Effects Of Divided Ownership On Oil And Gas Operations

Question 0

Joint tenancy

Answer 0

One estate, when one party dies their interest is passed on to the other party

Question 1

Tenancy in common

Answer 1

Separate undivided interest in property, each interest may be conveyed

Question 2

Majority rule on concurrent interests

Answer 2

Both parties have right to reasonable use or lease of interest without the consent of the other party, as long as they don’t prevent the other party from exercising the same right

Question 3

Minority rule of concurrent interests

Answer 3

One co-tenant or co owner can veto development. Louisiana follows this rule.

Question 4

Ways for a non consenting cotenant to receive his share of production

Balancing in kind

Answer 4

The cotenant may produce minerals independently until he has caught up. Should be remedy if well dries up before balancing occurs.

Question 5

Ways a non consenting cotenant to receive his share of production

Cash balancing

Answer 5

Cotenant receives his fair share of proceeds

Question 6

Prairie v. Allen

Answer 6

Allen was a non consenting co tenant with 1/10th interest and therefore was owed 1/10 of net profits.

If the venture is operating at a loss, one cotenant has no obligation to reimburse the other for any share of the loss.

Question 7

Wagner & Brown v. Sheppard

Answer 7

Texas

Sheppard was part of a pooled unit when her lease terminated. Claimed she was no longer part of the pooled unit and that she was not liable for expenses

Just because her lease terminated did not mean she was no longer part of unit and required to share in proceeds minus costs

Question 8

Anderson v. Dyco

Answer 8

Oklahoma

Dyco and other working interest parties own various working interest percentages in a producing well.

As the owners are covenants, each has the right to produce and market from the well without the consent of others. Had the owners sought action for accounting they would have solved the issue for not receiving payment

Question 9

Partition

Answer 9

Dividing of lands held by cotenants or tenants in common. They must be estates of equal dignity

Each cotenant has absolute and unconditional right to partition

Question 10

Partition in kind

Answer 10

Physical partition

Question 11

Partition by sale

Answer 11

Property is sold and the proceeds are divided by ownership interest to the parties

Question 12

Schmitt v. Mckellar

Answer 12

Arkansas

Court ruled there was an absolute right to partition. The only way to beat it is to prove that partition is being used as a weapon of oppression or fraud, such as forcing an owner into foreclosure.