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TX Essays (M. Walker) > Oil & Gas > Flashcards

Oil & Gas Flashcards

1
Q

Preamble

A

TX oil and gas law and constitution apply as governing law

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2
Q

Approach to Question

A
  1. identify the interest

2. how to profit from

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3
Q

Types of O&G interest

A
  1. mineral interest
  2. surface interest
  3. royalty interest
  4. leasehold interest
  5. royalty/mineral mixed
  6. production payment
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4
Q

Mineral Interest Owner’s Rights

A
  1. development rights: exclusive right to explore, produce, and develop minerals
  2. executive rights: right to lease minerals
  3. lease benefits: minus, royalty, and delay rentals
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5
Q

What is a Delay Rental Clause

A
  1. allows lessee to delay drilling during primary term and secondary term by paying a stipulate sum
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6
Q

What is a Shut in Royalty

A

shut capable well if able to produce only, pay shut in royalty

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7
Q

What is Pooling

A

allows lees to hold several tracts under a lease w/ producing just one well located on on of the tracts

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8
Q

Continuous Op

A

prevents expiration of the lease at the end of the primary term if drilling operation is in progress

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9
Q

What is the Accommodation Doctrine

A
  1. ME/lessee must accommodate surface uses only if:
  2. SE owner pre-existing use
  3. ME reasonable alternate method of developing O&G
  4. alternative available on leased tract
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10
Q

Dry Hole

A

defines what lessee must pay to maintain lease after drilling a dry hole

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11
Q

Habendum Clause

A

fixes ultimate duration of the lease

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12
Q

Main D/O Issues

A
  1. binding until revoked
  2. never change or contradict lease
  3. lessee withholds payments if title dispute
  4. provide lessors royalty paid of “market value at well”
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13
Q

Pugh Clause

A
  1. only part of acreage under lease is pooled,, lease on the unrolled acreage may not be maintained by production from pooled unit
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14
Q

What is the Mineral Estate Interest

A
  1. dominant estate
  2. implied easement to use surface
  3. as reasonably necessary
  4. owner does not pay surface owner
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15
Q

Implied Covenants

A
  1. covenant to protect against drainage
  2. covenant to market
  3. covenant for reasonable development
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16
Q

Minerals that are a part of Mineral Estate by Law

A
  1. building stone
  2. limestone
  3. caliche
  4. surface shale
  5. sand
  6. gravel
  7. water
  8. near-surface lignite
  9. iron ore
17
Q

Basic Tenets of State O&G Regulations

A
  1. RR commission regulates production to prevent waste
  2. protect correlative rights
  3. protect environment
  4. requires wells properly plugged
  5. enforce against
    a) operators (1 yr)
    b) non-operators owning working interest at time well ceased operation
    c) state of TX oil clean up fund
18
Q

What is Rule of Capture

A
  1. landowner entitled to all O&G
  2. brings to surface
  3. by drilling
  4. even if from adjacent owner’s land
19
Q

Language that Conveys a Royalty Interest

A

“oil, gas, and other minerals produced and save”

20
Q

Language that Conveys a Mineral Interest

A

“oil, gas, and other minerals in, on, or under the land”

21
Q

Language that Conveys Mixed Royalty and Mineral Interest

A

indicates mineral interest

22
Q

Basic Tenets of O&G Regulation

A
  1. prevent waste
  2. protect correlative rights
  3. protect environment
  4. properly plugged
  5. operators (1 yr)
  6. non-operator owning work interest @ time
  7. state (oil clean up fund)
23
Q

What is a Force Majeure Clause

A

lists acts of god excuse to production

24
Q

What is Formula fo Production

A

revenues - royalties - operating cost = positive #

25
Q

When are Drilling Operations Considered Commenced

A
  1. objective physical act

2. subjective good faith intent

26
Q

Introduction Paragraph

A
  1. O&G lease includes habendum clause that sets forth the primary and secondary term of the lease
  2. during primary term, lessee general is not obligated to undertake any specific activities on the land
  3. secondary term is an indefinite term where the lessee may hold the lease and explore and develop minerals so long as PPQ is obtained
  4. lease ordinarily ends at end of primary term if no drilling has commenced
  5. delay rental allows lessee to pay certain sums of $ (delay rentals) to extend term of primary lease
  6. delay rental may either be a condition to lease or covenant of lease
  7. use of “unless” in clause indicates that delay rental is a condition and failure to make such rental shall automatically terminate the lease
  8. NPRI holder not entitled to portion of delay rental since such rentals act as payments essentially for extend primary term

TX Essays (M. Walker) (12 decks)

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