Mr. and Mrs. Red conveyed to Mr. Blue “all our right, title and undivided 1/2 of an undivided 1/6 of all the oil, gas and other minerals in, on or under” the entire subject property with a warranty
Due to several Royalty Deeds that were executed fifteen years prior to the Mineral Deed, the 1/6 interest owned by Mr. and Mrs. Red was burdened proportionally by both a 13/16 (“fraction of”) non-participating royalty interest and a 1/24 (“fractional”) non-participating royalty interest
The Mineral Deed contains no reservations or exceptions from the conveyance for the prior outstanding non-participating royalty interests (which I suspect was due to Mr. and Mrs. Red not knowing about them)
Questions:
Should the rules established under Duhig v. Peavy-Moore Lumber Co. and Selman v. Bristow apply to this Mineral Deed such that Mr. and Mrs. Red’s entire 1/32 interest in lease royalties (1/6 * [1 - 13/16] = 3/96 = 1/32) conveyed to Mr. Blue (leaving Mr. and Mrs. Red with zero interest in lease royalties)?
Or is there some fact (or court case) I’m overlooking that causes the burden of the outstanding non-participating royalty interests to be shared proportionally between Mr. and Mrs. Red’s retained 1/12 interest and Mr. Blue’s acquired 1/12 interest (such that Mr. and Mrs. Red keep 1/64 and Mr. Blue receives 1/64 of the interest in lease royalties)?
The ownership report provided to me to by my landman only covered executive rights so I’m trying to piece the royalties together myself (which has proven extremely difficult thus far). Happy to provide additional background information if needed. Thank y’all for y’all’s help.
As stated, there was also a 1/24 NPRI which would have wiped out Red’s interest already being larger than 1/32. Would need to see the full chain with dates to know who is credited. Unless it was 1/24 of 1/6, then Red would still have 1/32 - (1/24 * 1/6). Either way Red conveys ART to 1/2 of 1/6 so everything they had if anything would go to Blue. If it said 1/2 of our RT and undivided minerals, then question two would apply.
I didn’t bother redacting it since I figured it’d make things too confusing. Wendell Forse is the predecessor in interest to Mr. and Mrs. Red and my read is he received a 1/32 (“fraction of”) interest in lease royalties with the 1/6 interest he purchased from W.W. Moore, Jr. (1/6 * [1 - 13/16] = 3/96 = 1/32).
I’m not factoring the 1/24 (“fractional”) non-participating royalty interest burden into the 1/32 since my understanding is “fractional” NPRIs come “off the top” (e.g. a 1/4 lease royalty would be reduced by the “fractional” 1/24 NPRI down to a 5/24 net lease royalty which would then be shared 100% by the owners of the interests in the “fraction of” lease royalty). And my read is that the burden of the 1/24 (“fractional”) NPRI applies proportionally to everyone (vs. 100% to the grantor’s retained 1/6) due to how the “subject to” section is worded.
I’m a layperson so it’s quite possible I’m getting everything confused however. Thanks again.
Thanks for the additional document, that clears things up. You are correct in that the fractional NPRI reduces the royalty in the lease owned by the mineral owners, but the 13/16 is going to be burdening in the same way ie 7/48 (48/48 - 1/24 - 13/16) royalty was conveyed with the minerals. See the language in the deed ‘the remaining royalty, their ownership also being non-participating.’ So Forse picked up a 1/6 * 7/48 interest. Was there another deed before the redacted deed? Red must have split Forse’s interest with someone, and then conveyed ART to 1/2 * 1/6 * 7/48.
Thank you again for the help. Here’s the bridge from Wendell Forse to Mr. and Mrs. Red:
W.W. Moore, Jr. conveyed a 1/6 mineral interest burdened by a 1/24 fixed NPRI and a 13/16 floating NPRI to Wendell Forse
Wendell Forse conveyed to Landowner #1: “…all of said 1/6th interest… subject to all the terms and conditions as set out in the deed from W.W. Moore, Jr. to Wendell Forse, recorded in Deed Book 72, page 387 of Newton County, Texas, to which reference is made for all purposes.”
Landowner #1 conveyed to Landowner #2 all of the surface with the following exception: “It is expressly agreed and understood that the said <Landowner #1> do not own all the oil, gas and other minerals on, in and under the above described tract of land, but such mineral interest as Grantors herein own is expressly conveyed by this instrument.”
Landowner #2 conveyed to Landowner #3 all of the surface with the following exception: “Subject, however, to the following: 1. Rights to an undivided 5/6ths interest in and to all oil, gas and mineral rights in captioned property, owned by predecessors in title.”
Landowner #3 conveyed to Landowner #4 all of the surface with the following exception: “Being the same land conveyed to <Landowner #3> by deed from <Landowner #2>, dated , and recorded in the Office of the County Clerk of Newton County, Texas; subject, however, to the exception contained in said deed.”
Landowner #4 conveyed to Mr. and Mrs. Red all of the surface with the following exception: “SAVE AND EXCEPT, however, from the above described tract an undivided 5/6th interest in and to all of the oil, gas and other minerals heretofore excepted and reserved by grantors predecessors in title, together with the rights of ingress and egress for the purpose of removing the same therefrom.”
Mr. and Mrs. Red conveyed to Landowner #5 all of the surface with the following exception and reservation: “SAVE AND EXCEPT, however, from the above described tract an undivided 5/6th interest in and to all of the oil, gas and other minerals heretofore excepted and reserved by grantors predecessors in title, together with the rights of ingress and egress for the purpose of removing the same therefrom.” “the GRANTORS herein reserve and except from this conveyance all oil, gas and other minerals of every kind and character (metallic and/or non-metallic), owned by them, in, on, and under said premises with the perpetual right of ingress and egress at any time and from time to time, to explore, drill, mine and in every way to operate for, and to remove same, when and in any manner by whatsoever means GRANTORS may choose, including roads, trains, railroads, pipe lines, and telegraph and telephone lines.”
Mr. and Mrs. Red conveyed to Mr. Blue “all our right, title and undivided ½ of 1/6 of all the oil, gas and other minerals in, on or under the following described tract or parcel” without exception or reservation
I think Mr. and Mrs. Red thought they owned a full 1/6 of the mineral rights and were conveying a full ½ of 1/6 of the mineral rights to Mr. Blue when they executed the Mineral Deed.
Hmm, I would say they meant to convey everything with Mr. being 1/2 and Mrs. being the other, but I’m not afraid to stand corrected. Cue attorneys from every nook and cranny to opine.
I’d love that answer (i.e. since I purchased all of Mr. Blue’s interest from his two heirs recently), but Mr. and Mrs. Red (and their two heirs) have executed several oil and gas leases since the Mineral Deed so I’d be surprised if that were the case.
The ownership report I received had Mr. and Mrs. Red’s heirs and I both having a 1/12 mineral interest with a note from the landman opining that the burden of the outstanding NPRIs applied proportionally to each 1/12 interest. I’m hoping, instead, that Mr. Blue received 100% of the interest in royalties owned by Mr. and Mrs. Red (whatever it might’ve been since it was clearly less than ½ of 1/6), but it’s been a mess unwinding all this. I think the landman’s note may’ve been based on his understanding of the ruling in Wenske v. Ealy, but it doesn’t seem like the fact pattern in that case fits since it dealt with an outstanding NPRI that was clearly excepted in a deed (whereas the Mineral Deed had no exceptions or reservations). Happy to go back to the landman for further clarification, but I wanted to run everything by y’all (i.e. for free) first.
