An ancestor owned oil and gas rights – how do I get title to them?

We are seeing a lot of situations where our clients have learned that they own mineral rights that were earlier reserved by an ancestor.  They typically learn of this through an oil and gas company who has researched title on a parcel they are interested in leasing (or sometimes on a parcel that has already been drilled).  The company discloses who reserved the minerals and describes its efforts in establishing a family tree for that person.
Based upon the company’s research (using Probate records, Ancestry.com and other tools) it determines those persons presently living who would have ownership of the minerals and the percentage of the minerals each such person owns.  Oil and gas leases are then prepared for those persons …

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Dormant Minerals – Searching for Heirs

A previous article discusses more generally the notice requirements in Ohio’s Dormant Minerals Act
Who must be notified?
Before declaring a mineral interest as abandoned, a surface owner must first provide adequate notice to the “mineral holder.”  Many times, the mineral holder is deceased and has been for many years.   If that’s true, the surface owner must notify the holder’s heirs.
Who are a holder’s heirs?
It depends on the structure of the holder’s family.  It could be a surviving spouse, the holder’s children, grandchildren, great-grandchildren, or even aunts and uncles depending largely on how long ago the mineral holder died.
How do I locate a mineral holder’s heirs?
Unless you personally know the mineral holder (or their family), chances are you don’t know the …

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Oil and Gas Protection Leases – A Good Idea?

What’s a Protection Lease?
Suppose there is an issue with the title to minerals under a 100 acre farm and it is clear that either Party A owns those minerals or Party B owns them.  Suppose further that this farm sits in the middle of a planned unit for a horizontal Utica shale well.  What can an oil and gas producer do to fix that situation?  More frequently, producers are using ‘protection’ leases to address this situation.
In the above example, the producer would obtain leases from both Party A and Party B, paying only a nominal amount upon signing of the lease.  A side agreement is also signed where all agree that any production royalties due on the acreage will be …

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Unresolved Issues with Ohio’s Dormant Mineral Statute

Some of the issues discussed below have been clarified by Ohio courts.  Read more here. 
Background
Over the past few years, Ohio’s courts, at all levels, have dealt with a number of issues pertaining to O.R.C. 5301.56, often referred to as Ohio’s dormant mineral statute. At this point in time, several such issues are about to be ruled upon by Ohio’s Supreme Court. One issue of importance, however, has received little mention in court rulings to date. That issue concerns the notice requirements by a landowner seeking to recapture dormant minerals. More particularly, what are those requirements?
Notice Requirements
(E) Before a mineral interest becomes vested under division (B) of this section in the owner of the surface of the lands subject to …

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Oil and Gas Lease Ownership Challenges

Below are the materials the National Business Institute asked me to prepare for a seminar on Oil and Gas law.
LEASE / OWNERSHIP CHALLENGES, DISPUTES AND NEGOTIATIONS
A.  Recent case law and litigation trends
Though Ohio was one of the earliest states to have commercial production of oil and gas, surprisingly, it has not developed much of a body of case law in the field of oil and gas.  Frequently, the laws of other states must be reviewed to find cases on point – Texas, Oklahoma and Louisiana seem to have the most published opinions concerning oil and gas.
The advent of the Utica shale has changed things.  Numerous oil and gas cases have been filed in Ohio over the last several years and …

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Forced Pooling – Trends, Benefits and Detriments

Recently I wrote about Ohio’s mechanisms for forcing unleased mineral owners into a drilling unit.  Oil and gas producers have increasingly started to rely on these mechanisms to drill  horizontal wells to the Utica / Point Pleasant shale formation in eastern Ohio.  These same laws require transparency for these procedures, and as part of a public records request, I obtained several recent orders approving the forced unitization of unleased mineral owners in various parts of Ohio.   I was hoping that I could gain some insight on the issue of whether a landowner is better off signing a proposed lease or being forced into a drilling unit under the applicable statute.  Having reviewed these unitization orders, I offer the following observations:
Producers …

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Forced Pooling

Before drilling an oil and gas well in the state of Ohio, a driller must first apply for a permit from the Ohio Department of Natural Resources (ODNR).  Part of the driller’s permit application includes a map indicating the leased lands the driller wants to include in the drilling unit.  Several considerations dictate the size this drilling unit can be.  The underlying oil and gas lease, for example, might specify a maximum unit size.  Ohio law also speaks to minimum well unit sizes. Generally speaking, the deeper the well, the larger the unit size must be.   A vertical well drilled deeper than 4,000 feet requires 40 acres of unitized land.  Horizontal wells, like those drilled in the Utica shale have …

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Implied Covenant to Reasonably Develop – Geologic Formations

In a previous post I wrote about certain terms that are implied in all mineral leases: the covenant to reasonably develop.  In that article I described how a judge might cancel a certain area of an oil and gas lease if the producer hadn’t reasonably developed all of it.
This same idea can be applied to unused geological formations.  Let’s assume an energy company (the “lessee”) takes a lease for a 200 acre farm.  Let’s also assume that the lessee successfully drills five 40-acre wells on the acreage thirty years ago.  These five wells are all relatively shallow, and seek to produce oil and gas from the Clinton Sandstone geological formation.  Now, it should be pretty clear that the lessee has …

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Implied Covenant to Reasonably Develop – Acreage

Many of my clients come to me hoping that I can help break their oil and gas lease.  As a general proposition, oil and gas leases are hard to terminate.  Given that they are drafted by oil and gas companies, it should not be surprising that they often favor the oil and gas companies themselves.  Every landowner’s situation will be different, but as long as the lessee to the oil and gas lease (the producer) pays a royalty to the lessor (the landowner), the lease is nearly bullet-proof.
However, there might be other ways to terminate an oil and gas lease even if the lessee is paying a royalty to the landowner.  One particular method to cancel an oil and gas …

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Class Action Landowner Royalty Litigation

Twice I have successfully represented large groups of landowners regarding the proper calculation of landowner royalties.  The first case was Charton v. MB Operating Co. Inc., (1990 CV 110417), which involved about two thousand landowners in Tuscarawas County, Ohio; the matter was filed as a class action.  In that case, it was alleged that MB Operating was deducting about 25% of landowner’s natural gas royalties to cover its costs of transporting and marketing same.  Because MB Operating used a number of different lease forms, and because those forms did not have consistent language which addressed how royalties were to be calculated, there was a concern that the class members claims might not meet the commonality requirement under class action rules.  …

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