Calculating mineral acre-interest

Ownership and Title
1

Could someone help me with the calculation of the following mineral interest:

An owner has a warranty deed for the surface of the S/2 of the NW/4 plus a 1/2 interest in the minerals (40 acre mineral interest). Plus, the owner has a mineral deed for an additional 20 acre mineral interest with the description reading in the SW/4 NW/4 and SE/4 NW/4. (60 acre interest total)

With a warranty deed the owner sells the surface of the SW/4 NW/4, reserving a 20 acre mineral interest with the description reading only the SW/4 NW/4.

What is the owner’s mineral interest in the SW/4 NW/4?

What is the owner’s mineral interest in the S/2 NW/4?

2

20 acres in the SW/4 NW/4 (the above transaction granted 10 acres) and 30 in the SE/4 NW/4 for a total of 50 in S/2 NW/4.

Assuming the deeds were correctly written and the grantor of the previous source deeds had the acreage to grant to the current owner.

3

Judy Phillips said:

Rick, Thanks for answering my question. The ownership is not in question only the amount.

The most important number to me is what the owner had in the SW/4 NW/4. Eventually, that is the description I have an interest in. I own other minerals but I have never had a situation like this.

This is what I know and what I understand:

The first deed was a warranty deed for 80 acres and 1/2 the minerals in the S/2 of the NW/4. It is easy to see the owner has 40 acres in the S/2 NW/4.

Then the second deed is a mineral deed for an additional 20 acre mineral interest with the description reading SW/4 NW/4 and the SE/4 NW/4. I understand the owner has 60 acres in the S/2 NW/4. I am not sure what he owns in the SW/4 NW/4 at this point and it doesn’t really matter as he is only going to retain 20 acres in the SW/4 NW/4. I was just curious.

Then the owner sells the surface of the SW/4 NW/4 with a warranty deed, reserving a 20 acre mineral interest. So he has 20 mineral acres to sell in the SW/4 NW/4.

New question: The owner starts selling off his minerals. Most of the time he sells a 2.5 acre interest from the SW/4 NW/4 HOWEVER, there is one transaction where the owner sells a 5 acre interest in the S/2 NW/4. Would part of the 5 acre interest be subtracted from the 20 acre interest he has in the SW/4 NW/4?

Sorry to bring up a new question. Please answer at your leisure if you wish to answer at all.

Judy

4

Let me go at this at a different angle as to the original question. After the second deed to the owner, he owns 30 nma in the SW/4 NW/4 and 30 nma in the SE/4 NW/4.

You said: With a warranty deed the owner sells the surface of the SW/4 NW/4, reserving a 20 acre mineral interest with the description reading only the SW/4 NW/4.

As the conveyance was a warranty deed for the SW/4 NW/4, under the Duhig doctrine, only 10 acres was reserved.

Key elements - a) warranty deed, b) reservation of 20 acres. Therefore, under Duhig and a similar Oklahoma case, unless there is something more in the second deed, the grantee was warranted title to the surface and 20 acres. Therefore, the reservation was only 10 acres in the SW/4 NW/4.

The Duhig doctrine has been known to bite a lot of people especially when the deeds were prepared by someone not knowledgeable of the law.

5

As I understand Duhig doctrine it involves confusion of conveying a percentage of minerals that the grantor does not own, having previously conveyed a percentage that reduced the amount an owner is attempting to convey. My owner specifically reserved 20 acres and not a percentage.

There is language in the deed that says the reservation of the 20 acre interest is a part of the consideration of the conveyance. I will have to go back to courthouse to read the language again.

I should have mentioned that all 3 of the deeds I have referenced were in the 1920’s, long before Duhig had been heard.

I appreciate all the information. This is my second response to your last communication because it appeared that I managed to delete my first. So if you get two responses, I apologize.

Thanks again, J

6

Judy,

I flat missed the call on that one. I focused on the numbers instead of the actual conveyance instrument.

The Duhig rule places the priority on the granted interest not the reserved interest. I believe it would have had to include a reservation of any prior mineral reservations or acknowledgment or the prior reservation to prevent the situation. At least that is my understanding of the way it applies in Oklahoma. The state in which this is located could impact some of the details.

The actual additional language you mention could also have some impact.

7

State is Oklahoma. My confusion is the description on the deeds of the locations of the minerals.

First 40 acre mineral acres are described as located in the S/2 NW/4 (Can the mineral interest be divided between the SW/4 NW/4 quarter and the SE/4 NW/4 (each getting half) or is the mineral interest only located as a whole in the S/2?)

Second 20 mineral acres being described as located in the SW/4 NW/4 and SE/4 NW/4 (same question as above)

Third his deed selling the surface of the SW/4 NW/4, retaining 20 acre mineral interest: Does owner retain 20 acres from the SW/4 NW/4 and still own the 30 acres in the SE/4 NW/4? That seems like such a simple answer, but with his original minerals described as located in the S/2 NW/4 and his second mineral interest described as located in the SW/2 NW/4 and SE/4 NW/4 I don’t know.

I appreciate all your input. I will follow up when I get a more definitive answer from a landman or an attorney.

I need coffee. Have a nice day.

J

8

First 40 acre mineral acres are described as located in the S/2 NW/4 (Can the mineral interest be divided between the SW/4 NW/4 quarter and the SE/4 NW/4 (each getting half or is the mineral interest only located as a whole in the S/2?) Yes. 20 acres is in SW NW and 20 acres in SE NW.

Second 20 mineral acres being described as located in the SW/4 NW/4 and SE/4 NW/4 (same question as above) Same answer 10 and 10.

Third his deed selling the surface of the SW/4 NW/4, retaining 20 acre mineral interest: Does owner retain 20 acres from the SW/4 NW/4 and still own the 30 acres in the SE/4 NW/4? That seems like such a simple answer, but with his original minerals described as located in the S/2 NW/4 and his second mineral interest described as located in the SW/2 NW/4 and SE/4 NW/4 I don’t know. Answer- yes, except I believe it is 10 acres in the SW NW and 30 acres in SE NW. The minerals can be subdivided. Sometimes it is easier to think of the owner as owning 2/4 or 1/2, rather than 20 NMA.

9

My first post was due to my lack of knowledge regarding the subdividing of minerals.

If the owner can subdivide his 60 acres into 30 in the SW/4 NW/4 and 30 in the SE/4 NW/4, I now calculate the following:

After he sells the SW/4 NW/4, he owns the 20 acres he reserved.

He might have conveyed 10 of his 30 from the SW/NW/4 when he reserved only 20.

Or if he didn’t convey 10, he would still own 40 in the SE/4 NW/4.

Either way that adds up to the 60 acres he owned in the S/2 NW/4 at the time he sold the SW/4 NW/4.

By your calculation, he owns 10 acres in the SW/4 NW/4 and 30 acres in the SE/4 NW/4 so where are the other 20 acres? Do you think he conveyed them and why.

Thanks again for your help.

10

Rick and Tim:

I read up on the Duhig rule and I now understand how one could apply it to this situation. The grantee might have thought the grantor owned 40 and was granting 20 and reserving 20. As I read Duhig, weight is given to the grantee, but some weight is also given to the intent of the deed.

I will go read the language in the deed again. Also, I will look for transactions that occurred after the warranty deed, to see if any might indicate what the grantor and grantee believed they owned.

It is interesting to see how our owner got his interests in the S/2 NW/4.

He obtained his interest for the surface of the S/2 NW/4 and his 40 acres of minerals from our grantee’s husband and a wife, but not our grantee. I assume it is his first wife.

Our owner obtained his additional 20 acres of minerals from the grantee’s husband and our grantee, now listed as the wife on the mineral deed.

She is buying in her name alone the surface of the SW/4 NW/4. It is probable that she knew he owned 60 acres of minerals and most assuredly knew he owned at least 20.

Thanks again for all the input. I will post other information I find that might interest you.

11

FYI: I spoke with an experienced landman. In his opinion, the owner retained a 20 mineral acre interest in the SW/4 NW/4, granted to the grantee a 10 acre interest in the SW/4 NW/4, retained a 30 acre interest in the SE/4 NW/4.

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With all due respect, I believe he is incorrect.

13

Judy,

Be very careful in taking this as “fact” based on a “conversation” with the landman based on the information you gave him. I’m just assuming that your conversation was similar to the information you gave in this thread. I’m also assuming that your outcome will be favorable if the situation is determined to agree with the landman.

We will generally have a tendency to look at something based on the way we “want” it to be resolved. We will focus so much on the points to strengthen our case that we tend to overlook other factors. Seldom do we give them the time and consideration we do the points that favor our preferred outcome. Did you bring up Duhig with the Landman and ask how it applies in this case?

I’d be interested in seeing the actual language on the deed. Can you post a copy?

Also the title opinion of a qualified attorney will usually trump that of a Landman! :slight_smile:

14

That’s how oil and gas attorneys make a living. God bless them.

I am curious why you think the landman was wrong. Is it based on the Duhig rule? I can’t see how Duhig would apply as these 1920 transactions were long before the Duhig ruling. However, in applying Duhig, intent would be considered. The deed says he is retaining 20 acres of minerals.

In the records the owner continued to sell minerals out of the SW/4 NW/4 in excess of 15 acres in the SW/4 NW/4, an indication that he thought he owned more than 10.

I will re-read the deed to see if I have missed something in the language.

Thanks for writing back.

15

Rick: I appreciate your good advice. We should all strive to be objective.

The landman’s opinion that the owner retained 20 acres does not help or hurt me as the leasing company offering to lease accepts that the owner retained 20 acres. That was never an issue. When our conversation veered off in that direction, I found it very interesting. I read up on Duhig and can see how it might be applied.

I did bring up Duhig but he discounted it in this case. I have given you my reasons I don’t think it applies.

Going back to my original post. I did not mean to raise the question of how many he was retaining. My confusion was how many acres were allotted to each in the SW/4 NW/4 and SW/4 NW/4. I now understand how to do that.

Our discussion veered off in a different direction which I found interesting. I still plan to go read the language in the warranty deed. If there is anything I think you will find interesting, I will post it.

16

Duhig is a rule of law interpreting warranty deeds. It wasn’t prospective only. The warranty deed on its face shows that the grantee is receiving the surface and 20 acres. It doesn’t say, reserve 20 acres and anything else that was previously reserved (I assume). Therefore, the grantee can expect that the grantor warranted title to 20 acres.

17

Tim,

I understand your position. And because of your and Rick’s posts, I understand how Duhig is applied to a warranty deed. I appreciate that you and Rick have been thorough in explaining Duhig to me. I don’t think Duhig would be applied to this 1920’s warranty deed as Duhig ruling did not exist at that time. Also, as I understand Duhig, it is subject to interpretation, giving some weight to the intent of the parties.

In addition, there were never any question raised by anyone with standing as to the intent of the grantor to retain 20 acres of minerals in SW/4 NW/4 as evidenced by further transactions

J

18

Judy, it appears you’ve made your mind up. But, I will point out that the two deeds in Duhig case which was brought in 1938 were executed in 1907 and 1912.

19

Judy Phillips said:

That’s how oil and gas attorneys make a living. God bless them

Some are much better than others so you have to be selective in retaining one. There is a return on investment and I’ve seen far more cases in which someone wished they had conferred with an attorney prior to entering an agreement than the other way around.

Judy Phillips said:

The landman’s opinion that the owner retained 20 acres does not help or hurt me as the leasing company offering to lease accepts that the owner retained 20 acres. That was never an issue.

Just because the leasing company is willing to lease based on that does not mean that is what the division order will reflect when that well starts producing. I’ve seen incompetence from the landmen in the original ownership reports. I’ve also seen where an issue has come up and they went ahead and “leased 10 acres” because that is what the owner insisted they owned. In reality they only owned 6.667 acres, but it was within budget so they signed them up. When it came time to pay for production, all they were paid on was the 5 acres. IMO, there is more than one reason there is a Mother Hubbard clause in those lease agreements.

Judy Phillips said:

I understand your position. And because of your and Rick’s posts, I understand how Duhig is applied to a warranty deed. I appreciate that you and Rick have been thorough in explaining Duhig to me. I don’t think Duhig would be applied to this 1920’s warranty deed as Duhig ruling did not exist at that time. Also, as I understand Duhig, it is subject to interpretation, giving some weight to the intent of the parties.

Discounting Duhig because of it being a 1920 transaction is incorrect. Tim Dowd is the subject matter expert, but I think you are confusing statutory law with case law. Duhig is case law, and as he pointed out, determines the way warranty deeds are interpreted.

I don’t think you fully understand Duhig because the situation is almost identical to the original case Duhig vs Peavy-Moor Lumber Company in Texas.

Read through this article pages 3-7.

http://law.und.edu/_files/powerpoint/law-review/2013oct24-ndlr-energy-sym-gaver.pdf

Here is another:

http://www.energyandthelaw.com/2014/01/07/the-duhig-rule-state-by-state/

Also note at the bottom the credit to George Snell’s book Oil and Gas Law, Nationwide Comparison of Laws on Leasing. Awesome book and I’ve been to a seminar where George discussed many of the topics and it was my first initiation on this subject. I highly recommend it as a reference for oil and gas law. It is available at the AAPL bookstore indexed by state or topic.

https://aapl.ps.membersuite.com/onlinestorefront/BrowseMerchandise.aspx

You might also want to look at page one for the contributions credit for Oklahoma while you are there.

http://www.landman.org/docs/educational-material-(pdf)/page1.pdf

Best of luck to you. I hope you find additional language in the deed acknowledging the prior reservation.

20

While we are on the Duhig subject:

Is there any case law in Oklahoma concerning its impact on Quit Claim deeds? It has always been my understanding that by nature of the instrument, it does not apply.