Articles

Created by: Martha Mills at 11/9/2017 9:12:20 AM | 0 comments. | 48 views.

FROM A PAST PRESIDENT

Keith T. Hebert, CPL

 

Obviously, things have changed positively in our industry as indicated by the  increase in the number of projects around the country, especially in areas like the Permian Basin and EOG’s large Austin Chalk play in South Louisiana, etc.  Although the lower price of oil and gas coupled with the proliferation of legacy lawsuits in Louisiana, has forced many companies to scale back, postpone or cancel some drilling prospects, the amount of work available to independent landmen is much better today than a year ago.  Yet because of the grit and character of landmen, we must hang in there as we all ride out the ups and downs of this industry. 

 

Although there are factors which we cannot control, there are actions we can take during these times of uncertainty.  Consider enhancing our education within our profession by attending LAPL and AAPL sponsored seminars; attend seminars offered by the state dealing with the SONRIS system which is being updated on a regular base; take note of and properly maintain continuing education requirements; follow issues facing the land profession in Landman and Landman 2 magazines and maybe get involved in furthering those causes which will bolster and strengthen professionalism within our industry; volunteer to help within LAPL, AAPL and other industry related organizations.  And all these things can be done while we continue networking and working in the profession we’ve all come to enjoy!

 

We’ve all seen positive and encouraging moves within the Trump Administration to help bolster our American economy, which can lead to greater prosperity and opportunities for our beloved country.  However, let us remain cognizant of what really matters as we strive to adhere to the lesson taught to us all by the greatest person who has ever walked on this earth as Jesus Christ, at the Last Supper, taught his disciples to serve and not wait to be served.

 

God bless and may the peace of God Our Father and the Lord Jesus Christ be with you and yours!

 

Keith Hebert

 

 

 

 

 

 

 

 

 

         

 

 

Created by: Martha Mills at 11/5/2017 2:19:33 PM | 0 comments. | 62 views.

LOUISIANA LEGAL

UPDATE

 

Ryan McAlister

Gordon Arata

    

Glassell Producing Company, Inc. v. Junius A. Naquin

July 5, 2017

On July 5th, the Louisiana First Circuit Court of Appeal reversed the 17th Judicial District Court of Lafourche Parish, Louisiana to hold that the contested deed conveyed the owner’s royalty interest only in a prior mineral lease and not the entire royalty interest in the land covered by the deed.

The suit arose out of a concursus action involving a dispute over royalty payments due under a mineral lease.  Three siblings, Junius Naquin, Carol Naquin Boudreaux and Dolores Naquin Durocher, had each inherited an undivided 1/3 interest in their father’s 1/16 interest in and to a 31-acre tract of land in Lafourche, Louisiana.  When they inherited the property, it was subject to a 1947 oil, gas and mineral lease with a 1/8 royalty.  Thus, each sibling had a 1/3 of 1/16 of 1/8 (or 1/3 of 0.0078125) royalty interest under the 1947 lease.

In August and October of 1993, while the 1947 lease was still in effect, Junius and Dolores conveyed to royalty interests to Carol.  Each deed contains the following language:

ALL OF SELLER'S right, title and interest consisting of an undivided one third in a .00781255 mineral royalty interest in and to the following described property

A certain tract or parcel of land containing 26.34 acres, being in the W/2 of the E/2 of Section 57, T 15 S, R 15 E; being bounded as follows: North by land of Dewey Adams now or formerly, East by Heirs of Joseph Adams now or formerly, South by Lyric Realty and Parking Company now or formerly, West by Roger heirs now or formerly

In 1998, after production had ceased, the lessees under the 1947 lease filed a release and surrender of the lease in the parish conveyance records.  Later that year, Carol entered into a new mineral lease with Alfred C. Glassell, Jr. for a portion of the property; she retained a 1/6 royalty interest.  But Glassell did not obtain a lease from the Dolores or Junius.  In 1999, a well was successfully drilled on the 1998 Lease.

In 2015, the lease holder, Legacy Trust Company N.A., and the well operator,  Glassell  Producing  Company,  Inc.,   instituted a concursus proceeding to determine proper payment of the royalty under the 1998 Lease.  The question presented was whether the 1993 deeds from Junius and Dolores to Carol conveyed only their royalty interest in the 1947 Lease or instead conveyed all of their royalty interest in the property.

Carol answered the petition and argued that the reference to a .00781255 mineral royalty interest in the deed was “merely a typographical error” and that her siblings intended to transfer all of their royalty interests in the property. 

The heirs of Dolores argued that the language of her deed was clear in that the transfer concerned only the .00781225 interest and that it was never the intent to transfer any future royalty interests.  Junius failed to timely answer the petition and was thereafter precluded from filing a claim in the matter.

Carol later filed a motion for summary judgment that her siblings transferred all of their royalty interest thereby creating a new mineral royalty interest under Louisiana Revised Statute 31:80.

Noting that neither deed referenced the 1947 Lease, the trial court granted Carol’s motion.  The court explained:

Prior to the acts of the cash sale, they [Junuis and Dolores] were receiving their one-third (1/3) interests. After the sale, they ceased receiving their interests. The sales accomplished what they intended to do, which was to relieve themselves of the financial royalties, so that they could qualify for whatever governmental qualification they were trying to attain. None of that is in dispute…

I don’t think that there's any dispute that these acts of sale transferred their interests—the interest of Junius II or the interest of Dolores Naquin to Carol. They’re not—those transfers of the interests were not somehow revived just because the Beckenstein lease [the 1947 Lease] went out of existence. Those interest were already sold.  They’re not revived.  The fact that they moved on to a new provider or payor, Glassell, doesn’t bring them back into this mineral interests.

Dolores’ heirs appealed to the Louisiana First Circuit Court of Appeal.  They argued that the district court erred in holding that her deed transferred all of her royalty interest in the land.  The pivotal distinction the heirs articulated was that the deed described “a .00781255 mineral royalty” and did not contain the language “all royalties.”  Additionally, they stressed that Carol had no authority to lease Dolores’ interests to Glassell, as Dolores never conveyed anything in the property other than a mineral royalty interest.

The First Circuit established the foundation of their opinion through the interpretation of several revised statutes and previous court opinions.  First, the court explained that under Louisiana Revised Statute 31:82, a mineral royalty may be created either by a mineral servitude owner or landowner who owns minerals.  Further, the court cited the seminal Louisiana Supreme Court case of Vincent v. Bullock, 192 La. 1, 187 So. 35 (1939), for the proposition that the nature of the royalty is grounded “upon the contract in which it appears … If a party to a contract sells royalty under an existent lease, he is selling a part or the whole of his rent due from the lease upon which his royalty depends.”

The First Circuit identified the issue whether the royalty interest conveyed to Carol created a new, real right in the property or instead was an appendage to the 1947 Lease and thus would cease to burden the property upon termination of the 1947 Lease. 

The First Circuit held that Dolores’ deeds lacked any language evidencing the intent to transfer all of their royalty interest in the land.  Furthermore, the Court found that “ALL OF SELLER’S right title and interest” simply modified reference to the “undivided on third in a .00781255 royalty in a royalty interest.”  Accordingly, because the conveyance was strictly applicable to the 1947 Lease, the royalty interest at issue in the deed ceased to burden Dolores’ interest in the land when the 1947 Lease terminated.  Thus, the First Circuit reversed the district court for erring as a matter of law “in finding that the 1992 deed conveyed a general royalty interest.”

What should you take away from Glassell?

First, it’s important to be accurate and precise when drafting and interpreting agreements.  Often times, disputes will arise long after a contract is executed and the parties may “remember” their intent differently than what it actually was at the time of signing—or one or more of the original parties may no longer be accessible.  Thus, parties are often left with only the language of the document to ascertain the executing parties’ intent.  Where the intent of the parties is not clear, a seemingly insignificant word or provision may make all the difference.

Second, identify these issues lurking in land and mineral title early on in the exploration and development of mineral resources.  Failure to do so often results in costly litigation to determine ownership of claims for unpaid royalties.  If the language in a deed seems ambiguous, or if you are charged with drafting specific provisions related to transfers of mineral or royalty interest, call Gordon Arata.

Ryan is an associate in the firm’s Lafayette office where he focuses his practice on oil and gas matters and complex litigation.  After graduating from Lafayette High School, Ryan attended the United States Military Academy at West Point where he earned his Bachelor of Science.  He then served as an Infantry Officer in the United States Army for over six years, including a year deployment to Iraq. During law school, Ryan interned with the Louisiana Department of Natural Resources.  He graduated Cum Laude from the Paul M. Hebert Law Center at Louisiana State University in 2017, receiving his Juris Doctor, Graduate Diploma in Comparative Law, and the Energy Law and Policy Certificate. He is admitted to practice law in Louisiana.

 

 

      

 

Created by: Martha Mills at 10/6/2017 9:45:39 AM | 0 comments. | 222 views.

Job:  Title Landman - Louisiana (contract)

Job Description:  See below

Availability:  Immediate

Project Duration:  2 months to 1 year

Please apply online:   https://www.ziprecruiter.com/job/d119848a?source=share-email

GOAL: As a Title Landman, you will be responsible for independently running full mineral and surface title, conducting online and / or courthouse research and preparing detailed lease packets. You will be responsible for the deliverables from start to finish, with as-needed support from the team leaders and written documents detailing project requirements.

As a Lease Acquisition Landman, you will be responsible for preparing the Oil, Gas and Mineral Lease, negotiations with the mineral owners and properly obtaining and witnessing the Oil, Gas and Mineral Leases.

ESSENTIAL FUNCTIONS: Must be able to:

-       Run title from the source deed to present on oil & gas properties located in Louisiana.

-       Understand and have knowledge of Louisiana Mineral Law and Mineral Servitudes.

-       Prepare lease packets for all properties researched. Include copies of all appropriate documents, completed runsheets, mineral and surface ownership reports, and interest flow charts if needed.

-       Research production information using public data websites and report on such information

-       Deliver accurate mineral and surface title reports and prepare lease packets based on detailed specifications

-       Follow written and verbal instructions

-       Complete tasks independently, accurately and timely

REQUIREMENTS:

· Minimum of  4 years of Louisiana experience running mineral and surface title, preparing title abstracts and preparation of title run sheets.

· Proficient in the use of Microsoft Excel, Word, and online collaboration and file sharing sites.

· Excellent research skills and attention to detail

· Self-motivated, strong ethics and ability to work with minimal supervision

· Active AAPL membership

Created by: Martha Mills at 10/4/2017 3:06:44 PM | 0 comments. | 187 views.

The Student Association of Professional Landmen had their first meeting on September 18th to discuss this semester’s upcoming events. We will be touring the property in Iberia Parish donated by Chevron on September 24th. Students will get a first – hand look at the wellheads, the gathering systems for those wells, and see the daily operations of a sugar cane farm.

We are also planning on a Volunteer Day at St. Josephs Diner before Thanksgiving to help prepare and serve meals to individuals and families experiencing poverty and homelessness in Acadiana. 

Our next meeting is on October 23rd and our Guest Speaker will be Mark Miller, from Merlin Oil and Gas. We are working on getting a continuing education point approved by AAPL and encourage LAPL members to attend.

 SAPL Officers 2017-18

From left to right: Cooper Aitken (Treasurer), Chloe Clifton (President), Ethan Istre (Vice President), and Bradley Harp (Secretary).

Created by: Martha Mills at 10/4/2017 11:51:24 AM | 0 comments. | 205 views.

Click on link below for the September 2017 Louisiana Legal Update

 

BIOGRAPHIES OF AUTHORS

 

Thomas G. Smart received his Bachelor’s of Science from Louisiana State University in 1979. He went on to Louisiana State University Law Center where he earned his Doctor of Jurisprudence in 1982. Tommy is licensed to practice in Louisiana and Texas. He is Vice President of the Mineral Law Section of the Louisiana State Bar Association, and a member of the Oil, Gas and Energy Resources Law Section of the Texas Bar Association. He is a frequent speaker at various legal, land and industry seminars, including the Louisiana Mineral Law Institute, and is a guest lecturer for the University of Louisiana at Lafayette PLRM Program.

 

Tommy is a shareholder at the Onebane Law Firm, where he has practiced in its oil and gas section since 1982. He has a general oil and gas transactional practice serving producers and others engaged in onshore and offshore operations, including title examination, the structuring, drafting and negotiation of complex agreements, the acquisition, sale and/or financing of oil and gas properties, due diligence for property acquisition, serving as local counsel for purchase and financing transactions, 3-D seismic permit and license agreement advice, and general advice.

 

Christopher J. Peyton received his Bachelor’s of Science in Business Administration studying Economics at the University of Louisiana at Lafayette in 2012.  He went on to the Paul M. Hebert Law Center at Louisiana State University, where he earned his Juris Doctor Degree and graduate degree in comparative law in 2016.

Christopher joined the Onebane Law Firm in 2016 as a part of the Oil and Gas Division.  He plans to develop a balanced practice including Oil and Gas transactional work as well as litigation.

Christopher grew up in Lafayette, Louisiana and graduated from St. Thomas More Catholic High School.  After high school, he played a season of soccer for Millsaps College before returning to Lafayette to finish his degree.  Christopher loves hunting, fishing, cooking and playing music with his band.  Additionally, he is a leader for the Confirmation Program at St. Alphonsus Catholic Church in Maurice.  He currently lives in Lafayette with his wife, Mary-Ellen.

 

 

 

Links:

LAPL Judicial Update
Created by: Martha Mills at 9/25/2017 12:43:16 PM | 0 comments. | 197 views.

Richard Hines

AAPL Director

 

Thanks all for the honor to represent LAPL on the AAPL Board as Director, I am humbled and appreciate the opportunity. I am your voice to the National Association, from concerns and issues to Thank you and congratulations; please let me know if you need anything. I will report quarterly on our meetings and things that affect your AAPL membership.

 

The September Quarterly meeting was held at Nemocolin Resort in Farmington, Pennsylvania, which is about 1 ½ hour south of Pittsburgh. Beautiful setting in the rolling hills near the West Virginia border, if you ever get up that way check out Nemocolin, lots for all members of family to do.

 

The AAPL Board voted to establish a disaster relief fund to aid AAPL members in a time-of-need.   AAPL seeded the fund with $500,000 and has committed an additional $500,000 in matching funds, so they will match your donations dollar-for-dollar up to that amount.  In addition to the AAPL matching funds, the AAPL Educational Foundation has agreed to match donations to the disaster relief fund dollar-for-dollar up to $250,000.00 dollars.  The Educational Foundation will administer this fund under their umbrella since it is a 501(C3) organization and all donations to the fund will be tax deductible.  You will receive a letter your tax records. 

 

If you would like to make a donation or have been affected by a natural disaster, please send your donation or information to:

 

          AAPL Educational Foundation Inc. – Disaster Relief

          800 Fournier St.

          Fort Worth, Texas 76102

 

The Disaster Relief Fund will only be available to AAPL members.  The fund is AAPL’s way of giving back to the members.

 

AAPL is establishing a Mentoring Program for Landmen, both Mentors and Mentee’s are needed. If you want to establish yourself in new areas or focus areas this is a great relationship tool. For those students and new landmen the mentoring program will allow you to ask questions and advice to seasoned landmen about land and employment related issues.

 

Proctors are needed for Test and re-take Test in all areas including Lafayette, LA; CPL certification is required.

 

Currently AAPL has 16,346 members, 23% are CPL’s. The Annual Meeting in Seattle was a great success with approximately 500 members attending. Summer NAPE was also a success, larger this year than last year with more sponsors, more booths and more attendees.

 

Copas has now been added to Contract Room along with the JOA agreements for 2015, 1989 and 1982, and confidentiality agreements. Contract room is the new Forms and Contract technology made available from AAPL.

 

Please stay tuned for an Independent Contractor Workshop coming up in late October or November to assist all independent landmen with IRS and Dept of Labor rules and regulations.

 

Thanks again for your support and confidence, I am here to help you should the need arise.

 

 

Created by: Martha Mills at 9/25/2017 9:40:54 AM | 0 comments. | 224 views.

Liability of Mortgagee-Bank for Faults

of its Mortgagor-Borrower

 

Patrick S. Ottinger

Ottinger Hebert, LLC

Adjunct Professor of Law, Paul M. Hebert Law Center,

Louisiana State University, Baton Rouge, Louisiana

 

                    The case we review this month is admittedly a bit different (certainly not “run of the mill”), but it is unquestionably one of the most significant and controversial decisions rendered by a Louisiana appellate court in many decades.  The case is “a bit different” in the sense that one working in the land business might only find a bit or snippet of relevant information in a few places in the case.  It is significant and controversial because it has the potential of resulting in a retreat in capital markets that loan money to E&P companies, and, consequen­tially, a further reduction in the number of wells drilled.  The case is not final, but is worthy of understanding at this stage of the proceeding.

 

                    In Gloria’s Ranch v. Tauren Exploration, Inc.,[1] the Second Circuit, Court of Appeal, affirmed a trial court’s decision that held a mortgagee liable, on a solidary basis,[2] with its lessee who had been cast for “over $23,000,000 in monetary awards and close to $1,000,000 in attorney fees.”[3]  The mineral lessee, Cubic Energy, Inc., was held liable for damages because it failed to timely release a mineral lease,[4] that the court held to have expired for failure to produce “in paying quantities.”[5]

 

                    Under article 207 of the Louisiana Mineral Code, if the “former owner of the . . . expired mineral [lease] fails to furnish the required act [evidencing the termination of the mineral lease] within thirty days of receipt of the demand . . ., he is liable to the person in whose favor the . . . lease has been . . . expired for all damages resulting therefrom and for a reasonable attorney’s fee incurred in bringing suit.”[6]

 

                    In this case, the mineral lease having been determined to have lapsed, the damages were based upon $18,000 per acre—the “going rate” in the Haynesville Shale in Northwest Louisiana at the time of lease termination—for “lost leasing opportunities.”[7]

 

                    Whatever can be said about the propriety of the court’s determina­tion as to lease termination, and the basis of damages “resulting from” the failure to timely release the expired lease, the most radical aspect of the decision is that the mortgagee-lender of the lessee was held liable along with the defaulting lessee.

 

                    The trial court based its decision principally on the fact that the mortgagee, under its mortgage, had been “assigned” the mineral lease, seem­ingly making the mortgagee a working interest owner for purposes of having a statutory duty to release an expired mineral lease that constituted its collateral.[8]  The mortgage clause on which the trial court relied was an assignment of proceeds, commonly found in mortgages encumbering the working interest in the leases.[9]

 

                    The good news is that the appellate court reversed that particular finding as a basis of liability.  The bad news is that the appellate court found that the various covenants in the recorded mortgage and unrecorded credit agree­ment—typical in “reserve based lending” transactions of this type—evidenced elements of “control” sufficient to impose liability on the mortgagee. 

 

                    Most important to the court seemed to be a mortgage provision that required the bank’s consent to the release by the lessee of an item of collateral, in this case, a mineral lease.  As to this common clause, the court noted, as follows:

 

Wells Fargo exercised control over Cubic’s oil and gas operations on the lease, and controlled Cubic’s ability to release the lease for failure to produce in paying quantities.  As such, Wells Fargo shared coex­tensive liability with Cubic to provide a recordable act evidencing the release of its interest in the lease, and we discern no manifest error in the trial court finding Wells Fargo solidarily liable with the remaining defendants.[10]

 

                    The court’s analysis, if it can be said to exist at all, is thin, to say the very least.  The decision does not articulate a rational basis on which the bank’s liability for monetary damages was imposed for the actions or inactions of its borrower.  No prior case has turned a lending party into essentially a surety or guarantor of its borrower.  The various covenants on which the court relied to find the elements of “control” are typical in virtually every credit facility in the E&P lending space, and are in fact encouraged by Federal regulations and lending guidelines.

 

                    The foreseeable adverse implications of this decision were correctly noted by Judge Bleich, sitting pro tempore, and joined by Chief Judge Brown, who “strongly agreed” with the dissenting reasons of Judge Bleich on rehearing denial.  As cogently recognized by Judge Bleich:

 

Devastating economic repercussions might possibly develop throughout the lending industry if the original opinion of this court is maintained.  Serious and harmful impact on the oil and gas industry is foreseeable.  At a minimum, confusion will develop inside the legal community, as well as to other advisors to the respective companies within those industries if the original pronouncement of this court is maintained.  Notwithstanding a generally well written and analyzed original opinion and the instructive language therein that this is a somewhat isolated fact setting, cautious managers and decision makers within those industries will incur a most chilling effect on their businesses.  All of these developments can be potentially harmful in a broader sense; e.g. the potential impact on the financial condition of this state resulting from lost revenue.[11]

 

                    If this radical decision is correct (and this author does not believe it to be), banks should be concerned that the same result might attach if the borrower-mineral lessee is found liable for a “legacy lawsuit,” damages for personal injury or death, failure of the operator to pay bills to contractors, or other fault or liability of the borrower-lessee. 

 

                    To be sure, even beyond the energy lending space, a commercial lender in a sophisticated transaction typically enjoys an array of covenants that might be characterized as elements of “control,” potentially leading to unantici­pated responsibility for a fault of its borrower.

 

                    Beyond the important topic of the liability of a bank for the faults of its borrower, other issues presented in the case include the issue of whether a court is authorized to award “treble” or only “double” the amount of royalties due as damages for nonpayment of royalties, finding a lessee solidarily liable for damages related to an interest which it did not own, and the amount of attorney’s fees awarded ($1,061,803).

 

                    Wells Fargo filed an application for rehearing that was denied on August 7, 2017, with two blistering dissents, as partially noted above.  The defendants (Wells Fargo, Cubic and Tauren) filed applications with the Louisiana Supreme Court on September 6, 2017, seeking review by that court.  The case is not final, and bears watching as it proceeds.[12] 

 

 



[1]         2017 WL 2391927 (La. App. Ct. 2d 2017).

[2]         Parties cast as being “solidarily liable” means that each party can be held liable for the whole of the monetary obligation, and the creditor is not required to pursue each party separately for its actual share.

[3]         Id. at *1.

[4]         Article 206 of the Louisiana Mineral Code.

[5]         Article 124 of the Louisiana Mineral Code.

[6]         Article 207 of the Louisiana Mineral Code.

[7]         See Patrick S. Ottinger, Louisiana Mineral Leases:  A Treatise, § 1-25(e) (Claitor’s Law Books & Publishing Division, Inc., 2016), for a discussion of volatility in bonus prices in the Haynesville Shale in Northwest Louisiana in the year 2008, documenting per acre bonus payments ranging from $150 (February 2008) to $25,000 (July and August 2008).

[8]         The absurdity of this finding would be that the mortgage would have been extinguished by “confusion” (Louisiana’s version of the doctrine of “merger”).

[9]         This typical mortgage provision read, thusly: 

          2.03 Assignment.  To further secure the full and punctual payment and performance of all present and future Indebtedness, up to the maximum amount outstanding at any time. . . . Mortgagor does hereby absolutely, irrevocably and unconditionally pledge, pawn, assign, transfer and assign to Mortgagee all monies which accrue after 7:00 a.m. Central Time . . . to Mortgagor’s interest in the Mineral Properties and all present and future rents therefrom . . . and all proceeds of the Hydrocarbons . . . and of the products obtained, produced or processed from or attributable to the Mineral Properties now or hereafter (which monies, rents and proceeds are referred herein as the “Proceeds of Runs”). Mortgagor hereby authorizes and directs all obligors of any Proceeds of Runs to pay and deliver to Mortgagee, upon request therefor by Mortgagee, all of the Proceeds of Runs . . . accruing to Mortgagor’s interest[.]

[10]        2017 WL 2391927 at *33.

[11]        Dissent in the Denial of Rehearing, p. 1.

[12]        In the interest of full disclosure, this author submitted an amicus curiae (“friend of the court”) brief with the Louisiana Supreme Court on behalf of the American Bankers Association and the Texas Bankers Association, in support of the writ application filed by Wells Fargo.

 

Pat Ottinger is a partner in Ottinger Hebert, L.L.C., where he has practiced oil and gas law since 1974.  He is a graduate of the Paul M. Hebert Law Center at Louisiana State University.  He is licensed to practice in Louisiana and Texas.  Since 1996, he has taught the course in Mineral Rights at the Paul M. Hebert Law Center.  He is the author of A Course Book on Louisiana Mineral Rights, utilized at three law schools in the state.  He published a comprehensive work on mineral leases, entitled Louisiana Mineral Leases:  A Treatise, available through claitors.com and amazon.com.  He is an experienced mediator and arbitrator, rendering such services through The Patterson Resolution Group.  He currently serves as Chair of the Advisory Council of the Mineral Law Institute at LSU.  He is a member of the Mineral Code Committee, Prescription Committee, Counter-letter Committee, Unsolicited Offers Committee, and Tax Sales Committee, and is Reporter for the Risk Fee Act Committee of the Louisiana State Law Institute.  He is a Past President of the Louisiana State Bar Association, and served as Chair of the Mineral Law Section of that association.  He served as City-Parish Attorney of Lafayette Consolidated Government from January 2004 to February 2011.

 

 

Created by: Martha Mills at 9/4/2017 8:02:24 PM | 0 comments. | 249 views.

American Association of Professional Landmen - Director News

Damon R. Weger, CPL

This year’s Annual Meeting in Seattle was well attended and by all accounts a success!  Planning for the Seattle meeting was a challenge in the wake of the low attendance numbers that came out of the 2016 Orlando meeting, but key members of AAPL felt that it could still be viable even with the challenges.  They worked with the host hotel and others to lower our costs allowing us to move forward with lower budgeted attendance numbers.  The Seattle meeting exceeded the budgeted attendance of 300 members with actual attendance at around 485 members and 118 spouses and other guests.  If you haven’t attended an AAPL Annual Meeting yet, I assure you it is worth your time and expense.  Many members bring their families along and use their time around the seminar and Expo as a vacation and to see the sights, since it is usually held in a great location.

AAPL management expected about a 10% decrease in membership over the past year, but it did not lose members and actually came out gaining a few.  AAPL is now sitting at about 16,700 members and is, along with the rest of us, anticipating a good year.

Summer NAPE:  We are looking good for a successful Summer NAPE - August 16-17.  If you have not made plans yet, now would be a good time to do so.  A new idea was tried out in Seattle for those looking for some social interaction and will also be tried out at NAPE in Houston this summer.  The idea is termed “Hot Play Happy Hour Socials” and will be held at local hot spots within walking distance of the George R. Brown Convention Center.  The socials are organized by active plays (e.g. Bakken, Permian, Scoop/Stack, Eagle Ford, Marcellus/Utica and Haynesville/Bossier) and are a fun and easy way to network with others working in your region of business.

If you are an AAPL member and eligible for the Certified Professional Landman (CPL) designation, but have not taken the CPL exam, please consider taking the short course and becoming certified.  It is our only land industry special designation and can only serve to help you along in your careers.  There are an increasing number of companies that request CPLs.

Also, for all of you who are working steadily and can afford it, please consider making a donation to the AAPL Educational Foundation to help further its mission of advancing the land community.  A planned, charitable donation to the AAPL Educational Foundation, Inc. is a gift that creates a lasting legacy within the oil and gas industry.  In addition, your gift will make a tremendous difference in the lives of landmen in furthering their continuing education and ultimately advancing their careers.

Finally, I would like to thank all LAPL members for your continued support and encouragement over the past four years.  I have considered it an honor and blessing to have served you as your AAPL Director and am now confidently passing the torch to the next Director.

As always, thank you all and may God Bless each of you.

Damon Weger, AAPL Director

Created by: Webmaster at 8/8/2017 7:57:59 AM | 0 comments. | 465 views.
Synergy Land Group, LLC is seeking experienced Title, Abstracting, Due Diligence, Leasing & Mineral Acquisition agents for contract positions locally and out of State. The ability to travel is a plus. Please submit a detail of your work experience, resume, references, and day rate requirements to info@synergylandgroup.net.
Created by: Webmaster at 7/7/2017 8:16:42 AM | 1 comments. | 478 views.

HPS Oil & Gas Properties, Inc. has immediate needs for experienced abstractors and title runners for North Louisiana projects.  Please email resume’ to gary@hps-og.com or jbivins@hps-og.com.

Created by: Martha Mills at 5/30/2017 8:52:36 AM | 0 comments. | 638 views.

LOUISIANA LEGAL UPDATE

By Andrea Tettleton

Mayhall Fondren Blaize

 

Smith vs Andrews, 2017 WL 603992

(La. App. 2 Cir. 2/15/17)

 

In the Smith case, the mineral servitude owners brought an action against the surface owners alleging that the surface owners were attempting to usurp their rights under the mineral servitude. The case discusses many legal issues, but we will focus on the arguments and decisions of the court regarding mineral servitude maintenance.

 

The defendants, Billy and Betty Ruth Andrews, owned several tracts of land located in Sections 23 and 33, Township 13 North, Range 14 West in DeSoto Parish. Ameritas Life Insurance Corporation owned a mineral servitude burdening part of the land, and the plaintiffs, the Smiths, owned a mineral servitude burdening some of the same property. Ameritas and the Smiths executed oil, gas and mineral leases in 1966 on the servitudes. Four wells were drilled, but only one well continued to produce, the Rogers No. 1 Well. This case concerns operations on and production from the Rogers No. 1 Well.

 

David Ogwyn, dba Quest Energies, LLC, acquired the 1966 Leases and was designated as operator of the Rogers Well. In 1994, the Smiths and Ameritas executed oil, gas and mineral leases in favor of Ogwyn. In 2001, Terry Dale Jordan was named operator of the wells, and Quest assigned the leases to Mr. Jordan. Sometime in 1990, Quest and Mr. Andrews entered into a verbal agreement whereby Mr. Andrews would serve as pumper on the Rogers Well, and would share in the net profits from the well. In May of 1997, Mr. Andrews reported that the Rogers Well was having difficulties and stopped pumping; however, evidence was presented that the well continued to use electricity through September of 1998. Further, on May 21, 1999, oil was sold from the storage tanks, and the Smiths and Ameritas received royalty payments as a result of said production and sale.

 

In 2007, the Smiths and Ameritas executed oil, gas and mineral leases in favor of Beusa. In 2008, Mr. Andrews presented evidence to the Louisiana Office of Conservation that production on the Rogers Well had stopped producing in 1997, that the servitude owners were aware of the lack of production, and the Office of Conversation amended the records to show that the well did not produce after 1997. Mr. Andrews then contacted Beusa and informed Beusa that all mineral rights will be united in the Andrews and to hold off on drilling any additional wells. Mr. Andrews then contacted the Smiths   and  Ameritas  demanding  acknowledgment that the mineral  servitudes had since terminated. The Smiths filed a lawsuit against the defendants, Quest, Mr.  Jordan  and  Mr.  Ogwyn  alleging that the defendants were attempting to usurp their mineral servitude. Mr. Andrew filed a reconventional demand asserting that the Rogers Well ceased producing in 1997; therefore, the mineral servitudes have terminated. After several summary judgments and writ applications, a bench trial was    held whereby the court determined that Mr. Andrews was not credible, had presented false evidence to the court regarding the lack of production from the Rogers Well and ruled in favor of the mineral servitude owners. Mr. Andrews appealed claiming numerous assignments of error, but we will focus on the arguments relating to prescription of the mineral servitude.

 

Termination Due to Nonuse

 

Mr. Andrews argued that even if his testimony is disregarded, there is sufficient evidence to prove that the mineral servitude terminated through nonuse. To contradict the defendants assertion, the plaintiffs presented evidence that that the well used electricity through September of 1998 to power the pump. Further in October of 1997, 69 barrels of oil were sold from the storage tank attached to the well, and testimony was presented that no oil was brought from any other place and stored in the tank. Also, an engineer testified that the only way to get the oil levels measured in the tank in May of 1999 was through production from the Rogers Well. The court agreed with the evidence presented by the plaintiffs that there was production from 1997 through 1999.

 

Intent to Act for Servitude Owner

 

Mr. Andrews also argued that the actions of Mr. Jordan, the operator of the well, were not carried out on behalf of the mineral servitude owners, because there was no legal relationship between them. Citing La. R.S. 31:42 and 31:43, the court found that argument to be meritless. La. R.S. 31:42 states that “except as provided in Articles 44 through 52, use of a mineral servitude must be by the owner of the servitude, his representative or employee, or some other person acting on his behalf.” La. R.S. 31:43 provides that “a person is acting on behalf of a servitude owner only when there is a legal relationship between him and the servitude owner…or when there is clear and convincing evidence that he intended to act for the servitude owners. Silence or inaction by the servitude owner will not suffice to establish that a person is acting on behalf of the servitude owner.” Mr. Andrews argued there was no legal relationship, because when the Smith lease was assigned to Mr. Jordan, it had terminated under the 90 day continuous operations clause due to lack of operations. While the court found this to be true, it held that the plaintiff provided clear and convincing evidence that Mr. Jordan intended to act of the servitude owners.

 

Mr. Jordan testified that he had made a deal with Ogwyn and Quest to take over the Rogers Well to get it pumping again.  He testified that he knew the wells were subject to a lease and that any production obtained  as a result of his efforts would benefit the royalty owners. He testified that he believed the assignment of the leases from Ogwyn gave him the right to produce the Rogers Well and that he was acting for his own benefit and for anyone else who had an interest in the lease. Further, the assignment clearly referenced that the leases were executed by mineral servitude owners. The court held that this evidence was sufficient to show that Mr. Jordan was aware that the Smiths, as mineral servitude owners, had rights to any production and that he was acting to make money for himself and the mineral owners.

 

Production Under R.S. 31:38

 

Mr. Andrew’s third argument was that production obtained by Mr. Jordan was insufficient to interrupt the running of prescription, as only a small amount was obtained, and it was never proven to be oil. The court rejected the argument by citing La. R.S. 31:29, 31:36 and 31:38. Prescription of nonuse running against a mineral servitude is interrupted by good faith operations for the discovery and production of minerals. To interrupt prescription, it is not necessary that minerals be produced in paying quantities. It is only necessary that minerals be produced in good faith with the intent of saving or otherwise using them for some beneficial purpose. Mr. Jordan utilized a bumping process to get the well producing oil again. He went to the well every other day, and each time the well was operational and was pumping oil. Mr. Jordan stated that the well produced between five to nine barrels of oil, but it was never enough to flow into the storage tank. The evidence showed that Mr. Jordan obtained production from the well from late 2001 through January 14, 2002. The court held that the defendants were incorrect in arguing that the amount of oil obtained was insufficient to satisfy the requirements of La. R.S. 31:38. The statute only requires that minerals actually be produced in good faith with the intent of saving them for a beneficial purpose. Mr. Jordan testified that he intended to achieve enough production to make money for himself and the mineral owners, and the court held that was sufficient to meet the requirements of La. R.S. 31:38.

 

Operations Under R.S. 31:39

 

Mr. Jordan testified that the pump was hung down, and he jarred it loose by causing the rods to strike the pump. The process is called “bumping” and took several days. The defendants argued that “bumping” the well to restore production was not a sufficient operation under La. R.S. 31:39 to interrupt prescription. The comment to La. R.S. 31:39 states that operations should be construed to include any good faith reworking operations or operations for recompletion of the well in another sand that involve use of equipment in the well bore. Gathering of geological information does not suffice. The defendant argued that “operations” require the use of equipment in the well bore to be classified as a “good faith” operation and that bumping the well was not enough. In its decision, the court utilized the Jardell v Hillin Oil Co., 485 So.2d 919 (La. 1986) which discussed reworking operations. The court in Jardell held that reworking is any process or procedure you may undertake to either regain, increase or create new production in a well or activity to restore or increase production from a well that has been drilled. For reworking to occur, it is necessary first that production has ceased or slowed down or has never been achieved. Reworking need not involved additional drilling. The court in Jardell made it clear that reworking operations encompass essential preparatory steps. The court in Jardell ultimately held that timely essential preparatory steps directly related to resolving the issue were part of reworking operations. The court held that Mr. Jordan’s actions in jarring the well in order to cause the pump to function constituted a sufficient good faith reworking operation to interrupt prescription under La. R.S. 31:39. The court affirmed the decision of the trial court and held that the mineral servitudes were still in effect.

 

Andrea K. Tettleton is a partner of Mayhall Fondren Blaize. Andrea represents major and independent oil companies in title examination, division order work and contract negotiation. She graduated magna cum laude from Texas Christian University with a Bachelor of Science in Psychology. She earned her Juris Doctorate cum laude from the Paul M. Hebert Law Center at Louisiana State University in 2009.

 

 

 

 

 

 

     

 

 

 

      

 

Created by: Martha Mills at 5/30/2017 8:48:09 AM | 0 comments. | 600 views.

FROM THE EXECUTIVE COMMITTEE

Annie Caillouet

 

We often hear people say, “May is such a busy month!”  With Mothers’ Day, high school & college graduations, the close of the school year and Memorial Day to wrap things up, we are often in a space of celebration and honor – looking to what’s next on life’s journey.  As we gleefully prepare for a relaxing summer vacation get-a-way, we also get to reflect on how well we have played the game for the first half of 2017.  Have we achieved the goals that we set for ourselves at the beginning of the year?  If so, how can we best use that momentum to continue propelling us forward and through the remainder of the year?  If we’ve fallen short of our goals, we get to assess the “how” and “why” so that we may re-direct our words and habits towards successful goal attainment.  We may also choose to forfeit those goals no longer conducive to our desires, while committing ourselves to new ones more fully aligned with our course trajectory.

 

Like so many who celebrate and eagerly await the next chapter, we revel during the month of May, knowing how we have persevered through many cold and rainy days to get to where we are right now.  So, with every blooming rosebush and those lingering scents of magnolia, jasmine and honeysuckle, we find ourselves thankful and satisfied in our achievement and success.  Our senses now awaken us to the possibilities of tomorrow, and we become re-energized and excited for what we will achieve before the year’s end.  Will we seek to learn a new skill or obtain a certification?  How will we be better leaders: in our homes; in our workplace; in our community?  What will motivate us to stay committed to our goals and dreams?  From whom will we learn something new and innovative in our careers?  How will we positively influence our peers and encourage them towards greatness?  Does “the next step” involve becoming a member of the LAPL Executive Committee??

 

If that last possibility perhaps piques your interest, we hope that you’ll consider becoming a part of the slate of candidates seeking to lead our LAPL organization in the upcoming cycle.  The following positions are up for election: 1st Vice President, 2nd Vice President, Treasurer, LAPL Director (2) and AAPL Director.  Ballots will be going out soon, so if you’re eager to be a part of the executive team, please contact Pete Van Der Veldt (337-281-6259) to submit your nomination.

 

And as we look to what’s next on our journey, “May” we always be kind, always be learning, and always be striving for greatness! in our careers?  How will we positively influence our peers and encourage them towards greatness?  Does “the next step” involve becoming a member of the LAPL Executive Committee??

 

If that last possibility perhaps piques your interest, we hope that you’ll consider becoming a part of the slate of candidates seeking to lead our LAPL organization in the upcoming cycle.  The following positions are up for election: 1st Vice President, 2nd Vice President, Treasurer, LAPL Director (2) and AAPL Director.  Ballots will be going out soon, so if you’re eager to be a part of the executive team, please contact Pete Van Der Veldt (337-988-9256) to submit your nomination.

 

And as we look to what’s next on our journey, “May” we always be kind, always be learning, and always be striving for greatness!

 

 

 

 

 

Created by: Martha Mills at 5/1/2017 1:46:21 PM | 0 comments. | 666 views.

Seeking Experienced Landmen

Penterra Services, LLC is seeking experienced Title, Abstracting, Leasing & Mineral Acquisition agents for contract positions for ongoing projects in Oklahoma, Texas, Louisiana, West Virginia, Ohio, Pennsylvania, North Dakota, Colorado and Kansas.  Please submit a detail of your work experience, resume, references, and day rate requirements to info@penterraservices.com.  Website: www.penterraservices.com

 

Created by: Martha Mills at 4/27/2017 10:02:45 AM | 0 comments. | 591 views.

April 2017 Legal Update

by

Gabriel R. Ackal, Jr.

Randazzo Giglio & Bailey LLC

 

Kennedy v. Saheid, 51,044 (La.App. 2nd Cir. 11/16/2016); 209 So.3d 985

 

               Roy Gish agreed to sell his 1,096–acre tract of land, complete with about 500 oil and gas wells, to Mohamed Saheid.  Saheid faxed Gish an offer (“the Offer”) to buy the property for $4 million “for 100% ownership,” with $200,000 down and the remainder to be owner-financed over five years.  On October 9, 2004, Saheid and Gish signed a one-page agreement (“the Agreement”) with respect to “Real Estate transaction involving 1,096 acres, including all oil and gas leases ….”  The Agreement included the following provision:

 

Other:  SELLER to give a best effort to deliver to BUYER the remaining 12.5% GISH family oil and gas lease holding.

 

               On November 2, 2004, the parties executed an Act of Credit Sale and Assignment of Oil, Gas and Mineral Leases, Rights to Pipelines, Wells and Gathering Systems, and Equipment Leases (“the Act of Credit Sale”).  The Act of Credit Sale recited that Gish and a certain trust conveyed “ALL THAT CERTAIN LOT OR PARCEL OF GROUND,” with all rights, ways, servitudes and component parts to Saheid. The instrument also included a special provision (“Paragraph K”) that stated:

 

K. The Trust and Purchaser acknowledge and agree that the Trust has represented to the Purchaser that the Trust is the sole and only owner of an undivided 87.5% interest in and to the leases assigned herein. Should that representation be incorrect, and should any claim be successfully asserted against the interest conveyed by the Trust to the Purchaser, then, and in that event, the purchase price attributable to said leases shall be reduced by the sum of [$400,000], without the necessity of the modification of this agreement and/or the execution of any other documents, provided, however, that any such claim be asserted on or before November 30, 2009.

 

Gish contended that he was the sole owner of the land and minerals, and that he had established the trust for tax purposes; he stated that the existence of the trust did not affect the 12.5% retention.  He went on to argue that the parties intended for Gish to retain a 12.5% mineral interest in the property.  At the trial court level, the parties stipulated that Saheid paid the 12.5% mineral royalty associated with this interest to Gish for almost four years.  

 

               When certain points of dispute arose, the parties executed an instrument entitled “Contract” on April 24, 2008, in which Saheid agreed to delete Paragraph K in its entirety from the Act of Credit Sale.  The Contract also included the following provision (“Paragraph 2(d)”):

 

2. Buyer shall: * * *

d) Waive and relinquish all rights to reduce the purchase price based on any claim that the percentage interest in any land owners['] royalty interest or leases assigned to buyer were less than what has been represented by seller * * *. Buyer consents to and acknowledges that seller has and shall continue to withhold a 6.25% royalty for the Kennedy family and a 6.25% royalty to Ruth Sheppard et al, on the 1,096 acres.

 

Additionally, in February 2009, Gish and Saheid executed an Act of Correction which corrected property descriptions, but made no mention of the 12.5% reservation. 

 

               At trial, Saheid argued that because there was no express reservation in the instruments executed in connection with the sale, Gish was not entitled to the 12.5% interest.  Gish, on the other hand, argued that the instruments reflected the intent to sell only an 87.5% interest.  Allegedly, Saheid could not get financing for the purchase, so the parties settled on owner-financing with retention of a 12.5% mineral interest.  However, Saheid claimed his original intention was to purchase all mineral rights with no reservation by Gish.  Saheid argued that because the Correction was silent as to the 12.5% reservation, his original intent was clear.  

 

               In its ruling, the trial court cited the language in the Agreement (which referred to a 12.5% mineral interest “remaining”), the Act of Credit Sale (“an undivided 87.5% interest in and to the leases assigned herein”), and the Contract (“seller has and shall continue to withhold” two 6.25% shares).  The court noted that the parties conceded that the Contract was “inartfully drafted” and that the “mineral interests were not reserved as they should have been.”  Because of the ambiguity, the court accepted parol evidence.  The court found that the parol evidence, along with the repeated mention of “12.5%” and “87.5%” in the instruments, and Saheid’s compliance with the 12.5% retention for several years, supported Gish’s argument that the intent of the parties was to convey only an 87.5% interest.

 

               On appeal, Saheid argued that the trial court erred in allowing parol evidence because both the Act of Credit Sale and the Contract were clear and explicit, and lacked any language reserving a mineral interest.  He went on to state that the four years of royalty payments were made in error.  While the appellate court noted that the instruments lacked the standard phraseology of “grant, bargain, sell, convey,” it also noted that in the Contract, Saheid consented to and acknowledged the fact that Gish would withhold a 12.5% interest.  Also, although it agreed with Saheid's position that the documents do not make an express reservation of mineral rights, the court held that the recurrent reference to a 12.5% interest—be it “remaining,” “withheld,” or inferred, along with Saheid paying Gish the mineral royalty for nearly four years, strongly suggested that the parties intended to make the reservation; therefore, Gish was entitled to the 12.5% mineral interest.

 

Guy v. Empress, L.L.C., 50,404 (La.App. 2nd Cir. 4/8/2016); 193 So.3d 177

 

               On March 23, 2004, plaintiffs and Long Petroleum, L.L.C. (“Long”) entered into an oil, gas and mineral lease which contained a habendum clause, a continuous drilling operations clause, a traditional Pugh clause, a “horizontal” Pugh clause, and an assignment clause.  The continuous drilling operations clause provided:

 

If within ninety (90) days prior to the end of the primary term, Lessee should complete or abandon a well on the lands described above or on land pooled therewith, or if production previously secured should cease from any cause, this lease shall continue in force and effect to ninety (90) days from such completion or abandonment or cessation of production.  If at the expiration of the primary term or at the expiration of the ninety (90) day period for in the preceding sentence, oil, gas, sulphur of other mineral is not being produced on said land or on land pooled therewith, but Lessee is then engaged in operations for drilling, completion or reworking thereof, or operations to achieve or restore production, or if production previously secured should cease from any cause after the expiration of the primary term, this lease shall remain in force so long thereafter as Lessee either (a) is engaged in operations for drilling, completion or reworking, or operations to achieve or restore production, with no cessation between operations or between such cessation of production and additional operations of more than ninety (90) consecutive day, or (b) is producing oil, gas, sulphur or other mineral from the said land hereunder or from land pooled therewith (emphasis added).

 

               The horizontal Pugh clause provided:

 

It is understood and agreed that this lease shall terminate at the expiration of the primary term as to all depths 100 feet below the deepest depth in any well drilled on the leased premises or on lands pooled therewith, subject however to the continuous drilling provisions contained in this lease.

 

               The lease contained a primary term of three (3) years with an option to extend for an additional two (2) years.  The option to extend was exercised and the primary term was extended to March 23, 2009.  On August 1, 2008, Long assigned its rights, title and interest in the lease to Empress, L.L.C. (“Empress”) except Long reserved “all rights, title and interest in strata and depths from the surface to the base of the Cotton Valley formation.”

 

               On January 16, 2009, a well (the “Edwards Well”) was spudded on lands unitized with the leased premises.  This well was completed in June 2009 at 8,200 feet in the Hosston formation, and the well produced through December 31, 2011.  Thereafter, within ninety (90) days of completion of the Edwards Well, Chesapeake spud a well (the “Yarbrough Well”) on September 21, 2009 on lands unitized with the leased premises with the purpose of producing from the Haynesville Zone.  The Yarbrough Well was completed on June 30, 2010 and it was producing as of the date of this decision (April 8, 2016). 

 

               The plaintiffs believed that the lease had expired as to depths below to base of the Hosston formation on March 23, 2009 and, on March 5, 2012, requested that Long, Empress, Chesapeake and any other working interest owners execute a partial release as to “all depths 100 feet below the deepest depth in the Edwards No. 1 Well in accordance with [the provisions of the] Lease.”  On March 15, 2012, defendants released the lease as to “all strata 100 [feet] below the stratigraphic equivalent of the Haynesville Shale formation” pursuant to the horizontal Pugh clause contained in the lease. 

 

               On August 14, 2012, plaintiffs filed suit, alleging that the lease had terminated as to all depths below the base of the Cotton Valley formation. The plaintiffs argued that the lease was horizontally divided as a result of the assignment of the lease as to depths below the base of the Cotton Valley formation and that as of March 23, 2009 (the expiration of the primary term) operations had not been conducted on depths below the base of the Cotton Valley formation sufficient to maintain the lease as to those deeper depths.  On March 25, 2014, plaintiffs filed a motion for summary judgment; the defendants filed an opposition and a cross-motion.  The district court granted the defendants’ motion for summary judgment, ruling that “although the Edwards Well ceased producing, the production from the Yarbrough Well continues to hold the entire lease.”

 

               The Second Circuit affirmed the district court’s ruling, holding that the assignment of the lease as to depths below the base of the Cotton Valley formation from Long to Empress did not constitute a division of the lease; thus, operations and/or production from depths either above or below the Cotton Valley formation was sufficient to maintain the lea, at least until 90 days after completion of the Yarbrough Well.  The court further held that because there was no evidence of record to indicate that there was a lapse in activity for any 90-day period, and because the Yarbrough Well was completed on June 30, 2010 without a gap of ninety (90) days since drilling operations commenced, the lease was maintained beyond the extended primary term by the “continuous drilling operation.”  Specifically, the court stated that the “defendants were engaged in operations for drilling, completion or reworking, or [in] operations to achieve or restore production, with no cessation between operations or between such cessation of production and additional operations of more than ninety (90) consecutive days.”

 

 

Gabriel R. Ackal, Jr. is an associate with the law firm of Randazzo Giglio & Bailey LLC.  Before practicing law, Gabe worked as an Independent Petroleum Landman in Louisiana and Texas.  As a landman, Gabe has experience abstracting title and managing lease acquisition plays.  His legal practice is primarily focused on Louisiana and Texas mineral and energy law, including rendering drill site and division order title opinions, as well as counseling on transactional matters, and providing nuts and bolts operational advice.  Gabe is licensed to practice law in Louisiana (2010) and Texas (2013).

 

 

Created by: Martha Mills at 4/27/2017 9:58:19 AM | 0 comments. | 449 views.

FROM THE PRESIDENT

Pete Van Der Veldt

 

Water’s Boiling & Balls Will Be Soaring!

 

Well it’s here, and we could not have made it possible without the generosity of our Sponsors.  I wish to first thank and recognize the following for stepping up:

 

Beta Land Services, LLC

Schoeffler Energy Group, Inc.

Mack Energy Co.

Scorpion Land Services, LLC

Petroquest Energy, LLC

Liskow & Lewis

Penterra Services, LLC

Onebane Law Firm

Bullen & Plauche, LLC

Orbit Energy, Inc.

Planet Operating, LLC

C.H. Fenstermaker & Associates

SAPL

Sterling Automotive

iLandman

Synergy Land Group, LLC

MKM & Associates, Inc.

Oil Land Services, Inc.

Mark A. O’Neal & Associates, Inc.

Trinity Energy, LLC

Gateway Land Services, LLC

Milling Benson Woodward, LLP

Audubon Energy, LLC

Hyland Abstracting, LLC

Stone Energy Corporation

 

Thank you for your support and making these events possible! 

 

I also want to thank everyone on the Executive Committee for their assistance and hard work in moving these events forward.  Most are not aware, but due to the decline in membership and the industry, the LAPL was unable to make scholarships available for the ULL Petroleum Land & Resource Management students this Spring.  On my watch, and the first time I’m aware of.  Therefore, any “meat left on the bone” from the events this week will ensure scholarships will be available next time around no matter what the future holds. So, get online, buy your tickets and attend the boil! Let’s make these events a success!

 

There have been flurries of activity in recent months and I hope everyone is overwhelmed with work. Hopefully, this is a sign of more things to come. That said, we continue to have openings this year for Safety Meetings and I thank S. Paul Provenza for filling the void this past March meeting at the Tap Room.  I know everyone who attended had a great time.  Also, we will soon be moving forward with elections and this is your opportunity to serve and better our organization.  Be looking for the announcements and throw your hat in the ring.  I extend my sincerest thanks for those who have served, and continue to serve and support the LAPL.

 

Created by: Martha Mills at 3/14/2017 7:39:11 PM | 0 comments. | 523 views.

Mardi Gras is over and the Lenten season has begun, which reminds us all of the sacrifices we should be making in our daily lives. Energy prices seem be dropping again due to another supply glut, which is an uneasy feeling for all in our industry. 

As energy prices fluctuate we are often asked to hurry up and wait as projects die and then become a priority once again.  This back and forth struggle seems to test our knowledge and fortitude on a daily basis which can frustrate even the most experienced.

During these periods of back and forth we must be ready to be our best in all situations, enhancing the current project when times are hectic and bettering ourselves in the sluggish times.  This means taking advantage of learning opportunities while we have idle time waiting for the next opening.  The knowledge we search for comes in many forms and is readily available to those who seek it, especially here in Lafayette.

First, don’t forget the details and remember the mistakes you have made and the lessons you have learned from those mistakes.  Don’t forget your landowners, clients and peers and make sure you keep a good relationship with your past associates because you will talk to them again.  Keep good notes and always write down contact names and phone numbers. Maintain superior records, complete files and preserve vetted documents for future use.

Secondly, get involved, sponsor a new member in LAPL, go to safety meetings, run for an EC position and most of all attend educational events.  The LAPL and AAPL offer many events that allow you to learn more about your industry while providing you with continuing education credits and a venue to network.  Register for a PLRM class at ULL if you have not already done so, they are unique to our area and will validate your career choice. 

Additionally, some might have to extend their range and travel out of their comfort area.  This means travel away from home and family which adds extra stress, therefore, please be aware, stay safe and take the time to explore other regional associations and what they have to offer.  Explore new opportunities in these other regions in which to utilize your talent and knowledge, like road/utility right of way and cellular tower site acquisition or even alterative energy employment.

Lastly, we are in the era of more for less, saving money, being innovative through technology and of course time management.  Use the resources offered to you to become a well rounded professional. I’m sure all of you have heard the saying:  low cost, quick or accuracy, pick two.  It is said that you cannot be swift, inexpensive and precise all at the same time but I think in these trying times we will be tasked to accomplish all three in order to compete.

 

 

 

Created by: Martha Mills at 3/13/2017 7:33:10 AM | 0 comments. | 1400 views.

LOUISIANA LEGAL UPDATE

Brett S. Venn

Jones Walker LLP

The Louisiana Court of Appeal, Second Circuit, recently issued opinions analyzing whether the unintended omission of a mineral rights reservations from an act transferring ownership of immovable property can be corrected by a notary’s affidavit of correction, and whether the running of prescription of nonuse on a mineral servitude can be interrupted by the good faith operations of an operator with no legal relationship to the servitude owners.  The decisions are discussed below. 

 

Notarial Affidavit Cannot Correct Omission of Mineral Rights Reservation from Act of Exchange.

 

In Petro-Chem Operating Company, Inc. v. Flat River Farms, L.L.C., No. 51,212 (La. App. 2 Cir. 3/1/17), 2017 WL 786868, the issues considered by the Court included whether the omission of a mineral rights reservation from an act transferring immovable property interests can be corrected by a notary’s affidavit of correction pursuant to La. R.S. 35:2.1.   The statute allows for correction of “clerical errors” in acts transferring mineral rights by an affidavit of correction executed by the notary who notarized the execution of the act. The Court concluded that omissions of mineral rights reservation from acts of exchange are not “clerical errors” and cannot be corrected by notarial affidavits.      

 

Relevant Facts:

 

In 2004, Larry Lott sold Raymond J. Lasseigne a 63-acre tract of land (“Tract A”) within a mineral servitude in Bossier Parish, Louisiana.  Later, a defect in the 2004 act of sale from Lott to Lasseigne was discovered.  In order to correct the defect, Lott and Lasseigne exchanged Tract A with another piece of property (“Tract B”) owned by Lott in the mineral servitude.  This was accomplished by an act of exchange recorded in the conveyance records of Bossier Parish on December 17, 2007.

 

As originally recorded in the conveyance records, there was no reservation of mineral rights in the act of exchange between Lott and Lasseigne.  Therefore, as a result of the exchange, Lott acquired Tract A with both its surface and mineral rights, and Lasseigne acquired Tract B with both its surface and mineral rights.

 

About three months later, on March 26, 2008, an affidavit of correction executed by the notary who witnessed the act of exchange was recorded in the conveyance records.  The affidavit stated that the intent of Lott and Lasseigne in executing the act of exchange was for Lott to reserve the mineral rights to Tract B.

 

Petro-Chem Operating Company, Inc., subsequently filed a concursus action seeking to resolve competing ownership interests in minerals for land on which it was operating.  In the lawsuit,  Lasseigne filed a motion for summary judgment seeking a declaration that the affidavit of correction is invalid and requesting that it be stricken from the conveyance records.  The district court agreed that the act of exchange was invalid and the omission of the mineral reservation could not be corrected a notarial affidavit of correction.

 

 

Relevant Statute and Civil and Mineral Code Articles:

 

Louisiana R.S. 35:2.1 (entitled “Affidavit of Corrections”) states, in pertinent part:

 

A. (1) A clerical error in a notarial act affecting movable or immovable property or any other rights, corporeal or incorporeal, may be corrected by an act of correction executed by any of the following:

 

(a)        The person who was the notary or one of the notaries before whom the act was passed.

 

(b)       The notary who actually prepared the act containing the error.

 

 

The Mineral Code, at La. R.S. 31:18, provides that a mineral right is an incorporeal immovable.

 

Article 1839 of the Civil Code governs transfers of immovable property and states in key part: “A transfer of immovable property must be made by authentic act or by act under private signature.” 

 

Article 1833 of the Civil Code defines an “authentic act” as a writing executed before a notary public or other officer authorized to perform that function, in the presence of two witnesses, and signed by each party who executed it, by each witness, and by each notary public before whom it was executed. 

 

Court’s Analysis:

 

The Court explained that the act of exchange between Lott and Lasseigne was completed as an authentic act before a notary and signed by both parties and two witnesses. 

 

The Court reasoned that it is clear from the language of La. R.S. 35:2.1 that a notarial affidavit of correction may correct only a “clerical error.”  By statutory definition, the Court explained, a clear error is an error in writing or copying a document. 

 

A reservation of mineral rights is a substantive change, the Court continued, because the addition of a reservation of mineral rights would change the effect of the authentic act in regard to the real rights held by Lott and Lasseigne.  Because reservation of real rights is a substantive issue which implicates the thought process and intention of the parties to the transaction, a notarial affidavit of correction cannot be used to correct the omission of a mineral rights reservation in a sale of land.

 

For these reasons, the Court held that the district court properly ruled that the notary’s affidavit of correction could not correct the omission of the mineral reservation from the act of exchange. 

 

 

 

Summary of Decision:

In Louisiana, a reservation of mineral rights incorrectly omitted from an act transferring ownership of land cannot be corrected by an affidavit of correction executed by the notary who   notarized the execution of the act of transfer.

 

Good Faith Operations by an Operator with No Legal Relationship to Servitude Owners Can Interrupt the Running of Prescription of Nonuse Against the Servitude.

 

In Smith v. Andrews, No. 51,186 (La. App. 2 Cir. 2/15/17), 2017 WL 603992, the Court considered issues including whether mineral servitude prescribed due to a lack of good faith operations by on the servitude for a period ten years.  The Court of Appeal held that good faith operations are sufficient to interrupt prescription even where the operations are by an operator with no legal relationship to the servitude owners.

 

Relevant Facts:

B.J. and Betty Ruth Andrews own several tracts of land in DeSoto Parish, Louisiana.  The Andrews’ land is burdened with one mineral servitude held by Ameritas Life Insurance Corporation (“Ameritas”), and a second mineral servitude held by heirs of Sara R. Smith (the “Smith Heirs”). 

 

Leases on the servitudes were originally executed by Ameritas’ predecessor and Sara R. Smith in 1966.  Four producing wells were drilled on the leases. 

 

Ultimately, the leases were assigned to Terry Dale Jordan effective November 1, 2001.  However, the leases had lapsed prior to the assignment.  Thus, Jordan did not have a valid lease with Ameritas or the Smith Heirs.  No other legal relationship (such as agency or co-ownership) existed between Jordan and the servitude owners.  Also on November 1, 2001, the operator of the wells was changed to Jordan.

 

In the lawsuit, the Andrews claimed that the mineral servitudes of the Smith Heirs and Ameritas had prescribed due to ten years of nonuse between 1997 and 2007.  The Andrews claimed to be the owners of the mineral rights.  

 

During the trial, the testimony of Jordan established that, in 2001 and 2002, Jordan attempted to regain production from the last producing well.  He went to the well every day for a few days and then started going every other day. Each time he went to the site, the well was operational and was pumping oil. He opened a bleeder valve and observed oil coming out of the well. One day, he saw the well pumping and obtained a sample of pure oil in an old bottle.  Jordan testified that he able to bottom bump the well and get it pumping oil again, although the well did not operate for very long.  Further, electric company records show that the well used electricity from November 2001 through January 14, 2002.

 

Jordan also testified that he understood that the wells were subject to a lease and that any production obtained would benefit the Smith Heirs and Ameritas. 

 

The district court concluded that Jordan was acting on behalf of the Smith Heirs and Ameritas in his attempts to regain production from the well, and his use of the servitude was for their benefit as servitude owners.  As a result, the servitudes had not prescribed and the Andrews did not own the mineral rights. 

 

Relevant Mineral Code Articles:

 

Article 27 of the Mineral Code provides that a mineral servitude is extinguished by prescription for nonuse if not exercised for a period of ten years.  La. R.S. 31:27(1). 

 

Article 29 of the Mineral Code, La. R.S. 31:29, defines provides that the prescription of nonuse running against a servitude is interrupted by “good faith operations for the discovery and production of minerals,” as defined by the article.

 

Article 42 of the Mineral Code, La. R.S. 31:42, states:

 

Except as provided in Articles 44 through 52, use of a mineral servitude must be by the owner of the servitude, his representative or employee, or some other person acting on his behalf.

 

Article 43 of the Mineral Code, La. R.S. 31:43, provides:

 

A person is acting on behalf of the servitude owner only when there is a legal relationship between him and the servitude owner, such as co-ownership or agency, or when there is clear and convincing evidence that he intended to act for the servitude owner. Silence or inaction by the servitude owner will not suffice to establish that a person is acting on behalf of the servitude owner.

 

Court’s Analysis:

 

The Andrews argued that Jordan's actions from 2001 through 2002 were not sufficient to interrupt prescription on the servitudes because he had no legal relationship with the servitude owners and he did not act with the intent to benefit them. 

 

The Court reasoned that La. R.S. 31:43 provides that a person may act on behalf of the servitude owner to interrupt prescription when there is clear and convincing evidence that he intended to act for the servitude owner. Based upon the record, the Court found that such a showing was made.

 

The Court found that Jordan was aware that both the Smith Heirs and Ameritas had rights to any production that might be obtained from the well and that he was acting to make money for himself and them.  Jordan's unrebutted testimony was clear that any actions he took were done with the intent to act not only for himself, but also for the servitude owners. 

 

The Court concluded that Jordan’s attempts to regain production from the well were on behalf of the Smith Heirs and Ameritas and for their benefit.

 

The Court held that the district court properly determined Jordan’s activities in 2001 and 2002 interrupted the running of prescription of nonuse against the servitudes despite Jordan not having a legal relationship with the Smith Heirs and Ameritas.

 

Summary of Decision:

The running of prescription of nonuse on a mineral servitude can be interrupted by good faith operations for the discovery and production of minerals conducted by a person with no legal relationship to the servitude owners. 

 

Brett Venn is a partner in Jones Walker LLP’s Business & Commercial Litigation Practice Group and practices from the firm's New Orleans office.  His practice focuses on a variety of business and commercial disputes.  He has recently represented companies in disputes under the Louisiana Oil Well Lien Act, in construction lien and contract disputes, and in litigation arising out of the Bayou Corne sinkhole in Assumption Parish, Louisiana. He also has experience in investigations involving allegations of commercial kickbacks and conflicts of interest.  He was named a “Rising Star” in the area of Business Litigation in the 2016 and 2017 editions of Louisiana Super Lawyers.

Brett S. Venn
Jones Walker LLP
D: 504.582.8116   F: 504.589.8116
bvenn@joneswalker.com

201 St. Charles Ave, Ste 5100
New Orleans, LA 70170
T: 504.582.8000
www.joneswalker.com

Created by: Martha Mills at 2/23/2017 5:34:03 PM | 0 comments. | 554 views.
BE A SPONSOR!
WE NEED YOUR HELP!

LAPL ANNUAL CRAWFISH BOIL & GOLF TOURNAMENT TO BE HELD IN CONJUNCTION WITH THE SPRING EDUCATIONAL SEMINAR
 
This Sponsorship opportunity will give you exposure at all three events!
The LAPL has confirmed dates for our Annual Crawfish boil to be held on Thursday, April 27 at Acadian Village, and the Spring Educational Seminar will be held the same day at the Petroleum Club.  The annual Golf Tournament is scheduled for the following day, Friday, April 28, at Farm D'Allie.  Your organization will be recognized at all three of these events.  These events are to be held together in conjunction with Festival International and provide an extra reason for those out of town to make the trip. 
 
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Given our decrease in membership, downturn in the industry, and most folks working abroad, we need to know your level of commitment from the sponsorships identified below before we pull the trigger.  Time being of the essence, your confirmation is needed by FridayMarch 3, so we can confirm whether it will be economic for the LAPL to move forward with these events as planned. If we don't move forward with the events as identified above you're under no commitment and will be notified. 
 
Available Sponsorships:
 
Level   Amount You'll receive for your Sponsorship
Champion Sponsor $2500.00 8 Golfers + 10 Crawfish Tickets + 2 Seminar Seats
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1 Crawfish Ticket
Please submit your commitments by Friday, March 3 to:
 
Buster LeBlanc (Golf) at 337-945-5888; ojl1383@louisiana.edu
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Thanks everyone for all you do for the LAPL, and please help us make these events a grand success!
 
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Created by: Martha Mills at 2/10/2017 9:24:53 AM | 0 comments. | 587 views.