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Real Property + O&G for Bar > O & G > Flashcards

O & G Flashcards

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1
Q

hook: NIS is in iran, and corresponds with Kurdistan, either way, they’ve got oil

What are the rights and limitations on the rule of capture?

A

Correlative rights

Limitations: NIS

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2
Q

What are the rights and limitations on the rule of capture?

Correlative rights

NIS

A

rights: every O&G owner has a right to fair opportunity to produce O&G from a common reservoir underlying his property

limitations: Negligently drilled O&G, Illegally drained O&G (violation of the Texas/Conservation order), Stored gas (stored gas is personal property and thus not subject to the rule of capture

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3
Q

hook: DEE jennings from FW, FW has mineral rights

What are the Mineral Interest’s Rights?

A

DEE

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4
Q

What are the Mineral Interest’s Rights?

DEE

A

Development right (the exclusive right to explore, produce, and develop minerals);

Executive right (right to lease the minerals);

Economic benefits (under an O&G lease: Bonus, Royalty, and Delay Rentals)

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5
Q

3 ex: are SOP, Braveheart rasta mod + British yuppies

What is the accommodation doctrine?

A

Requires mineral owner to accommodate surface uses, but only under the following 3 circumstances:

SOP

ME/L RAsta MOD

RAA

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6
Q

What is the accommodation doctrine?

SOP

ME/L RAsta MOD

RAA

A

Requires mineral owner to accommodate surface uses, but only under the following 3 circumstances

Surface Owner has a Preexisting use of the surface

Mineral Estate owner or Lessee has Reasonable Alternative Method Of Developing the O&G that is less destructive

Reasonable Alternative is Available on the leased tract

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7
Q

What are the Life Tenants & Remaindermen general rules?

A
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8
Q

hook: DOGS always trespass

What are the four types of trespass against mineral rights?

A

DOGS

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9
Q

What are the four types of trespass against mineral rights?

DOGS

A

Drilling dry well: damage to the speculative lease

Ordinary trespass: when the lease expires but the lessee stays on the tract, lessee is a trespasser (remedy: injunction and damages)

Geophysical or seismic trespass: when someone on adjacent land explores lessor’s land using seismic vibrations, and gains information lessor’s mineral potential (remedy: sue in assumpsit)

Slant well drilling

*note: secondary recovery operations are not a trespass since they’re approved by the government

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10
Q

Trespass damages Good Faith v. Bad Faith?

A
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11
Q

hook: Private First Class w/ Major want to keep losses on the low

What are the elements to slander of title?

A

PFC w/ M LOSSLO

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12
Q

What are the elements to slander of title?

PFC w/ M LOSSLO

A

Publication of a False Claim of title to the property

w/ Malice

Loss Of a Specific Sale or Leasing Opportunity by the rightful owner b/c no buyer wanted to purchase property with disputed title

*note: damages: measured by the difference between the market value of the lease at the time of the slander and its value at trial when cloud removed

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13
Q

both stephen and STIPpec have P

What is the Habendum Clause?

A

The habendum clause sets for the duration of Lessee’s interests in the premises

P Fixed NOpe

STIP

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14
Q

What is the Habendum Clause?

P Fixed NOpe

STIP

A

The habendum clause sets for the duration of Lessee’s interests in the premises. Typically:

P: Primary term, which is a

Fixed: Fixed period during which Lessee has

NOpe: No Obligations to conduct drilling operations

ST: Secondary Term, which is

I: Indefinite but normally linked to

P: Production

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15
Q

What is the formula for production in paying quantities?

A

PPQ

Formula: R - R - OC = positive #

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16
Q

What is the formula for production in paying quantities?

PPQ

Formula: R - R - OC = positive #

A

PPQ: production in paying quantities.

Formula: R - R - OC = +# -> Revenues - Royalties - Operating Costs = positive #

*note: usually viewed on a yearly basis

*note: standard: would a reasonably prudent operator interested in making a profit rather than speculation continue to operate the well at a loss

17
Q

hook: cessation can be sad, sad songs on radio (like a breakup)

What is the temporary cessation doctrine?

A

Common law exception to PPQ

Applies when there is a sudden stoppage due to a mechanical breakdown or the like

If the lease has an express clause, it will control

Must have production resumed w/in a reasonable amount of time

Key Factors: SADFM

18
Q

What are the temporary cessation doctrine key factors?

SADFM

A

S = Short, temporary shutdown

ADF = lessee Acts Diligently to Fix

M = b/c Mechanical breakdown, or the like

19
Q

What is the difference between an “Unless” vs “Or” Delay Rental Clauses?

A
20
Q

hook: Ozarks, Petticoat, and Acres started in springfield (SGF)

What is the Commencement of Drilling Clause?

A

If the delay rental clause states that “if operations for drilling are not commenced on or before [date], the lease shall terminate unless” lessee pays delay rentals, “commencement” depends on two factors:

OPA

SGF

21
Q

2 factors “commencement” depends on

OPA

SGF

A

OPA: Objective Physical Acts done on the leased premises (such as building a road, cutting down trees, or drilling a water well)

SGF: Subjective Good Faith to pursue drilling operation

22
Q

hook: Sports Illustrated FMCo has Pitchers, Designated Hitters, and Closing Pitchers on air

What are some of the savings clauses?

A

SIFMCO P, DH, CP

23
Q

What are some of the savings clauses?

SIFMCO P, DH, CP

A

SI: Shut In: when a well ceases PPQ due to market conditions, the lessee can hold the lease by paying shut in royalties

FM: Force Majeure: excuses performance, or extends the time for performance, because of unforeseeable factors beyond Lessee’s control. (Exam tip: look to see if the force majeure clause covers only covenants or also conditions)

CO: Continuous Operations: end of the primary term operations have commenced, but there was not yet actual production

P: Pooling: allows Lessee to hold several tracts under lease with PPQ from just one well located on one of the tracts. The royalty from the one well is typically split between the various tract owners. Courts require that the Lessee exercise pooling in good faith.

DH: Dry Hole: lessee drills a dry hole, she can maintain the lease by starting to drill another well within the stated time

CP: Cessation of Production: if a well ceases producing, lessee can maintain the lease by commencing repairs within the stated time

24
Q

What are the rules of the 1991 Division Order (D/O) Act?

A

Applies to D/Os executed after 1991

D/Os are binding until revoked but,

A D/O can never contradict a lease. If it does, it is invalid; as if it was never valid, a Royalty Interest Owner should get past underpayments.

25
Q

hook: San Diego Department of Public Works to Offset Drainage Damages (San Diego River)

What is the Implied Covenant to Protect Against Drainage?

A

The lessee must act as a reasonably prudent operator to protect the leased premises against drainage, lessor must prove three elements:

SD - DPW to OD - Damages

26
Q

3 elements to lessor prove reasonably prudent operator

SD - DPW to OD - Damages

A

SD: Substantial Drainage

DPW to OD: lessee could Drill a Profitable Well to Offset Drainage

Damages

27
Q

hook: east coast has good Rapid Transit, good media (BPR) + good markets

What is the Implied Covenant to Market?

A

Lessee has an implied covenant to market the oil and gas

RT: Reasonable Time

BPR: at Best Price Realizable

*note: lessee’s actions in marketing are judged by the reasonably prudent operator standard

28
Q

What are the two tests in determining the meaning of minerals?

A
29
Q

hook: TV is surface level, so are channels and streaming service

What are some of the substances that belong to the surface estate as a matter of law?

A

WGN Lifetime CBS SS

30
Q

What are some of the substances that belong to the surface estate as a matter of law?

WGN Lifetime CBS SS

A

WGN = Water, Gravel, Near-surface lignite

LIfetime = Limestone, Iron ore

CBS = Caliche, Building stone, Sand

SS = Surface Shale

31
Q

hook: melania don’t care (Don’t Care 4 Date Time or Location)

What are the general rules in regard to Duhig problems?

A

DC 4 DTL

32
Q

What are the general rules in regard to Duhig problems?

DC 4 DTL

A

DC: Deed Construed against grantor

4: 4 corners rule requires that courts try to harmonize all the clauses in a deed to give effect to each clause

DTL: courts read Deed Terms very Literally (ex: there is a difference between “the land conveyed” and “the land described.” (1/2 of 1/8 royalty based on land described v. ½ of ½ of 1/8 based on the conveyance)

33
Q

Mineral Interest v. Royalty Interest Language?

A
34
Q

What are the Drilling Permits and Spacing Rules?

A

Rule: drilling permit required for drilling, and spacing rule requires applicant have a minimum of 40 acres to drill

Exceptions:

Confiscation (ex: drainage) is proven

Subdivision: the small tract was subdivided by deed before oil and gas was discovered in the area or before the land was leased. Subdivisions into small tracts that occur after oil and gas is discovered or after the land was leased are voluntary subdivisions and are not entitled to a confiscation exception

35
Q

hook: O-NO-out of TX t!

What is the duty to plug order?

A

O-NO-TX

36
Q

What is the duty to plug order?

O-NO-TX

A

Operator: the person responsible for the physical control of the well at the time it is about to abandoned

NO: Non-Operator who owns a working interest

TX: state of TeXas

*note: no duty to plug is imposed on mineral interest holders, royalty owners, and other interested persons who do not have a working interest in the well

Real Property + O&G for Bar (2 decks)

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