Requirement 14.003 – Ambiguous Deed; Provision for Interpleading Disputed Interest

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Requirement 14.003 – Ambiguous Deed; Provision for Interpleading Disputed Interest

 

 Ambiguous Mineral Deed: By mineral deed dated March 2, 1996, and recorded in Deed Book 486, page 26, James Bonham conveyed an undivided mineral interest in Tract 1 to James Bowie. James Bonham did not sever any other mineral interests from his fee ownership of Tract 1, so he retained the remainder of the mineral estate in Tract 1.

 

 The deed contained a grant of an undivided one-fourth interest in the minerals and separate statement that the parties intended for the deed to convey twenty mineral acres to Bowie. The fractional grant and the intention clause appear to conflict, since the abstract indicates that Tract 1 is in an enlarged section, and that Tract 1 actually contains 80.375 acres.  If Tract 1 actually contains 80.375 acres rather than 80 acres, then an undivided one-fourth mineral interest in Tract 1 would be  20.09375 acres rather than twenty mineral acres.

 

 The deed from Bonham to Bowie also states that Bowie purchased his interest in Tract 1 for a consideration of $25.00 per mineral acre, which totaled to 20 * $25.00, or $500.00. This fact  suggests that Bonham and Bowie intended for Bowie to obtain only twenty mineral acres regardless of the size of Tract 1. For that reason, we have estimated the ownership and net revenue interests for Bonham and Bowie on the basis that the deed to Bonham conveyed only twenty mineral acres in Tract 1.

 

 You have obtained oil, gas, and mineral leases covering all the possible interests of James Bonham and James Bowie in Tract 1.   If your finished well plat survey confirms that Tract 1 contains 80.375 acres, then production attributable to an undivided 0.09375 acres may be claimed by both Bonham and Bowie  (1/4th of 80.375 acres =  20.09375 acres versus 20 net mineral acres). You should not distribute royalty proceeds attributable to the possibly disputed 0.09375 acres without the written authorization of Bonham and Bowie given pursuant to a full disclosure of the reason for the potential dispute or a court order.

 

 Requirement:  If you complete a producing well on Tract 1 or a drilling and production unit including Tract 1, you should:

 

(1)Obtain an accurate survey of Tract 1.

 

 (2)        If the survey of Tract 1 shows that it does not cover exactly 80 acres, then you should obtain duly executed division orders from James Bonham and James Bowie specifying that Bowie is to be paid on the basis of owning 20 net mineral acres in Tract 1 and Bonham owning the remainder.

 

 (3)        Without such division orders or upon the expiration or termination of such division orders, if Tract 1 contains more than 80 acres, you should pay Bowie on the basis of 20 net mineral acres and deposit into the registry of a court of competent jurisdiction with the potential claims of Bonham and Bowie interpleaded the royalty proceeds attributable to an undivided number of mineral acres equal to ((1/4) * (actual acres in Tract 1)) - 20.  If Tract 1 contains less than 80 acres, without an enforceable division order from Bonham and Bowie, you should pay Bowie on the basis of (1/4) * (actual acres in Tract 1) and deposit into the registry of a court of competent jurisdiction with the potential claims of Bonham and Bowie interpleaded the royalty proceeds attributable to an undivided number of mineral acres equal to 20 - ((1/4)*(actual acres in Tract 1)).

Copyright 2011 by Edward G, Hawkins. All rights reserved.