Requirement 14.004 – Ambiguous Deed; 5 Mineral Acres Spread Across Section

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Requirement 14.004 – Ambiguous Deed; 5 Mineral Acres Spread Across Section

 

 Unlocated Five Mineral Acres:  Section 35, Township 5 South, Range 6 East, DeWitt County appears to contain 640 acres.  Tract 1 appears to contain 160 acres.  W.B. Travis acquired all of Section 35 from David Crockett by deed dated August 25, 2001, and recorded in Deed Book 1825, page 4.  W.B. Travis conveyed an undivided five mineral acres in Section 35 to George Brown by mineral deed dated September 9, 2003, and recorded in Deed Book 1836, page 35.

 

 In 2006, W.B. Travis conveyed Tract 1, which is the NE¼ of Section 35, Township 5 South, Range 6 East, DeWitt County, to George D. Butler. Butler took his interest in Tract 1 subject to the prior conveyance to George Brown of five mineral acres in Section 35.

 

 In calculating the mineral ownership of Tract 1, we have allocated the George Brown five mineral acre interest evenly across the entire Section 35, based upon the assumptions that: (i)  Section 35 is a regular, 640 acre section; and (ii) that Tract 1 covers 160 acres.  Under that approach, George Brown would own an undivided mineral interest in Tract 1 equal to 0.0078125.  That interest, however, is only an approximation, because his interest in Tract 1 cannot be accurately determined without the benefit of an accurate survey of Section 35 and Tract 1.  Consequently the  mineral ownership of George D. Butler in Tract 1 is also an approximation.

 

 The abstract suggests that Section 35 is a regular, 640 acre governmental section and that Tract 1 covers 160 acres.  Therefore, any risk of error in the mineral ownership of Tract 1 for George Brown and George D. Butler is in the nature of a reasonable business risk that prudent oil and gas operators customarily assume.

 

 You have leases from both Brown and Butler, and those leases contain blanket grants of the lessors’ entire interests in Tract 1.  The Alabama Supreme Court has recognized blanket grants for many years. Wright v. Louisville & N.R. Co., 82 So. 132, 133 (Ala. 1919).  Therefore, any possible dispute between Brown and Butler about the quantities of their ownership interests would not affect your right to drill and to produce oil and gas from Tract 1.

 

 Requirement:  If you complete a producing oil and gas well on Tract 1 or on lands pooled with it, and if you are unwilling to accept the reasonable business risk that the ownership interests we have shown for George Brown and George D. Butler, are incorrect because Section 35 and/or Tract 1 are irregular governmental tracts, then you should:

 

(1)Obtain a survey of Section 35 and Tract 1; and

 

(2)If the survey establishes that Section 35 does not contain exactly 640 acres or that Tract 1 does not contain exactly 160 acres; then prior to paying royalties on production attributable to Tract 1 to George Brown and George D. Butler, you should obtain an agreement from them in the form of a recordable deed with cross grants establishing their mineral ownership interests in Tract 1; and

 

(3)If George Brown and George D. Butler will not join in such a deed, you should deposit into the registry of a court of competent jurisdiction any royalty proceeds attributable the disputed interests and interplead the potential claims of Brown and Butler.

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