industry, a landman is a gender neutral term used to describe a man or woman who reviews recorded title instruments and other evidence of ownership, performs title curative work, and negotiates and acquires oil and gas leases and other contracts relating to oil and gas exploration, development, and production.
- The leasing of state-owned lands or mineral rights for oil and gas exploration and development is generally governed by state statutory law and perhaps by provisions in the state’s constitution; Commonly, states issue oil and gas leases through an oral or sealed bid auction. The bidding parameters may vary from state to state or auction to auction. Louisiana negotiates oil and gas exploration and exploitation contracts with interested parties. Securing an oil and gas lease to state park, recreation, and wildlife lands, if possible, may not be governed by the same leasing statutes and regulations applicable to state grant lands; however, acquired lands resulting from foreclosures may be governed similarly to state grant lands. Leasing of sovereign lands—the beds of navigable lakes and streams and of state territorial sea—is likely to be addressed by special For all types of state lands, the key issues are that an oil and gas lease or other exploitation agreement be obtained from an...
- Where minerals are severed from the surface either by deed or by oil and gas lease before the execution of a non-mineral landlord-tenant lease, the tenant’s lease is subject to the rights of the owners of the mineral estate to use so much of the land as is reasonably necessary for the development and production of oil and gas. The non-mineral tenant with actual, inquiry, or constructive notice of the oil and gas lease will have acquired interests subject to the right of the owners of the severed minerals to enter and develop the land for oil and gas.
- The basic question of the law of co-tenants as it relates to oil and gas is whether a co-tenant has the right to remove petroleum products without the agreement of co-owners. Oil and gas, unlike solid minerals, are capable of moving to places of lower pressure. Production on adjacent tracts may drain oil or gas from under the neighboring tract. Because of the possibility of drainage and the rule of capture, nearly all jurisdictions allow a co-tenant to drill for and to remove oil and gas without the permission of other co-tenants. several jurisdictions, including Illinois, Louisiana, Michigan, and West Virginia, permit one co-tenant to enjoin production of oil and gas by another co-tenant.
- New Domain Oil & Gas Co. v. McKinney, 221 S.W. 245 (Ky.1920)
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Chapter 3 TRespass: Surface and Sub-Surface, and Third Party CLaims 156 results (showing 5 best matches)
- If A, as the oil and gas mineral owner, or O, as owner of both the surface and the oil and gas rights, enters into an oil and gas lease with Acme Oil Company, an issue arises whether Acme then owns the exclusive right to explore the leased land. If non-exclusive, it would allow anyone desiring to conduct seismic surveys on the leased land to obtain permission from either the mineral owner (lessor here) or the oil and gas lessee. This issue has been resolved by examining the oil and gas lease to determine whether it expressly confer on the lessee, Acme, the exclusive right to explore. As a matter of contract interpretation courts have held the right to authorize seismic surveys is not exclusive to the oil and gas lessee because they can be conducted without undue interference with the lessee’s drilling and development of the oil and gas, which are
- a tract of land, the typical problem is identifying the relative rights of the surface owner, mineral owner, and oil and gas lessee. For example, assume landowner O conveys the oil and gas in Section 30 to A. Who “owns” the right to explore the oil and gas in Section 30? A, as the owner of the oil and gas in Section 30 also owns the right to explore for these substances. also “owns” the implied right to make reasonable use of the surface to conduct exploration of its oil and gas mineral interest. The North Dakota Supreme Court describes the “reasonable use” concept as follows:
- The West Virginia federal court took essentially and overtly the position of the dissent in The court pointed out that the rule of capture was developed in the situation where high pressure oil and gas seeped to a lower pressure area where a well had been drilled and that the rationale for the rule of capture is that the drained landowner can protect himself by drilling his own well. The court pointed out that the production resulting from fracking is not the same as production moving from a high pressure to a low-pressure area. Moreover, most property owners lack the resources to drill their own well. So the court in opinion effectively allows oil and gas companies to steal from the owners of small tracts. The court hypothesizes that the oil and gas company can tell the owner of a small tract to either sign the company’s lease or the company will hydraulically fracture beneath the tract and take the oil and gas without compensation. Or the company may choose to hydraulically...
- Barquin v. Hall Oil Co.
- This section addresses seismic and other geophysical operations carried out on the surface, or slightly beneath the surface, for the purpose of discovering whether the sub-strata is favorable for the discovery of oil or gas. Although in the mind of the public such operations are viewed as “searching for oil,” technically, this is not the case. Instead, it is known that various configurations of sub-structures are favorable for the retention of oil and gas. Geophysical operations are usually directed at finding oil and gas indirectly, by the identification of underground formation structures favorable for their accumulation. The discovery of oil and gas is achieved by actual drilling into the sub-structure. Surface geophysical exploration employs various tests, such as seismic tests,
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Chapter 4 Adverse Possession and Statutory Termination of Mineral Interests 62 results (showing 5 best matches)
- In states classifying the mineral estate as a corporeal interest in real property, the granting of an oil and gas lease prior to the AP’s entry onto the surface has the same effect as a prior conveyance of a mineral interest. The same result should be reached in non-ownership jurisdictions that classify the oil and gas lease as creating an incorporeal interest in real property.
- See Owen L. Anderson and Ernest E. Smith, The Use of Law to Promote Exploration and Production, 50th Oil & Gas Methods for Facilitating the Development of Oil and Gas Lands Burdened With Outstanding Mineral Interests, 43 Tex.L.Rev. 129 (1964).
- However, if no intent is found to the contrary, merger will occur where the TO has reserved a lesser interest in the minerals, such as a reversionary interest. For example, the TO, the owner of Section 30 in fee, executes an oil and gas lease to Acme Oil Company for a five-year primary term. At the end of the primary term the lease terminates for lack of production. The AP later enters and does acts on the surface sufficient to gain ownership. In this situation, the AP will acquire the surface and the minerals. Upon execution of the oil and gas lease either a determinable fee or a profit-à-prendre is created in the lessee. In the first instance the lessor retains a possibility of reverter, and in the latter the fee subject to the profit. Upon the termination of the lease, merger will occur, and the TO will own the fee simple in an unsegregated estate. A later adverse possessor will acquire both the surface and the minerals.
- The acts necessary for adverse possession of the mineral estate all relate to whether they are sufficient to put the mineral owner on notice that someone is asserting rights to the mineral estate, as opposed to the surface estate. Execution of an oil and gas lease, without accompanying acts to reduce the minerals to possession, is insufficient, the AP took gas from an abandoned well on adjacent land to use in connection with a minnow pond, brooder, and dwelling house on the land being claimed. The court held that these acts did not constitute possession of the severed mineral estate because: (1) the gas was not produced from a well located on the claimed land; and (2) no operations were conducted on existing well sites located on the claimed land. The same sort of notice problems exist when oil or gas is drained from the claimed land by wells located on adjacent or nearby tracts, even when part of the same pooled unit.
- Adverse possession of the mineral estate can be accomplished by actually producing oil and gas for the required statutory period of time. The drilling and production must be continuous for the required period and accompanied by any other acts required by any applicable statute, such as paying taxes.
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- Publication Date: June 30th, 2017
- ISBN: 9781634599337
- Subject: Oil and Gas Law
- Series: Hornbooks
- Type: Hornbook Treatises
- Description: This Hornbook, a revision of the Hemingway Hornbook, is the most comprehensive one-volume work on oil and gas law and taxation available today. For over three decades, Professor Richard Hemingway’s prior editions of this seminal work provided guidance to courts, lawyers, commentators, and students. Six distinguished scholars, Professors Anderson, Dzienkowski, Lowe, Peroni, Pierce, and Smith, have joined together to co-author a new version of this classic treatise. As a one-volume treatise, this work covers the substantive law of oil and gas and federal income taxation of oil and gas transactions. The first two chapters examine the mineral interest/estate and related transactions. The third chapter covers trespass and related issues. The fourth chapter covers adverse possession and dormant minerals. Chapters five through eight examine in detail the oil and gas lease. Chapter nine addresses transfers by the lessor and the lessee. Chapters ten through twelve are devoted to oil and gas taxation.