OIL & GAS TITLES
WORKSHOP
Ownership Reports & Title Opinions
Prepared & Present by:
Jon F. Love, CPL
American Association of
Professional Landmen
Copyright ©2012
By Jon F. Love
July 4, 2012
American Association of Professional Landmen
4100 Fossil Creek Boulevard
Fort Worth, Texas 76137-2791
Telephone: 817.847.7700
Disclaimer
The information presented in this book and during the workshop is intended solely as a general
overview of selected issues commonly associated with land matters encountered by land professionals.
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energy industry, will or will not do business.
American Association of Professional Landmen
4100 Fossil Creek Boulevard
Fort Worth, Texas 76137-2791
Telephone: 817.847.7700
WWW.Landman.org
Table of Contents
Courthouse Records & Ownership Reports .................................................................................................. 5
Client Standards ........................................................................................................................................ 5
Instructions to Brokers, Field Landmen and Attorneys ............................................................................ 5
Instructions to Brokers or Field Landmen ................................................................................................. 5
Title Opinions—Form and Substance ......................................................................................................... 11
Drilling Title Opinions.............................................................................................................................. 11
Division Order Title Opinions .................................................................................................................. 18
Mistakes Often Made In Division Order Title Opinions .............................................................................. 21
TITLE CURATIVE:.......................................................................................................................................... 26
Affidavit of Possession ............................................................................................................................ 26
Assignments without “Tabulation” information..................................................................................... 26
Curative Materials................................................................................................................................... 26
Death....................................................................................................................................................... 26
Delay Rentals........................................................................................................................................... 26
Delinquent Real Estate Taxes.................................................................................................................. 27
Dissolution of a Corporation ................................................................................................................... 27
Divorce Decrees ...................................................................................................................................... 27
Execution, Defects in Same by Corporation or Trust .............................................................................. 27
HBP (Held by Production) Leases ............................................................................................................ 27
Liens ........................................................................................................................................................ 28
Objections ................................................................................................................................................... 29
Encumbrances:........................................................................................................................................ 29
Unreleased Oil and Gas Leases: .............................................................................................................. 29
Mortgages: .............................................................................................................................................. 30
Easements: .............................................................................................................................................. 31
Comments and Requirements .................................................................................................................... 31
1. Affidavit of Possession ........................................................................................................................ 32
2. Affidavit of Identity ............................................................................................................................. 32
3. Parties to Be Pooled Comment: .......................................................................................................... 32
4. Strangers to Title ................................................................................................................................. 32
5. Decedents' Estates .............................................................................................................................. 33
6. Easements: .......................................................................................................................................... 34
7. Existing Pooling Orders ....................................................................................................................... 34
8. Old Wells ............................................................................................................................................. 34
9. Pooling ................................................................................................................................................ 34
10. Expired But Unreleased Oil and Gas Leases...................................................................................... 35
11. Involuntary Unitization ..................................................................................................................... 35
12. Liens, Litigation, and Judgments ....................................................................................................... 36
13. A Violation of the Duhig Rule: ........................................................................................................... 36
Exhibits ........................................................................................................................................................ 37
Exhibit #1 – Legal Description and Certification Date............................................................................. 37
Exhibit #2 - Consolidated Working Interest Ownership.......................................................................... 38
Exhibit #3- Surface Ownership ................................................................................................................ 39
Exhibit #4- Mineral & Royalty Ownership ............................................................................................... 40
Exhibit #5 – Combined Oil & Gas Leasehold ........................................................................................... 44
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Exhibit #6 – Leases & Assignments ......................................................................................................... 45
Exhibit #7 – Assignment of Leases .......................................................................................................... 46
Exhibit #8 - Possession ............................................................................................................................ 47
Exhibit #9 - Encumbrances ...................................................................................................................... 48
Exhibit #10 - Comments .......................................................................................................................... 50
Exhibit #11 – Objections and Requirements........................................................................................... 51
Exhibit #12 – DOTO Unit Summary ......................................................................................................... 56
Exhibit #13 - Production Revenue Standards Act ................................................................................... 58
Exhibit #14 - NADOA Article .................................................................................................................... 60
Exhibit #15 –Split Stream Division of Interest.............................................................................................
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What we will cover today:
• Ownership Reports – The reasons for them;
the forces driving them; their essential
content; a suggested form for them; and
tools to assist the Field Landman in
assembling them in co-operation with, and to
assist Lease Buyers, In-house Landmen,
Attorneys and perhaps even Division Order
Analysts.
• Drilling Title Opinions – The reasons for
them; the influence the In-house Landman
should have in determining their form and
content; the essential elements of them, and
a few of the mistakes you may find in them.
• Division Order Title Opinions –The reasons
for them; the influence the In-house
Landman should have in determining their
form and content; the impact of their
content on Division Order Analysts; and
mistakes commonly made in them.
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Ownership Reports:
Please jot down what you would expect to be the essential elements of an
Ownership Report:
(and no fair peeking if a Field Landman is seated on either side of you).
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
_____________________________________________________________________________________
p.s. The Number of Blank lines above may or may not be the number required to
describe the essential elements (i.e. divisions) of an Ownership Report.
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Now let’s take a look on the PowerPoint screens at what most Lease Brokers consider
to be the essential elements and contents of an Ownership Report. (It is courteously
suggested you jot these elements or division of the “O.R.” down on the blanks above
[even if you have to erase some of your initial answers] and, next to each, a one-line
description of what they probably should contain.)
1. The Plat
2. The Recap
3. Tract-by-Tract Ownership with The Number of the Tract (e.g. “17-2”), taken from
the Plat entered on a Worskhseet Tab, A set of “Headers” at the top of this
worksheet listing the Legal Description of that Tract (e.g. “NW/4 NE/4 and W/2
NE/4 NW/4”: “60 net mineral acres”); in a single vertical Column, the Names,
and Addresses (dated) of each of , Tract #, NMAs
4.
Courthouse Records & Ownership Reports
(From Manual Notes or Digital Images)
Client Standards
Instructions to Brokers, Field Landmen and Attorneys
In order to standardize Ownership Reports and Drilling and Division Order Title Opinions, World Oil, Inc. (“the
client”) requires the use of certain procedures, formats, and guidelines as described below. All Field Landmen,
Brokers, and Attorneys providing World Oil, Inc. with digital images of land records, Ownership Reports, and Title
Opinions, all needed to determine surface, mineral and leasehold ownership, will submit these in World Oil’s
preferred format.
World Oil, Inc. requires the following procedures, especially as they relate to the capture, communication and
transmission of information and documents, to be conducted, first and principally, electronically by E-Mail with
attachments, and then supported or replaced by overnight mailing of hard copies, only as made necessary by
these procedures. This includes DVD’s of recorded instruments.
Instructions to Brokers or Field Landmen
World Oil, Inc. will determine:


The Primary and Secondary Target Formations to be drilled and tested in the new well,
The size and configuration of the Spacing Unit (640, 320 160, 80, 40, or 10 acres) which has been or is to
be created to cover these formations,
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


Any existing wells presently producing from the Primary Formation listed for the new well, and
Any Spacing, Location Exception, Increased Density or Pooling Orders covering any of the existing wells
presently producing from that Primary Formation
Any AMI Agreements, JOA ‘s, Unit Declarations or other documentation affecting Leasehold ownership in
that Spaced Unit
World Oil will send these determinations and documents, together with copies of the supporting Orders of the
Regulatory Authority (Oklahoma=OCC, Texas=RR Commission), to its Broker or Field Landman.
Broker or Field Landman will secure and create:
1
2
A copy of ALL of the pages of the Tract Index (printed on 11” x 17” paper, if possible, 8 ½” x 14” if necessary,
or 8 ½” x 11” only if forced to accept the latter and then, only at gunpoint by the County Clerk) for the Section
or Sections being examined. This will be used to make a “Protocol Index” by making notes of the frame
numbers of the digital images, or, probably more accurately--the range of frame numbers –containing each
page of the instruments of record, next to the Book and Page numbers listed for that instrument —probably
on the margin at the left or right of the pages in the Tract Index.
A single light-scribe-labeled DVD disc containing:
a) Digital images of all filings and Orders or the Regulatory Authority—e.g. 1002A s, Spacing, Location
Exceptions, Increased Density, Pooling, and other Orders and documents sent to the Broker by World Oil
b) A hard copy of all the pages of the Tract Index, to be used to make a “Protocol Index” by placing
c) Digital images of all recorded instruments listed in the Tract Index from “Patent to Present” (i.e. from
Inception to date of last search in the courthouse)—with each image of those instruments laid out in a
single folder and in continuous film-strip order, labeled with the book and page numbers at which, and in
the same order in which, those instruments appear on the Tract Index,
d) A digital copy of the Assessor’s Surface Tax Rolls in a separate folder,
e) A digital copy of the Tract Index in a separate folder, preferably in film-strip form.
f)
A digital copy of the Ownership Report prepared by the Broker or Field Landman from the digital images
shot in the courthouse, in a separate folder, listing:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
the full legal name (s) of all owners of surface, minerals and Leasehold in the Unit,
last known address for each owner, of record, or from internet, local phone books, etc.
the date the last known address appears in the records
the Social Security Number or Employer Identification Number, if available
(e.g. in plain sight on Leases or other instruments of record such as Wills or Trusts)
current or HBP Leases of that owner’s minerals
surface acreage ownership and its tract legal descriptions,
net mineral acreage ownership in tracts then in a Unit Summary
decimal mineral interest to 6 places in 100% of the Spacing Unit, for each and every owner of any
interest—first Leasehold, then Minerals, then Surface, in tracts then in a Unit Summary for the
Spacing Unit being searched, then,
g) An electronic copy of the Ownership Report is e-mailed and a paper copy of the Ownership Report is sent
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by overnight mail to the Landman at World Oil who placed the order for a courthouse records shoot.
h) The light-scribed label on the top of the DVD disc will list:
(1) The name, current address, and name and direct office or cell phone number of the contact person
responsible for having assembled the DVD disc for the client
(2) The Section, Township, Range, County(s) and State in which the courthouse search was conducted (in
BOLD, minimum 10-point Arial font, in the following order—(viz. 28-8N-12E Hughes & McIntosh, OK),
(and yes, I know, that some
(3) Brokers like to place T, then R, then S in that order for database search purposes, but that’s not the
way World Oil wants to see it.)
(4) Length of the search (e.g. “from Patent at 1M /12 rec 5/12/1909 to 3127 / 455 rec. 10/12/08”) and
(5) Date of last search in the courthouse or by fax from the courthouse (e.g. “last search: 11/1/08”).
NOTE: The Broker or Field Landman may also be called upon to make paper copies of all the field shots to be sent
to the examining Attorney in place of the DVD disc. World Oil will then have duplicate copies of the DVD disc sent
to it from its Broker, after final edit, together with any Unit Declarations, AMI Agreements, JOA s, Memos of
JOA s or any other documents of record affecting Leasehold title in the Unit, and then:
The Examining Attorney will prepare the Drilling Title Opinion as follows:
In Legal-Sized Format (8 1/2” x 14”) on a DVD disc, and later printed on Legal Size paper, using both Microsoft
WORD and EXCEL in this order:
WITHIN THE FIRST TWO PAGES OF THE OPINION:
1
The Name and Address of the Client
World Oil, Inc
000 West 0th Street, Suite 0000
Tulsa, OK 74000
2
The Type of Opinion:
Drilling Title Opinion or
Division Order Title Opinion
3
The Overall Legal Description of the Spacing Unit being examined—e.g.
“ LANDS COVERED BY THIS OPINION:
All of Section 28-8N-13E McIntosh County, Oklahoma consisting of 639.28 acres”
Or, assuming these LANDS are Spaced on Lay-Down 320 s
N/2 Section 28-8N-13E McIntosh County, Oklahoma consisting of 319.28 acres
Or, assuming these LANDS are Spaced on stand-up 80’s
W/2 SW/4
but NOT A TRACT-BY-TRACT BREAKDOWN OF THE UNIT JUST YET !
4
The Dates and Time through which title is being certified.
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In a single short sentence, state this set of facts for the Client (World Oil) to see immediately—e.g.
5
“Based on the items examined listed on attached Exhibit “A”, with the last instrument examined being that
appearing at Book 1030 Page 353 as recorded on September 19, 2008 and subject to the Comments and
Requirements listed in this Opinion, I find fee title to the captioned LANDS, as of September 28, 2008 at 5:00
p.m. CDT to be as follows:”
Unit Summary.
Attorney lays out, on legal paper, in Microsoft Word, on the very first (or first few) page(s), the Unit
Summary—that is, a Summary of ALL of the FEE ownership in the Overall Legal Description of the Lands
Covered by this Opinion laid out as follows:
(1) Surface Ownership,
(2) Leasehold or Working Interest Ownership,
(3) Mineral and Royalty Ownership
with the Surface Title and each of the three divisions of the Mineral Title adding up to the same total
number of acres in the subject Spacing Unit applicable to the target formation(s) in the proposed
well, complete with the fractional interest calculations used to arrive at the gross working interests,
net working interests, royalties and overriding royalties, and listing the Lease Numbers and
Requirement Numbers used in the subsequent Lease Tabulations and Requirements sections of the
Opinion.
6
A list of the instruments and records examined.
This list should include all of the several classifications of these instruments such as:
a) abstracts,
b) courthouse records or document images of them,
c) abstracter’s tract index,
d) county or parish Clerk or Recorder’s tract index,
e) final decrees in probate, and
f) any other documents examined such as:
g) well completion report forms and spacing orders from the regulatory agency governing oil and gas
exploration in the State where the well is located.
At least one “vein” of these instruments—usually, at least, the instruments recorded in the office of the
county or parish Clerk or Registrar of Deeds—must demonstrate an unbroken chain of time from origin of
title at grant or patent to “present” (i.e. the date of certification of title).
7
A tract-by-tract breakdown of the same elements of title that resulted in the Unit Summary
This portion of the Drilling Title Opinion is the natural result of any substantial amount of acreage being
combined from smaller pieces (e.g. the combination of, say, 4 of the “homestead” tracts of 160 acres into a
single 640 acre Section) and, thereafter the breaking apart of these larger tracts into parcels of 2.5 acres or
less and even smaller “city lots” and subdivisions as population centers continued to grow and encroach on
the agrarian landscape.
8
Encumbrances:
These are most often Mortgages for improvements to be situated on the land such as houses, barns for
equipment storage, and the like. Many mortgages encumber not only the surface but the minerals as well and
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even the production of oil and gas from those minerals.
9
Comments:
Here, the attorney writing the Opinion may disclaim any examination of certain records such as tax liens or
money judgments taken in a Federal Court against one or more of the interest owners listed in the opinion
and other State or Federal Rules or Statutes that might affect title—limiting the scope of the Opinion to just
those items of public record in the office of the county pr parish Clerk or Registrar of Deeds.
But a careful examination of this exculpatory passage is called for on the part of the Client (i.e. you, the
Landman) lest the attorney attempt to avoid any responsibility for the certification of title which would
otherwise be covered by Errors and Omissions Insurance.
10 Tabulation of Leases and Assignments:
Here the attorney writing the Opinion should provide the Client with a “tabulation” (actually a condensation)
of the relevant elements of the Leases and the Assignments of those Leases, that tie to the amount of each
Working Interest resulting from those Leases and the amount of the Overriding Royalties or other interests,
such as production payments, carved out of those Working Interests and the subsequent transfer of those
Working Interest to the present owners by the Assignments. This tabulation also provides the fractional
interests of each of the owners of minerals, leasehold and overrides set forth in the Unit Summary mentioned
above.
11 Objections and Requirements:
Using much the same wording they would use in trying a case in a court of law, the attorneys writing these
Opinions will state an “Objection” to something they find or even fail to find of record in the instruments they
have examined that would impair or even break the chain of title to one or more of the ostensible present
owners. This “Objection” is then usually followed by a Requirement which, hopefully, spells out the curative
measures that need to be taken to cure or waive the Objection. It is this area that Landman and Attorney
must reach something of a gentile agreement as to just how deep the knife must cut to remove the canker.
Here both Landman and Attorney need to be at least reasonably familiar with the State Bar Association’s Title
Standards governing the lands under examination and try to take advantage of them at every turn.
For example, the idem sonans rule listed in most Title Standards provides that no matter how many different
ways a person’s name appears in the records examined—the perfect example being that of “Ray J. Johnson,
Jr.”—so long as the variants appear of record for the requisite period of time—10, 20 or 30 years—it can be
concluded that those variants represent one and only one person.
As to form or style of these objections and requirements, the Landman should ask of the attorney that she or
he observe parsimony in structuring both the Objection and the Requirement, and that the Requirements
provide a cure that will be at least reasonably obtainable by the Landman. In fact, asking the attorneys to
limit themselves to 25 words or less in each Objection and Requirement, in most instances, would not seem
unreasonable to this writer. If your attorney argues that this is too limiting a parameter to follow, then
witness the “Synopsis of Requirements” that appears later in this text, listing not only the instrument, or the
lack of it, appearing in the records examined, that is causing the problem or “Objection,” by its Book and Page
number and date of recording, but also posting the number of net mineral acres involved to some idea of the
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magnitude of the problem, then providing a virtual “cookbook” remedy to cure it in the Requirements,
seems very little to ask of a professional wordsmith—in spite of the fact that they were once paid that way in
English Common Law—that is, by-the-word !
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Title Opinions—Form and Substance
Drilling Title Opinions
Basic Elements
1.
Overall Legal Description of the Drilling and Spacing Unit.
This should be a legal description of the gross acreage that will be held by production from the projected
well—not yet broken into tracts. (See Exhibit # 1)
2.
A list of the Instruments Examined.
These may include Abstracts, Prior Opinions, Ownership Reports, and Digital Images of Documents from the
Courthouse or Abstracter’s Office but, taken in part or together, they must clearly show an unbroken chain
of title from its Inception to the last instrument of record in the courthouse examined by the attorney writing
the opinion.
3.
Date and time of Certification.
This portion of the opinion should also list the last instrument examined by the attorney, by the Book and
Page numbers at which it was recorded and the date of its recording. If you are a Landman responsible for
clearing title for what will surely be a very expensive well, don’t just suggest or even meekly ask for this
summary description of the entire drilling and spacing unit, last instrument examined, and the date and time
through which title to the drilling and spacing unit is being certified—DEMAND IT! And remember—you are
the client.
4.
Drilling Unit Summary.
a. Although most attorneys have a tendency to place this Summary at or near the end of the Opinion, most
Landmen prefer to see it “right up front” so as not to have to “dig” for it within the Opinion.
b. The first elements of this Drilling Unit Summary consist of all Leasehold, Surface and Mineral ownerships
within the spaced drilling unit, with contents as follows:
CONSOLIDATED WORKING INTEREST OWNERSHIP
(1) Leasehold Owners & Interests
(a) Full Name of the Leasehold Owner (Lessee)
(b) Assigned Lease Number(s) held by Lessee
(c) Effective Net Revenue of Each Lease or Group of Leases
(i.e. 100% less Royalties Overrides)
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(d) Total Net Mineral Acres Under Each Lease or Lease Group
(e) Gross Working Interest Total for each Lessee
Un-leased Minerals
(f)
Please See Exhibit #2
(2) Surface Ownership
This may seem out of order here , but this portion of the opinion makes it extremely comforting to
your field Landman or other personnel responsible for securing drill sites to know that he or she has
been contacting the right people and paying them correctly for access roadways, drill site locations
and pipeline rights-of-way, and is just as important an element in the first few pages of the opinion,
as the summary of the relative positions of ownership by the Lessors and Lessees.
(a) Full Names and any “aka s” of the Owner(s) [and whether JTs–Joint Tenants, or TIC—Tenants In
Common, as necessary ]and their Addresses *
(b) The Legal description of the Tract (s) Owned with the net acres in any Adjustment Lot spelled out
in full (e.g. 39.2 a)
* Many—if not most—title attorneys will contend that while examining the instruments of record
that comprise title to the drill site unit, asking them to look for and record addresses and Social
Security Numbers for the ostensible owners—or even inserting this information from a Broker’s
Ownership Report, “…is not the best use of [their] time…”. Isn’t Land Work largely a name and
address exercise of finding the people who own the minerals and getting the right from them to
explore and develop those minerals? Never forget: You are the client.
Please See Exhibit #3
(3) Mineral and Royalty Owners and Interests
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
Tract No., Legal Description of Tract, # of acres in Tract
Full name of the Mineral Owner(s)
Last known address and SSN of the Mineral Owner(s) *
Fractional Interest owned by the Owner
(i.e. owner’s net mineral acres / tract net mineral acres)
Total Net Mineral Acreage held by the Owner(s)
Lease Royalty (1/8th, 3/16ths, ¼)
Assigned Number of the Tract in which the Interest is owned
Assigned Lease Number(s) corresponding to each Lease in that Tract
Unleased mineral acreage held by a Mineral Owner
[This pattern of data is then repeated for all of the Tracts in the Spaced Drilling Unit]
Please See Exhibit #4
(4) Consolidated Oil and Gas Leasehold Estate
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All Leases, by their assigned Numbers and their respective Lessees are set up in Groups by the
amount of Royalty in each Lease and the particular Overriding Royalty Interest to be taken out of the
Working Interests under these Leases.
Each Roman Numeral designates another Group of Lease numbers—generally bearing the same
amount of Royalty burden—listing the total net mineral acres represented by each Group, the names
of the Lessees, their percentage of ownership of the Total Working Interest under these Leases, and,
with numbered footnotes, describing the particular Overriding Royalty Interest (s) to be taken from
each Lessee’s Gross Working Interest.
Please See Exhibit #5
(5) Lease Tabulations
Each Lease, under its assigned Number, is tabulated—that is, abstracted—down to its essential
elements, such as Name(s) (and address, preferably) of Lessor(s) date, term, royalty, legal description
of gross acreage covered, and special provisions such as depth limitations
Please See Exhibit #6
(6) Assignment Tabulations Listing Overrides
Assignments of Numbered Leases, from one Working Interest owner to another, are tabulated,
showing dates, recording location, parties and most importantly, the amount of any Overriding
Royalty withheld by the Assignor in the process of transferring the Working Interests
Please See Exhibit #7
5.
Possession
The concern here is that there may be a tenant in possession of the surface under a lease from the surface
owner or a “squatter” occupying the surface under a claim of adverse possession. Your field Landman or
personnel should be consulted to see if there is an adverse possessor or a tenant in possession of the Tract in
question and any necessary compliance with a requirement—such as an Affidavit of Consent to Operations
from a surface lease tenant should be made. This is usually required in Comment #1 as follows:
1. This Opinion is subject to the rights of all parties in possession of the subject property. You should determine what interest is
claimed by any such party in possession other than the record owners of the surface. In the event a tenant is in possession, we
require you to obtain a tenant’s consent agreement prior to the commencement of operations on the surface of the property.
Please See Exhibit #8
6.
Encumbrances
The concern here is any instrument(s) appearing of record that may result in a divestiture of title out of the
hands of the ostensible owners of mineral rights or the production proceeds from those minerals, as follows:
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a. TAXES:
Failure by the landowner to pay Ad Valorem taxes in certain States may result in the County Assessor or
Treasurer running a statutory foreclosure action in court, posting the property for sale at public auction,
and having a Sheriff‘s or Treasurer‘s Deed issued to the highest bidder—thus divesting the original owner
of, possibly, both the minerals as well as the surface of the property. In any case in which the records
examined reveal one of these Deeds—most especially a Sheriff’s Deed, the examining attorney should
advise you of whether the sale appears to have been valid, and whether or not it carried both mineral as
well as surface title. This is especially true of tax foreclosure sales during the Great Depression of the
1930’s—since recently the courts have become notorious for setting aside these sales forced in hard
economic times, well after their occurrence.
b. UNRELEASED MORTGAGES:
Here again, the threat for non-payment to the Mortgagee (Private Bank, Mortgage Company, Federal
Land Bank, et. Al) is one of possible loss of both minerals as well as surface—as generally specified in
either private or Federal mortgages. Another provision in some mortgages specifies that any monies to
which the Mortgagor may become entitled—including both bonus and rentals for Leases, as well as
production proceeds from minerals, if any, must be paid directly to the Mortgagee. Many mortgages also
provide the Mortgagee with a Power of Sale Without Foreclosure or Notice to Mortgagor. Here also we
are addressing something closely akin to sudden-death overtime. In the present economic times, watch
for possible Federal or even State-by-State intervention by statute in foreclosures based on nonpayment of either mortgages or land taxes. If litigation ensues as a result of such intervention, and your
company is making a distribution of production proceeds from an oil or gas well, advise your Division
Order Department that the quickest way to get out of the tar baby and avoid payment of interest on
suspended funds is to Interplead these funds into the State or Federal court hearing the intervention
action.
c. UNRELEASED OIL AND GAS LEASES:
Since most oil and gas producing States do not require that undeveloped leases be released, when Leases
appear of record that are beyond their primary term, you and the title examiner are on point to inquire as
to any production (in some cases possibly several years ago) or a shut-in gas well holding these
apparently expired Leases by production (“HBP”) (“Held By Production”). In some States, it is possible to
obtain a Certificate of Non-Development or Non-production from the oil and gas regulatory authority
(such as the Oklahoma Corporation Commission). However, filing of record such a Certificate is best
combined with a thorough search of the spaced Drilling Unit by your field Landman or personnel for any
sign of a producing or shut-in well. Also, a check of the severance tax records might be wise to see if any
operator has listed any wells on the Unit as “temporarily abandoned.” Special caution should be observed
in regard to those apparently expired Leases which cover lands other than those lying solely with the
subject Spaced Drilling Unit, and inquiry should be made as to whether there are any wells on this
“outside” acreage capable of rendering all of the mineral acreage in the entire legal description in the
Lease HBP. Also note that in most States—with the notable exception of those with a statutory Pugh
Clause—if the Leases in question do not provide for depth limitations as to formations or deepest depths
drilled, they will be deemed HBP as to all depths and formations within the spacing unit—no matter how
shallow the well producing from any of the spaced formations.
d. PENDING SUITS, JUDGMENTS OR LIENS:
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Generally, unless instructed to do so, or prompted by something in the real property records such as an
instrument indicating the probate of an owner’s estate, but without a Final Decree filed, most title
examiners do not routinely check the District Court Clerk’s records for mechanics’ liens, pending lawsuits
or other matters that would impinge upon either Leasehold or Mineral owners interests. However if you,
as Landman have even as much as a hint of lien filings or suits that may affect title, then have the
examining attorney or, even earlier, your broker or Field Landman, check the records in the County
Assessor’s, Treasurer’s and District Court Clerk’s offices for these possible Encumbrances that may lead to
complete failure of title.
e. EASEMENTS AND / OR RIGHTS OF WAY: Here a particular portion of the spaced Drilling Unit as been
dedicated for use as a pathway for pipelines and possibly utilities-including, as shown in EXHIBIT # 8-use
of the surface as a wind farm under a Surface Lease for 30 years covering the entire SE/4 of the Section! If
there is an indication that any of these easements are for a rural water district, it may be wise to inform
the contractor building an access to the drill site of this fact-especially if such access will require a cattle
guard or “tin-whistle” storm water conduit. Watching a D-8 slice through a 4” water line buried in the
ditch next to a Section-line road is not a pretty sight-and very expensive.
Please See Exhibit #9
7.
Comments
Title Attorneys often use this Section of a Drilling or Division Order Title Opinion to “duck the bullet” so to
speak. That is, they disavow any certification of title that would be prevented by Orders of State agencies
governing oil and gas exploration and production, or by orders of State or Federal courts and instruments
that are not usually filed in the real property records of the County or Parish in which the subject well is to be
located, and limiting the scope of the Opinion to just those records kept by the County Clerk’s office. In some
cases, the extent of this exculpation may reach a point as which the attorney disavows any certification of
title whatsoever based on the fact that she or he was not provided with certified abstracts that ostensibly
provide a greater scope of title than the instruments recorded in the courthouse.
Please See Exhibit #10
8.
Objections And Requirements
These Objections (generally listing defects in, or “clouds” on, the Mineral and Leasehold titles) and
Requirements (steps to be taken and instruments to be found or created and filed in the real estate records
against the legal description of the Drilling Unit to “cure” the defects or “clouds”) can be considered the
“heart “ of the Drilling Title Opinion. With the understanding that each piece of real property under
consideration for these Opinions is unique, and will present some Objections and Requirements germane
only to that property, let’s take a look at those in the “Example” Opinion to see if some sort of guidelines for
curing them can be drawn.
Please See Exhibit #11
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9.
Synopsis Of Title Requirements
The Objections and Requirements just reviewed in EXHIBIT # 11 would appear, in synopsis form (which is
something else recommended that you exact from the examining attorney), in order, as follows:
1. Get use agreement from any surface tenant found in Unit (639.4 ac):
Waived
Cured
X
2. Get Assignment or Farmout, Participation Agreement or JOA, or Pool Leasehold owners: (611.90 ac)
Waived
Cured
X
3. 1st Exp. Of your Leases is 7/9/09—commence operations prior (180.0 ac):
Waived
Cured
X
4. Your Lease at 1029-848 expired and a 2nd Lease on this acreage was taken by S__: propose well to S____
to participate or, if not, Pool them (28.9 ac)
Waived
Cured
X
Pooled
5. Submit unrecorded Letter Agmt of 11/15/04 for possible further Requirement(s); (480 ac) Waived
Cured
X
6. Record and submit for further examination and possible added Requirements, documents of succession
by P____LLC to the interest of CDE; (375 ac)
Waived X
Cured
7. Secure and Record a Mineral Quitclaim Deed from The Oklahoma Trust Company as Agent for the Donnie
V. _____Living Trust to B______ Bank N.A. in favor of the latter as Trustee of the William R.______IRA:
(7.119 ac)
Waived
Cured
X
8. Secure and record a Correction Mineral Deed from Leon____ to Stephen & Diane_____ to validate the
latter’s title to an interest (1.7154 ac) in Tract 3:
Waived X
Cured
9. Conveyance by Mineral Deed from Stephen & Diane R _____ to R______ Energy LLC appears to make
Grantors Strangers to Title. Secure and record muniments of Grantors‘ title. (6.96 ac) or Pool:
Waived
Cured
Pooled
X
10. Subordinate those Mortgages listed above as requiring such curative, to the Leases issued by the
Mortgagors: (278.74 ac)
Waived
Cured
X
11. Satisfy yourself that any of your surface operations will not interfere with a 30 yr Surface Lease in favor of
the L______ Wind Corporation covering the entire SE/4 of Section __. (160 ac)
12. Although all the apparently expired but unreleased Oil and Gas Leases appear of record after the effective
date of the Oklahoma Statutory Pugh Clause, satisfy yourself that there has been no production, shut-in gas
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wells or other operations sufficient to render the subject Drilling Unit or any part of it as being HBP.
Waived
Cured
X
10. Pooling Lists
Although principally germane to Drilling and Spacing Units in Oklahoma, these lists also serve well as a crossreference to those Mineral Owners and even some of the Lessees that could not be found or chose not to
participate their interests in the drilling and completion of the proposed well. Such a list should appear in any
Drilling Title Opinion in regard to which some form of Pooling of the Spaced Drilling Unit may be necessary,
due to these “open” interests. Such a List might well appear as follows:
Exhibit “A”
Cause CD No. 200909999-T
KNOWN RESPONDENTS:
C________ Exploration Limited Partnership
P.O. Box 000123
Oklahoma City, OK 7______
O____ Resources, LLC
____South Boulder, Suite000
Tulsa, OK 7____
Mark S.______
Route0, Box 000
McAlester, OK 7___
Tom ________
____ South Boulder, Suite 000
Tulsa, OK 74000
P___________ Royalty Company
0000 N G---- Blvd., Ste. 000
Oklahoma City, OK 70000-0000
B_____, Inc.
P.O. Box 0000
Fr______, CA 90000-0000
RESPONDENTS LISTED FOR CURATIVE REASONS WITH KNOWN ADDRESSES:
L____ Exploration, Inc.
000 South Boston Avenue, Suite 000
Tulsa, OK 70000
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S______ Resources, Inc.
0000 Gaillardia Parkway, Suite 000
Oklahoma City, OK 70000-0000
N_______ Petroleum Corporation
0000 NW G____ Boulevard
Oklahoma City, OK 73000
Ray J. Johnson, Jr.
CBS Television Plaza
Beverly Hills, CA 90909-9999
RESPONDENTS LISTED FOR CURATIVE REASONS WITH NO KNOWN ADDRESS:
1.
2.
3.
4.
5.
6.
7.
R______ B. I________
Cynthia A. H________
Kevin J. I____________________
Robin W. I_______
Blackwell, Enid and Southwestern Railroad Company
The St. Louis and San Francisco Railroad Company
The heirs, known and unknown, of Polly Jane Z___________, deceased
DISMISSALS:
John Q.____________,
1422 NW 1238th
Oklahoma City, OK 73000-0000, who has elected participation in the initial well, dismissed.
XYZ Oil____, LLC, which elected participation in the initial well, dismissed.
123 Oil – E Plaza
Tulsa, OK 74999-9999
Fredric C__________, named in error, dismissed.
121 Chopin Plaza
Wichita, KS 69999-9999
Division Order Title Opinions
Basic Elements:
1. Basic Elements Virtually Same As Drilling Title Opinion
The basic elements of the Division Order Title Opinion are virtually the same as those in the Drilling Title
Opinion, and are most readily readable and useful to the Landman when laid out by the examining attorney
in the same order and style as the Drilling Title Opinion–with the possible exception of a lack of concern for
surface ownership, listing those parties pooled if pooling was used to account for unleased interests, and a
significant change in the elements of the Unit Summary.
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2. The Division Order Unit Summary
The interests of each and every owner of any interest—Working Interests, Royalties and Overriding
Royalties—are to be calculated down to decimal interests (preferably to 8 places—albeit some States like
Oklahoma require only 6) in the production revenues of a successfully completed oil or gas well—all of
which said decimal interests must add up to a parity (not parody) of one—i.e. 100%. These decimals of net
revenue to be paid to each owner listed on the Unit Summary preferably should appear as the last column
on an EXCEL spreadsheet, recommended as the format of choice. Exhibit Number 12 is attached as an
example of what this writer considers to be a nearly ideal layout format for the Unit Summary in a Division
Order Title Opinion.
a. For the purposes of Division Order Title Opinions written on wells located in Oklahoma, several different
calculations will need to be made to arrive at each type of owner’s net revenue interest and displayed
under additional headers for columns listing a decimal figure reached using these calculations for each
owner as follows:
(1) Royalty Interest Owners:
The Production Revenue Share and Royalty Interest in the Well
(2) Working Interest Owners:
The Working Interest in the Well and Proportionate Production Interest
(3) Overriding Royalty Interests and Leases issued by agencies of Federal Government such as the
Bureau of Indian Affairs:
The amount of these Subsequently Created Interests
Please See Exhibit #12
b. Production Revenue Standards Act
Production Revenue Share (PRS)
Royalty Interest in the Well (RIW)
Working Interest in the Well (WIW)
Subsequently Created Interests (SIC)
The terms PRS or Production Revenue Share, RIW or Royalty Interest in the Well, WIW or Working
Interest in the Well, PPI or Proportionate Production Interest, and SCI or Subsequently Created Interests
and the calculations to arrive at them on way to a Net Revenue Interest for each owner of an interest in
the drilling and spacing unit are necessitated by the terms of what was originally termed Senate Bill 168,
and are now a portion of what is now known as the Production Revenue Standards Act in Oklahoma
Statutes.[52 O.S. §87.5 et seq.—the “Definitions” portion of which are set forth as Exhibit # 13 below]
This Act was the result of a final and successful push by royalty owners in Oklahoma and elsewhere to
have the Oklahoma Legislature devise a means for all of them to be paid for any production marketed
from split-stream gas wells and to be paid equitably among and between themselves by the working
interest owners marketing this gas, no matter what the amount of acreage they had leased or had force
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pooled from them, the amount of royalty to be paid to each, and to which of the working interest owners
their leases and consequent royalty burdens were tied. A brief history of this legislation and the method
of calculating the above-listed intermediate decimals leading to net revenue figures for all the owners of
an interest in an Oklahoma split-stream gas wells are explained and laid out in an explicit manner far
beyond the capability of this writer, by Sara Kemker Tays, CDOA, CMM, in Volume II, Chapter Twelve of
the Certified Division Order Analysts Exam Review Manual, reprinted in this text by permission of the
National Association of Division Order Analysts and appearing herein as Exhibit # 14.
Please See Exhibits #13 & 14
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Mistakes Often Made In Division Order Title Opinions
1. Failure to secure for examination abstracts certified through the date of first SALE of oil and/or gas.
Statistically, this appears to be the most common failure among all examining attorneys and forces a
return to “square one” because the abstractor must now provide a supplement or the attorney must
return to the court house to examine instruments down through the date of first sale and the examining
attorney must prepare a supplemental division order title opinion.
2. Failure to address the opinion to the correct party-in interest. Most first purchasers of oil and/or gas
require that the division order title opinion be addressed to them, especially if that first purchaser is to be
responsible for the distribution of production proceeds from the well.
3. Failure to date the division order title opinion. This date should appear somewhere on at least the first
page of the instrument and is in contradistinction to the date and time through which the title to the
lands are to be certified. This date is useful in identifying the opinion, such as “the opinion of John J.
Attorney, dated November 22, 1984,” when corresponding with the producer or his attorney.
4. Failure to designate the instrument submitted as a “division order title opinion.” Many brethren in the
bar seem reluctant to call the instrument which lists all the ownership in an oil or gas well to a decimal
certainty exactly what it is–a division order title opinion or “DOTO”, as it is often called.
5. Failure to list a correct legal description of the lands in regard to which the attorney signing the opinion is
about to certify mineral title. Ideally, this is an opportunity for the attorney to limit his or her exposure
under errors and omissions insurance. At a minimum, the legal description should match the exact
boundaries of the drilling and spacing unit, if any has been established by public authority or field rules. It
is preferable, in order for the practitioner to avoid additional liability, to further limit the exact lands to
which you are about to certify title by limiting the surface description to the minimal drilling and spacing
unit allotted to this wall and then further limiting the certification to production from a specific geological
formation or formations at specific depths, ending the description with the exact location of the wall bore
described in lineal footage coordinates from nearest section lines.
6. Failure to designate the exact date and time (a.m. or p.m.) through which the attorney is certifying titles
to the described lands.
7. Failure to list the complete name of the owner and all of the variations thereof known to the examining
attorney. This type of failure runs the range from simple misspellings through complete omission of
essential legal designations of parties such as, “trustee,” administrator,” etc.
8. Failure to designate each applicable lease being examined with a letter or number and failure to list
against each owner’s name the particular letter or number designation of that lease or leases under
which that owner’s interest arises.
9. Failure to clearly show all of the fractions and percentages by which the fractional interest of the owner in
question was calculated.
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10. Failure to show the royalty interest against which the particular owner’s fractional interest was
multiplied to arrive at his net revenue decimal interest.
11. Failure to correctly calculate the net revenue decimal interest of each owner listed in the opinion and,
additionally, the failure to have these decimal interests clearly divided between the mineral estate
(royalty interests under lease), and the oil and gas leasehold estate (divided into overriding royalty
interests and working interests). Albeit the various types of interests may be more than the three listed
here, it is, nonetheless, the accurate segregation of these three primary types of interests and how they
arise that allow the title examiner to determine the correct computations for the fractional interests
leading to decimal interests, for each of the owners, that are accurate and add up to a parity of one
(1.0000000). Perhaps the best example is the owner of a portion of the mineral estate who does not lease
his oil and gas lands but, rather, elects under a force pooling order or makes no election at all.
12. Failure to include a brief recapitulation of the spacing order or administrative regulation establishing the
correct drilling and spacing unit size and drainage area per formation. Failure to examine this information
renders an attempt at determining resultant royalty interests (as in the example in the paragraph above)
a virtual impossibility, because the number of mineral acres in the drilling and spacing unit are unknown
and thus the denominator in the net mineral acreage fraction cannot be determined.
13. Failure to include in the opinion a brief summary of any pooling orders issued by public authority.
Without this information, it is impossible to determine how unleased mineral owners elected as to
whether to participate in the drilling and completion costs of the well as a working interest owner, or to
take a fraction of the production proceeds as a royalty interest owner.
14. Failure to use the comments section of the division order title opinion to correctly limit the liability of the
attorney preparing the opinion. Certainly, permissible standards allow a disclaimer of most items not of
public record and certain liens and judgments. Also, disclaimers as to dedication of gas to interstate
commerce, reliance upon a marketable record title act, and title standards adopted by local bar
associations are within the ambit of permissible comment. With the possible exception of specifically
disclaiming liability for another attorney’s title opinion and the certification of that title to a given time
and date as contained in that other attorney’s opinion, comments should be limited in length and subject
matter to those words which will clearly limit the scope of attorney liability, but do so within acceptable
industry standards for the state in which the well is located.
15. Failure to recapitulate the status of objections and requirements in prior title opinions. A listing of prior
opinions by name of author and date, together with a listing of the unsatisfied title requirements by the
numbers used in the prior opinion, serves as a ready guide to the analyst attempting title curative, and is
absolutely essential if the attorney preparing the present division order title opinion is supplementing the
work of another attorney.
16. Failure to exhibit parsimony in writing objections and requirements. In the OBJECTION, simple reference,
by book and page number to the troublesome item or items in the chain of title, together with the date of
the acknowledgment of the instruments, and the date of the recordation of the instruments, will
generally suffice to isolate the problem for the reader. Certainly there will be occasions when the
examiner is confronted with a situation which requires a degree of explanation. However, this author
fully believes that the page and date references listed above, together with a one-line statement of the
problem, will generally suffice 95% of the time. Further, the REQUIREMENT should be written in virtually
the same one line style, specifying the exact instrument to be secured, recorded of public record, and
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examined by the attorney or analyst to satisfy the requirement and overcome the objection from which it
grew. The words “secure, record, and produce for examination . . .” have been used by this author like a
litany in an attempt to virtually “cookbook” title requirements for the curative agent, down to exactly the
instrument to be created and recorded.
17. Failure of the examining attorney to familiarize herself or himself with bar association title standards and
other curative acts and statutes such as the record marketable title act, which generally assist in limiting
the necessity for more complicated forms of title curative in order to overcome objections and
requirements. The best example that comes to mind is the simple “10 year” rule in regard to the length
of time during which an estate must have been of record in order to dispense with the necessity for the
examiner to secure and inspect a complete transcript of the entire proceedings.
18. Failure to list all instruments examined in the process of preparing the title opinion together with the
sometimes attendant failure to demonstrate that the dates and times on these instruments complete an
unbroken chain of title from inception through the date of first purchase. Also, in this regard, come the
attendant failures to check the records of the county treasurer for current payment of taxes; failure to
examine the probate index maintained by the court clerk or clerk of the probate court for the county or
township in question; failure to examine well completion reports required by the local or state authority
which give more complete details in regard to the exact depths of the producing horizon of the well in
question; and, finally, failure to examine Area of Mutual Interest or Joint Operating agreements or
farmout agreements for “before payout”, “after payout”, and “ backin” agreements which will ultimately
effect a change in the decimal interest of some owners.
19. Failure to list all unreleased oil and gas leases still remaining of record that over- lap into adjacent
Sections outside the Drilling and Spacing Unit being examined. Here, one of the particular failures of the
attorney examining title is the lack of recognition of leasehold acreage which overlaps the drilling and
spacing unit being examined for the present title opinion. An example would be “stand-up” 80 acre
drilling and spacing Unit consisting of the W/2 SW/4 Section 1, and a“lay-down” 80 acre drilling and
spacing units, each of which have a well in the north half and west half respectively producing from
different formations, and the well in question is to be drilled in the “open” 40 acres at the intersection
overlap of the “80s.” If the “open” 40 is at the SW/4 SW/4 of Section 1 and the “lay-down” 80—of the
two 80’s that overlap--has its westernmost 40 acres made up of the SE/4 SE/4 of Section 2 with a well
producing from a deeper formation than the one in the north 40 acres of the “stand-up” 80, you may
have a serious problem. This mistake is a disastrous one, especially if discovered after the well has been
drilled and completed as a producer.
20. Failure to list sufficient detail in regard to mortgages affecting title to the land on which an oil or gas well
is drilled to determine whether or not all or any of the production from the well is to be considered
encumbered by said mortgage, rather than severed personal property, free of said mortgage. Without
some degree of detail, the analyst attempting title curative does not know whether to seek a
subordination of the mortgage, which may later be “called” by the mortgagee (bank or lender) instructing
the purchaser of production to pay proceeds directly to the lender rather than to the interest owner who
has given the mortgage to secure a debt.
21. Failure to list easements which affect the subject lands. Also, failure to list sufficient detail in regard to
these easements, both in terms of location and whether or not minerals are affected. One of the most
critical examples that comes to mind is a railroad easement which, in turn, may well carry the mineral
title to a strip of land as wide as 1/8th mile and traversing the entire legal description being covered by
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the title opinion.
22. Failure to list, in some detail, any judgments, liens, or Lis Pendens appearing of public record in the offices
of the county clerk, register of deeds, county treasurer, district court clerk, and probate court clerk. In
addition to the standard waiver of liability contained in the certification or abstract, the examining
attorney may wish to avail himself or herself of a limitation of possible liability for federal judgments and
liens by specifically disclaiming any certification thereto in the Comments Section of the division order
title opinion.
23. Failure to recognize and list, in some detail, the particulars of each oil and gas lease affecting the mineral
estate being examined. This is further compounded by the attendant failure to list, under each lease, each
and every ASSIGNMENT of an interest therein, whether all or a fraction, since those subsequent
assignments will determine, in large measure, the fractions that go into the calculation of the decimal
interest for each of the owners listed in the title opinion. In the event the writer of the title opinion is
confronted with the situation in which, for example, the operator of the well has not yet recorded
assignments but, in turn, has made the attorney aware of his intention to do so, the attorney may wish to
use a “phantom” assignment under each of the current oil and gas leases in order to correctly reflect the
intended interest of each of the parties listed in the title opinion and then “require his or her way into”
those exact decimal interests listed, by requiring the recordation and examination of certified copies of
these prospective assignments. A suggested form for “abstracting” the oil and gas leases and their
subsequent assignments is as follows:
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TITLE CURATIVE:
The following are objections and requirements often encountered by oil and gas purchasers attempting
to set up owners for payment of production proceeds from a division of interest listed in a division order
title opinion, and the procedures most purchasers will follow in order to effect the title curative of these
objections and requirements:
Affidavit of Possession
We do not require that the operator secure, record, and produce for our examination an Affidavit of
Possession to assure that no one presently occupies any of the lands covered in the drilling and spacing
unit, for one of the wells from which we purchase oil or gas, in such a manner as to assert a claim under
the adverse possession statutes. However, we do note this requirement in our letter to the operator
transmitting division orders for distribution.
Assignments without “Tabulation” information
We often deal with subsequent assignments of interests in wells which do not tabulate the date of
execution, the date of recordation, the book and page number, etc. Please note that we will accept these
subsequent assignments mentioned in a division order title opinion if they list a well name and a legal
description sufficient to tie the interest together with the name of an assignor and an assignee.
Curative Materials
As a general policy, we try to route as much of this material through the operator and into his files for
satisfaction of the DOTO requirements as is possible. Also, frankly, we do this as a defense against the
occupation of our time with anything other than setting up as many owners to be paid as accurately and
rapidly as possible.
Death
Please note that the event of the death of an owner of an interest in one of the wells from which we
purchase oil or gas automatically vests this interest in the decedent's surviving heirs. Therefore, the
probate of the estate is merely a judicial confirmation of that automatic vesting and, when a will is
present, and admitted to probate as valid, there may be a limitation of ownership to one or more
specified persons. This is a helpful concept to remember when examining a deed or lease which has been
placed of record prior to the conclusion of a probate involving the same property being deeded or leased.
Also, if the interest is small, we will rely on a copy of the death certificate and an affidavit of heirship.
Delay Rentals
We do not require an examination of receipts for delay rentals from the operator, but, rather, we handle
it by noting it in our letter to the operator transferring division orders to him or her for distribution.
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Delinquent Real Estate Taxes
Here we do suspend, but only the royalty owners. Again, this suspension should be called to the attention of
the operator in the letter when returning division orders to the operator for circulation and signature.
Dissolution of a Corporation
In order to legally dissolve a corporation, that corporation must file Articles of Dissolution in the state of its
incorporation (usually with the Secretary of State's office). These Articles of Dissolution almost always
indicate the party or other business organization who will succeed to ownership of the assets of the
corporation, including all of its stock and property. Thus, you would look to the Articles of Dissolution of a
corporation to determine ownership of an interest in the well.
Divorce Decrees
Fortunately, most of the Divorce Decrees with which we are confronted are fairly specific in listing the marital
property being conveyed to either or both of the spouses involved. Many contain a provision that, in the
event either spouse does not comply with the court’s direction to make this transfer of property to the other
spouse, then the Divorce Decree itself will serve as a conveyance. Thus, it most cases, no other additional
conveyance of record is needed in order to allow a transfer of an interest to the spouse designated to receive
an interest in one of the wells from which we purchase oil or gas.
Execution, Defects in Same by Corporation or Trust
When a corporation, for example, leaves off a corporate seal or fails to indicate the officer of that corporation
making that execution, or, for example, a trust is listed as an owner (rather than an individual trustee, as is
legally required in many of the states in which we deal), we simply go ahead and list the corporation or the
individual trustee’s name in its correct form and make a notation of this failure or requirement in the DOTO in
our letter to the operator transmitting division orders for circulation and signature.
HBP (Held by Production) Leases
In the event that the examining attorney does not require an Affidavit of Production or, as is most often the
case, he does require such an Affidavit of Production to validate leases which would otherwise have expired
at the end of their primary term, we will suspend all ownerships based on these “HBP” Leases until such time
as the operator secures and records such an Affidavit of Production.
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Liens
If a lien is filed against only one operator, it should not affect all owners listed in the DOTO. In spite of the
fact that many lien forms, as filed of record, do specify that they constitute a lien against the “entire
leasehold estate”, these liens are still personal in nature and should affect only the interest of the
particular party or parties named therein.
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Objections
We look now to some samples of the Objections (or "Comments") and Requirements that vex both the Producer
and the Purchaser, from a cadre of attorneys trying to best serve their clients and, at the same time, cover their
flanks under Bar Association's Title Standards and their Errors and Omissions Insurance:
Encumbrances:
Taxes: "Guideline": List all acreage in the drilling and spacing unit-by tract if applicable-and state the amount, if
any, of unpaid Ad Valorem or special assessment taxes on any fee lands-i.e. lands on which the surface estate has
not been severed from the mineral estate. (e.g. NE/4 SE/4: Not applicable, C.O.L.O. lands. SE/4 SE/4: Not
applicable, minerals severed. SW/4 SE/4: Ad Valorem taxes paid. NW/4 SE/4: Ad Valorem taxes of $284.50 unpaid
for second half 1999; Rural Water District No. 254 special assessment of $88.70 unpaid for 1998-1999.)
Litigation: "Guideline": List style and nature of all lawsuits in the local District Court in which any of the owners
recited above are named. Also examine the Mechanic's Lien Index in the Clerk's office and the Mechanic's Lien
Docket in the Court Clerk's office for a listing of those same owners as parties liened, and record here the style of
the case with the full name or names of the parties Plaintiff and Defendant, the amount of the claim, name of the
well and/or legal description and the Book and Page where recorded. e.g. [Federal Land Bank of Wichita vs. John
J. Farmer, 96-CA-256 (mortgage foreclosure-NW/4 SE/4).] [ Mechanic's Lien filed 9-23-98 by Single Pole Well
Service against Frank J. Farmer d/b/a Farmer's Oil Co.($5,432.10), Book 215 Page 17.] [Single Pole Well Service v.
Frank J. Farmer, 99-CA-54 (mechanic's lien foreclosure-Farmer #1 well, NW/4 SE/4).]
Unreleased Oil and Gas Leases:
"Guideline": Almost invariably, record title to land with a history of oil and gas production will show unreleased oil
and gas leases which have expired primary terms, but may be held and rendered valid by existing production. For
these leases with a legal description lying solely within the spacing unit, a clear Certificate of Non-Development
from the Oklahoma Corporation Commission covering all the land within the spacing unit and placed of record
with the County Clerk will render the title marketable against those leases. However, since the Oklahoma
Corporation Commission has been known to issue clear Certificates of Non-Development when in fact a well has
been drilled but not plugged, the client should be given the advice and opportunity to satisfy itself that there is no
continuing production by physical inspection and inquiry at the Oklahoma Tax Commission Gross Production
Division, and
Corporation Commission. (The reason for mention of the Oklahoma Tax Commission as well as Corporation
Commission is the fact that many producers-especially in times of low oil and gas prices-will list a lease as
"temporarily abandoned" to help provide collateral proof of perpetuation of the lease on a shut-in well, in
addition to the primary objectives of not being forced to plug the well and avoid having their purchaser penalized
for failure to file monthly production reports.) As to those expired leases listing additional acreage outside the
spacing unit on which the proposed well is to be drilled or re-entered, it will be necessary to require drafting,
getting properly executed signatures on, and recording a written release as to land within the subject spacing
unit, or at least requiring the operator to satisfy himself with a physical inspection.
AAPL Titles Workshop 8-3-12
29
(e.g.)
["Unreleased Oil and Gas Leases:"-as above] see Requirement 3 on page 6.
(P.6)
1. Comment: There are several oil and gas leases which have expired according to their primary terms but
for which releases have not been recorded. With the exception of the leases shown in the following
paragraph, none of these leases covered land outside Section 16. (Note: should probably read "...outside
the spacing unit" unless the spacing unit is a full section.)
At Book 21, Page 118 is a lease dated August 12, 1953, wherein Libbie Pechacek leased the SW/4 SW/4 of
Sec.16 and the NE/4 SE/4 of Sec. 20 for 5 years to Carl S. Ford. That lease is now owned by Continental Oil
Co. A Delaware corporation.
At Book 691, Page 55 is a lease from Libbie Pechacek to Southwest Petrochem, Inc.of the SW/4 SW/4 of
Sec.16 and the NE/4 SE/4 of Sec.20 for 3 years from 1-3-77.
At Book 754, Page 510 is a lease dated February 3, 1981whereinLawrence E. Pechacek leased the same
two tracts for 2 years to E.L. Greene.
Requirement: For the expired leases covering land only in Sec.16, secure a Certificate of NonDevelopment from the Oklahoma Corporation Commission. If this Certificate shows no exceptions,
recordation with the Pottawatomie County Clerk will render title marketable against those expired leases.
However, since the Corporation Commission has been known to issue clear Certificates when in fact a
well was drilled but not plugged, you should also satisfy yourself that these leases are not being kept alive
by rental or royalty payments or production not reported to the Corporation Commission or "zero"
production still being reported to the Oklahoma Tax Commission on a well listed as "temporarily
abandoned" on their Form 320. For the other 3 leases, secure and record properly executed releases.
Mortgages:
"Guideline": List all recorded mortgages not released of record. Also, distinguish between those mortgages that
encumber only the surface and those that cover both surface and/or minerals. In regard to the latter, please give
some detail as to whether the mortgagee has retained the right to lease the minerals and collect royalties or
other profits from them, or simply retains an option to do so and any right of notice requiring ratification of any
lease granted by the mortgagor. Consider requiring the purchaser to issue a "no present interest" division order
to clear the cloud on title created by the rights of the mortgagee.
(e.g.) (surface only:)
Dated: February 29.1980
Recorded: Book 741, Page 68
Mortgagor: George Kroos, a/k/a George H. Kroos, et al. Mortgagee: Federal Land Bank of Wichita
Description: Surface only: SW/4 SW/4 Sec. 16-11 N-6E.
(e.g.) (surface and minerals:)
AAPL Titles Workshop 8-3-12
30
Dated: March 5, 1981
Recorded: Book, 745, Page 107
Mortgagor: Charles W. and Verna E. Lindsey
Mortgagee: First National Bank of Seminole
Description: Surface and Minerals: NW/4 SW/4 Sec. 16-11 N-6E.
Rights: Mortgagor can lease on 30 days notice to and ratification by Mortgagee.
Easements:
"Guideline": The record title to land with any history of oil and gas production can be expected to contain
easements for pipelines. In addition, there may be other easements for utilities, water districts, soil conservation
and flood control structures, road and highway rights-of-way, and occasionally a railroad or even a runway.
Priority should be given to listing the name of the Grantee, construction and maintenance restrictions (e.g. "
pipeline must be buried and maintained below plow depth") and whether the Grantor included minerals as well
as surface in the conveyance (especially important in the case of railroads). Any details as to location of the
easement or right-of-way and the structures placed in it or under it-such as survey station numbers or Book and
Page or other reference numbers to maps or aerial photographs, as well as its legal description, should be
included here or treated in a Requirement to assist the client in accounting for all mineral ownership and avoiding
interruption of any use of the easement by the Grantee or its successors.
(e.g.)
Dated: March 19, 1974
Recorded: Book 465, Page 443; Map: Page 445
Grantor: Libbie Pechacek
Grantee: Mustang Fuel Corp.
Description: SW/4 SW/4 Sec. 16-11 N-6E; Survey stations: 16-151 through-156.
Purpose: Pipeline
Restrictions: Pipe must remain buried below plow depth.
Comments and Requirements
"Guideline": To increase the efficiency of the client being able to account for all of the surface and, most
especially, mineral ownership in the spacing unit and to determine the necessity for force pooling and enable
drilling at the earliest possible date, the client will require that any Comments and Requirements be recited in the
fewest possible number of words and give a clear indication of the curative process to be followed-preferably the
securing or creation and recording of a single, simple document and avoiding wherever possible protracted
procedures such as massive numbers of signatures on stipulations of interest or quiet title suits. Adherence to
State Bar Association Title Standards by the examining attorney is expected by the client and the latter hereby
expresses a preference for the simplest method of curative or the opportunity to waive the Requirement or
accept the attendant business risk of Defensible Title rather than Marketable . Certainly, the client realizes that
the examining attorney must use Requirements to limit his or her exposure for certifying title; however, these
Requirements must be made with the idea in mind that the least complicated and most practical curative method
is not only preferred by the client but is essential to operational efficiency. Some of the most commonly
encountered title defects and suggested forms for the Comment and Requirement that lead to a speedy and
effective cure of those defects is as follows:
AAPL Titles Workshop 8-3-12
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1. Affidavit of Possession
Requirement: Record properly executed affidavits of possession, with tenant disclaimer if necessary, from
those parties in actual possession of the subject land, or you may elect to waive this requirement after
your physical inspection to determine those parties.
2. Affidavit of Identity
Affidavit of Identity And a Possible Application of the Idem Sonans Rule Comment: In Book at Page
appears a final decree in the Estate of William T. Reynolds. The interests credited to the Reynolds family
are based on the assumption that William T. Reynolds is the same person as Truman Reynolds.
Requirement: Record an affidavit from a disinterested third party that William T. Reynolds is the same
person as Truman Reynolds.
3. Parties to Be Pooled Comment:
In Book at Page appears a mineral deed from Alton Reynolds, s/p/a Hadley A. Reynolds, to Hadley Alton
Reynolds, Trustee of the Hadley Alton Reynolds Revocable Living Trust covering SW/4 NE/4 16-10N-6E.
Alton's predecessors in interest only owned the surface.
Requirement: All of the parties named above should be named in the pooling application and given
notice.
Comment: We have shown Tex/Con Oil & Gas Company as 3/16 undivided owner of SW/4 NE/4.
However, it appears that Tex/Con may have conveyed its interest to Ensearch Exploration, Inc. due to a
conveyance in Book 2098 at Page 17 from EEX, formerly Ensearch Exploration, Inc., to EEX Operating, L.P.,
a Texas Limited Partnership = an undivided 1.00%, and EEX Operating LLC, a Delaware L.L.C., 4849
Greenville Avenue, Suite 1200, Dallas, TX 75206 = an undivided 99.00% interest. Subsequently EEX
Operating L.P. conveyed its interest to Lariat Petroleum, Inc., 15 W. 6th Street, Suite 1100, Tulsa, OK
74119 in Book 2146 at Page 93. (Note: A listing of these addresses from instruments examined is seminal
to client efficiency.)
Requirement: All of the entities named above should be listed in the pooling application and given notice.
4. Strangers to Title
(Note, as in the example below, these requirements may necessitate a longer explanation in the
Comment-albeit this example has been shortened from the length of the original.)
Comment: In Book 167 at Page 123 appears a Mineral Deed dated September 13, 1924, from John
Stidham, Seminole Roll #596, in favor of R.T. Harber, covering 1/2 of Stidham's undivided mineral interest
AAPL Titles Workshop 8-3-12
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in the N/2 NE/4 and SE/4 NE/4. Harber later conveyed part of this interest to M.E. Templeton and W.E.
Grisso. Thereafter, Harber, Templeton and Grisso executed quitclaim deeds on April 11, 1935 in favor of
the heirs of Mahale Stidham and their successors and assigns. But the heirs and assigns of Harber,
Templeton and Grisso-namely: Mekusky Oil Company, Inc., Mitchell Royalty L.P., Robbie Kay Rich a/k/a
Robbie Harber Rich, Mary Kathryn Grisso Trustee of the Mary Kathyn Grisso Revocable Trust, the First
National Bank and Trust Company of Oklahoma City Trustee of the Grisso Family Trust, Harry J. Schafer,
Jr. Trustee of the Grisso-Schafer Trust No.1, and Harry J. Schafer, Jr. Trustee of the Mary E. Grisso Trust
No.1 are asserting ownership, creating a cloud on title.
Requirement: All of the above should be named in the pooling application and given notice. In the event
of production, a stipulation of interest with words of quitclaim and cross-conveyance from those parties
should be obtained and recorded.
5. Decedents' Estates
Comment: John Sedlacek, Jr. is the record owner of an 11/160th mineral interest in the NW/4 SW/4 and
29/160 in the SW/4 SW/4, Tracts 2 and 3 respectively. There appears of record a Proof of Death and
Heirship dated December 22, 1982, filed January 20, 1983 in Book 894 at page 332 for the estate of John
Sedlack, Jr. from Helen A. Sedlacek. His heirs were listed as his spouse, Helen A. Sedlacek and his children,
Mary Frances Newton, Edward Lee Sedlacek, Harry Allen Sedlacek, Anna Mae Jeske, Franklin G. Sedlacek,
Johnnie Sedlacek, III, Helen Irene Sturdivan, Rose Marie Vaughn and Linda Kay Sedlacek. The property
description was for the E/2 SW/4, but was not indexed in Section 2. There are then two Mineral Deeds
dated December 23, 1982, filed January 20, 1983 in Book 894 at Pages 334 and 337 from the named
children of the decedent to Helen A. Sedlacek. Again the property was described as the E/2 SW/4 and the
mineral deeds were not indexed against Section 2. There appears of record a Mineral Deed dated January
20, 1983, filed the same date in Book 895 at page 340 from Helen A. Sedlacek, a widow, to Mary Frances
Newton, Edward Lee Sedlacek, Harry Allen Sedlacek, Anna Mae Jeske, Franklin G. Sedlacek, Johnnie
Sedlacek, III, Helen Irene Sturdivan Rose Marie Vaughn and Linda Kay Sedlacek. Conveying all interest in
the minerals in the E/2 SW/4 reserving a life estate.
The mineral deed was not indexed against the SW/4 but did describe the E/2 SW/4. I examined a Final
Decree dated February 3, 1988, from Lincoln County Case No. P-P-86-156, the Estate of Helen A.Sedlacek.
I have credited the grantees in the above described mineral deed with the interest owned of record by
John Sedlacek, Jr.
Requirement: For drilling purposes, you may wish to rely on the proof of death and heirship as filed for
John Sedlacek, Jr. In the event of production, you should have the parties institute probate proceedings to
determine the ownership of his mineral interest in the W/2 SW/4 and they should execute a disclaimer as
to the E/2 SW/4. The mineral deed should be properly indexed in the SW/4 and the final decree of Helen
A. Sedlacek should be filed of record in the Office of the Lincoln County Clerk. (However, if the interest of
the ostensible owner or owners is miniscule, consider leaving the purchaser the option of clearing title
with an Affidavit of Death and Heirship.)
"Guideline" for preferred length of Comment and Requirement:)
Comment: J.W. Marsh is the record owner of an undivided 1/8th mineral interest in N/2 NW/4 of Sec.17.
AAPL Titles Workshop 8-3-12
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Several individuals with the surname of Marsh conveyed their interest in that tract to Golda Marsh, who
conveyed surface only to a third party. Therefore, we presume that J.W. Marsh is deceased.
Requirement: If the presumption is correct, a probate or quiet title suit should be completed by a court of
competent jurisdiction in Oklahoma to determine his death, heirs, and estate distribution. A certified
transcript of the proceedings should be provided for examination and a certified copy of the final decree
or journal entry of judgement should be recorded with the Pottawatomie County Clerk. (But, again, leave
the Purchaser the option of an Affidavit of Death and Heirship.)
6. Easements:
"Guideline": If present in the instrument, give details as to the exact location.)
Comment: We call your attention to the easements and rights-of-way set forth as Nos. 1-3 of
"Encumbrances" above. Requirement: Confirm the precise nature and location of the described rights-ofway and conduct your operations in compliance with same.
7. Existing Pooling Orders
Comment: In Book 1361, Page 762 appears an affidavit concerning Oklahoma corporation Commission
Order No. 4215432, dated March 16, 1998, pooling the equities of various named respondents in the
Checkerboard, Cleveland, Prue, Upper Skinner, Lower Skinner, Redfork .and Second Wilcox formations
underlying the SE/4 SE/4 of Section 25-13N-5E. We have assumed that this order does not remain in
effect.
Requirement: To establish marketable title, this order should be specifically vacated by the Commission.
In the alternative, you may elect to satisfy yourself as to the expiration of this order and waive this
requirement as a business risk.
Anderson
8. Old Wells
Comment: There appear of record references to the Gamma No. 1 well in E/2 SW/4 SW/4 and the Ernst
No. 1 well in W/2 SE/4 of Sec. 25. We have assumed both wells have been plugged and abandoned.
Requirement: You should confirm this assumption by examining Oklahoma Corporation and Tax
Commission Records.
9. Pooling
Comment: We have assumed that the Oklahoma Corporation Commission has established 160-acre
spacing for your intended drilling depth(s) underlying the subject lands. We have not, however, examined
AAPL Titles Workshop 8-3-12
34
any documentation in this regard.
Requirement: You should obtain any applicable spacing orders from Oil-Law Records Corporation in
Oklahoma City, OK and satisfy yourself in regard to the existence or need to establish the spacing
required for your intended drilling objective.
10. Expired But Unreleased Oil and Gas Leases
(with legal descriptions lying solely within the intended drilling unit)
Comment: There appear of record numerous unreleased oil and gas leases covering only the subject lands
or portions thereof and we assume you will rely on a Certificate of Non-Development from the Oklahoma
Corporation Commission to establish their expiration and have therefore not tabulated
them.
Requirement: Obtain and record this Certificate covering the SE/4 of Sec. 25 and any lands spaced,
unitized or pooled therewith, reflecting the absence of drilling or producing wells that would perpetuate
these leases, and conduct an on-site inspection to satisfy yourself as to the absence of drilling or
producing wells.
(with legal descriptions lying both outside and within the intended drilling unit:)
Comment: The expired but unreleased oil and gas leases listed in the "Encumbrances" section above
contain legal descriptions lying both outside and within the subject lands and we assume none have been
perpetuated by production on any of their acreage.
Requirement: To clear these leases from title, a release by the parties thereto or a Certificate of NonDevelopment from the Oklahoma Corporation Commission should be recorded for all the acreage
included in them and you should conduct an on-site inspection to further assure yourself of their
vitiation.
11. Involuntary Unitization
Comment: In Book 70 Page 379 appears an Oil and Gas Grant dated May 8, 1926, as to 1/2 the minerals in
Tract 1 containing language that might be construed as unitizing production from it.
Requirement: In order to make title to Tract I marketable, all parties listed above as owners of minerals
therein should execute a Stipulation of Interest containing words of grant or quit-claim and crossconveyance and disavowing this unitization. In alternative, you may wish to satisfy yourself as to this
matter and waive this requirement as an acceptable business risk.
(Hasn't this problem cured itself with the passage of time under OBA Title Standard 30.4?)
AAPL Titles Workshop 8-3-12
35
12. Liens, Litigation, and Judgments
Comment: This opinion is not based upon the customary examination of abstracts of title.
Requirement: You should obtain a special Abstracter's Certificate certifying that there are no pending
suits, judgments or liens filed against any party named in the Fee Title of this opinion. The certificate
should also certify as to parties in the title as follow: (54 individual names or names of companies
were listed in the original requirement.)
Note: This seems an expensive way to cure, in comparison with the following alternative:
Comment: We have not examined the records of the District Court for the County in which this well is
located, or any records other than those in the office of the County Clerk and therefore cannot opine as
to whether there are any suits, judgments or liens filed against any of the parties listed as Fee or Mineral
owners.
Requirement: You may wish to satisfy yourself as to the absence of any of these impediments to title, or
waive this requirement as a business risk.
13. A Violation of the Duhig Rule:
Objection
Leon Red was vested with an undivided 3/208 mineral interest underlying Tract No. 3. Subsequently, a
Mineral Deed appears filed of record in Book 742 at Page 257 from Don Sappington to Leon Red
conveying an undivided 1.7 net mineral acre interest in Tract No. 3. Subsequently, a Mineral Deed
appears filed of record in Book 742 at Page 258 from Leon Red in favor of Charles W. Brown purporting to
convey “an undivided 1/2 interest” in the NW/4 SE/4 and S/2 SE/4. The undersigned, for the purposes
herein, has assumed that it was the intention of the subject mineral deed to convey 1/2 of Leon Red’s
mineral rights (i.e. an undivided 1/2 of grantor’s interest) rather than an undivided 1/2 interest as is
referenced in the mineral deed.
Requirement
A Correction Mineral Deed should be executed and filed of record from Leon Red and approved by
Charles W. Brown wherein an undivided 1/2 of grantor’s mineral rights as of June 5, 1989 were conveyed
by the subject mineral deed.
None of the compromises that are required among and between examining attorney, producer and
purchaser in order to satisfy the demands of Title Standards, errors and omissions insurance, time, money
and business risk are completely satisfying to all three of these participants in the process. However, it is
here suggested that writing Objections and Requirements that not only adhere to Title Standards, but
also provide an alternative allowing the producer and purchaser to share the burden of business risk, may
provide the greatest utility to all three of the parties involved in the process of examining and curing oil
and gas titles.
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36
Exhibits
Exhibit #1 – Legal Description and Certification Date
Daniel D. Deepthinker
Attorney at Law
0000 S. Avenue, Suite 000
Bowlegs , OK 79001
(000) 000-8669
FAX (000) 000-9000
June 10, 2008
_______________ Energy, L.L.C.
320 S. ____Suite 0000
Maude, Oklahoma 79002
Attn: Mr. Jon Love
Re:
South Suwanee Prospect – Suwanee River 1-4H Well
DRILLING TITLE OPINION
All of Section 000, Township 000 North, Range 000 West,
Wahoo County, Oklahoma, containing 639.4 acres, more or less
Dear Mr. Love:
Pursuant to your request, I have examined the tract indices of the Wahoo County Clerk’s Office and
copies of the various instruments as filed of record covering the above captioned premises from inception of title
through June 4, 2008. Pursuant to my examination, I find title suitable for the purposes of drilling for oil and gas
subject to the comments, objections and requirements as hereinafter set forth as of June 4, 2008 at 8:00 a.m.
which is one and the same as the date of the recording of the Last Instrument Examined by me as recorded at
Book 1991 Page 87 in the office of the Wahoo County Clerk, as follows:
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Exhibit #2 - Consolidated Working Interest Ownership
Owner
P________ Energy,
L.L.C.
Lease
1-13
14,15
17
18
Effective
NRI
80.00%
78.25%
79.25%
74.00%
C_______ Exploration
L.L.C.
1-13
14,15
16
79.20%
78.00%
75.00%
C_____ Resources, L.L.C.
Tim Zapata
1-13
14,15
1-13 1-13
14,15
Unleased Minerals
AAPL Titles Workshop 8-3-12
77.75%
76.75%
79.25%
78.25%
Total
W.I.
Acres
Percentage
310.08680
3.30670
7.11540
8.65380
329.16270
51.47993%
239.08350
1.51810
1.71540
242.31700
37.89756%
37.56400
0.33000
37.89400
5.92649%
2.5042
0.0221
2.52630
0.39510%
27.50000
4.30092%
100.00000%
38
Exhibit #3- Surface Ownership
FEE TITLE
OWNER
Roger S_____ and Donna S_____
(Tenants in Common)
DESCRIPTION
Lots 1 (39.1 a) and 2 (39.2 a) and
S/2 NE/4
Yvonne M.______
NE/4 SE/4
Leon S_____ and Gweneth S_____
Joint Tenants
NW/4 SE/4 and S/2 SE/4
Elaine P. B_______, Trustee of the
Elaine P. B_______
Revocable Living Trust
SW/4 and Lot 3 (39.05 a) and SE/4
NW/4
Weldon R. S______ and Joyce C.
S_______, Joint Tenants
Lot 4 (39.25 a) and SW/4 NW/4
AAPL Titles Workshop 8-3-12
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Exhibit #4- Mineral & Royalty Ownership
MINERAL AND ROYALTY OWNERSHIP
Tract No. 1:
Lot 1 (39.96 acres) and Lot 2 (39.89 acres) and the South Half of the Northeast
Quarter (S/2 NE/4), a/d/a the Northeast Quarter (NE/4) of Section 4, containing
159.85 acres, more or less.
Fractional
Interest
Owner
Net
Acres
Lease
Royalty
Lease
No.
Roger S_____
79.925/159.85
79.925
3/16
11
Donna S_____
79.925/159.85
79.925
3/16
11
Tract No. 2:
The Northeast Quarter of the Southeast Quarter (NE/4 SE/4) of Section 4,
containing 40 acres, more or less.
Fractional
Interest
Owner
Yvonne M.________
Tract No. 3:
40/40
Net
Acres
Lease
Royalty
40
3/16
Lease
No.
2
The Northwest Quarter of the Southeast Quarter (NW/4 SE/4) and the South Half
of the Southeast Quarter (S/2 SE/4), a/d/a the West Half of the Southeast
Quarter (W/2 SE/4) and the Southeast Quarter of the Southeast Quarter (SE/4
SE/4) of Section 4, containing 120 acres, more or less.
Leon _____and Gwen
______, Joint Tenants
30/120
30
Michael G. Snider
7.5/120
7.5
3/16
6
Donald W. Snider
7.5/120
7.5
3/16
7
David B. Snider
7.5/120
7.5
3/16
8
Karen J. Spradlin
7.5/120
7.5
3/16
7
Joe B. Hinz and Karen V.
Hinz, Tenants in Common
4.6154/120
1/4
13
AAPL Titles Workshop 8-3-12
4.6154
3/16
9
40
G.W. Lowry, Jr.
3.4615/120
3.4615
3/16
14
Don Sappington
3.4923/120
3.4923
3/16
12
Imperial Oil Company
8.6538/120
8.6538
1/4
18
7.1154
3/16
17
3/16
15
Bank of Oklahoma, Trustee of 1 7.1154/120
the William R. Albracht I.R.A.
Leon Red
1.7154/120
1.7154
George S. Johnson
1.7308/120
1.7308
3/16
5
Charles W. Brown
1.7154/120
1.7154
1/4
16
27.5
?
The United States of America, 2 27.5/120
Bureau of Indian Affairs,
in Trust for the heirs of
Heap of______(member of
the Cheyenne/Arapaho TribeRestricted Indian)
1
2
Unleased
There is some question as to the ownership to the above 7.1154 net mineral acres. Please refer
to Objection and Requirements No. 7 below in regard thereto.
This interest may have been leased for the benefit of __X____ Resources Company, however, no
lease appears filed of record or has been submitted for examination. Please refer to Objections
and Requirements below in regard thereto.
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41
Tract No. 4:
Owner
The Southwest Quarter (SW/4) of Section 4, containing 160 acres, more or less.
Fractional
Interest
Net
Acres
Lease
Royalty
Ely P. B________, Trustee 1 160/160
160
of the Ely P. B_______Revocable Living Trust dated
August 16, 0000
3/16
Lease
No.
10
 Ely P. B_______ as Trustee owns all the executory rights and 1/2 of the rights to the royalty as to
Tract No. 4. The following parties own the following shares of a 1/2 non-participating royalty
interest in perpetuity:
Name
% of 1/2 Non-Participating Royalty
Red____ ______, Ltd.
25%
Wayne and Shawn W______,
12.0002%
Joint Tenants
KOO, Inc.
6.25%
Brian B_____
5.7379%
J.T. C______
5.7379%
Billy J. S________
5.4545%
Kenneth S_______
3.2174%
Janet W_____
3.0304%
Pauline M_______
3.0304%
Peggy H_____
3.0304%
Karlene S. G_____
3.0304%
Randy M. S_______
3.0303%
Jack W. S_______
3.0303%
James D._____, Paulette J. Q______
2.7699%
and Phyllis M. S______, Co-Trustees
of the Irving S______ and Linda
Sc______ 1987 Irrevocable Trust
Guy M____
2.5%
Benferd J. H___
1.5625%
Carol L. ____
1.5625%
William A. L_____, Jr.
1.275%
James R. W_____, Jr.
1.25%
Patrick T. C______
1.25%
Bill J. T_______
1.25%
Christie L. G____
1.25%
Laura J. T____
1.25%
Danny R. M_____
1.25%
Wayne G. G________
.625%
Stephen V. E_____
.625%
AAPL Titles Workshop 8-3-12
Acres
20.0
9.6004
5.0
4.5903
4.5903
4.3636
2.5739
2.4243
2.4243
2.4243
2.4243
2.4242
2.4242
2.2159
2.0
1.25
1.25
1.02
1.0
1.0
1.0
1.0
1.0
1.0
.5
.5
42
Tract No. 5:
Lot 4 (39.74 acres) and the Southwest Quarter of the Northwest Quarter (SW/4
NW/4) a/d/a the West Half of the Northwest Quarter (W/2 NW/4) of Section 4,
containing 79.74 acres, more or less.
Fractional
Interest
Owner
Weldon R. S_______ and
79.74/79.74
Joyce C. S_______, Joint Tenants
Tract No. 6:
Net
Acres
79.74
Lease
Royalty
Lease
No.
3/16
4
Lot 3 (39.81 acres) and the Southeast Quarter of the Northwest Quarter (SE/4
NW/4), a/d/a the East Half of the Northwest Quarter (E/2 NW/4) of Section 4,
containing 79.81 acres, more or less.
Owner
Fractional
Interest
P______ Exploration and
Producing, Inc.
Arlene B______
AAPL Titles Workshop 8-3-12
39.905/79.81
39.905/79.81
Net
Acres
39.905
39.905
Lease
Royalty
3/16
3/16
Lease
No.
3
1
43
Exhibit #5 – Combined Oil & Gas Leasehold
I.
Leases #1-#13
_____________ Energy, L.L.C.
__________Exploration, L.L.C.
__________Resources, L.L.C.
Tim Zapata
1
2
3
II.
________________Energy, L.L.C.
____________Exploration, L.L.C.
____________Resources, L.L.C.
Tim Zapata
2
III.
1
2
2,,3
2
(5.1769 acres @ 3/16 royalty)
63.875%
29.325%
6.375%
.425%
1
1,2
1,2
1
All the above working interest is subject to overriding royalty interest of 2.5% owned by _______
Energy Company, L.L.C. and a 1% x 8/8 overriding royalty interest owned by C________ Energy,
Inc.
6.375% of the working interest owned by C___________ Exploration, L.L.C. and all the working
interest owned by O__________Resources, L.L.C. is subject to an overriding royalty interest of
.75% x 8/8 owned by Tim Zapata and John Shoemaker, each.
Lease #16
C___________ Exploration, L.L.C.
IV.
52.625%
40.575%
6.375%
.425%
The working interest of _________Energy, L.L.C. is subject to an overriding royalty interest of
1.25% owned by J___ D. W______.
The above working interest is subject is subject to an overriding royalty interest of 2% x 8/8
owned by C_______ Energy, Inc. 6.375% of the working interest shown owned by
______________Exploration, L.L.C. is subject to an additional override of .75% owned by Tim
Zapata and John Shoemaker, each.
All the working interest of Oxley Resources, L.L.C. is subject to an overriding royalty interest of
.75% owned by Tim Zapata and John Shoemaker, each.
Leases #14 and #15
1
(589.2385 acres @ 3/16 royalty)
Leases #17 and #18
______________Energy, L.L.C.
(1.7154 acres @ 1/4 royalty)
100%
(7.1154 acres @ 3/16 royalty)
(8.6538 acres @ 1/4 royalty)
100%
1
1
The working interest of ____________Energy, L.L.C. as to Lease #17 is subject to a 2% x 8/8 overriding
royalty owned by C_______ Energy, Inc. and a 1% override as to Lease #18 owned by C________Energy,
Inc.
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V.
Unleased Mineral Owners
(27.5 acres)
Exhibit #6 – Leases & Assignments
Lease #1
Type:
Paid-Up
Dated:
July 9, 2005
Recorded:
Book 1015, Page 994
Lessor:
Arlene K. B_____
Lessee:
C____D_____ Energy, L.L.C.
Description:
Lot 3 and SE/4 NW/4 of Section 000-000N-000W
Primary Term: 3 years
Royalty:
3/16
Shut-in Gas Clause:
Yes - $1.00 per year per acre.
Pooling Clause: Yes
Entireties Clause: None
Special Provisions:
None
Lease #2
Type:
Paid-Up
Dated:
July 9, 2005
Recorded:
Book 1016, Page 119
Lessor:
Yvonne M. F______
Lessee:
C____D_____ Energy, L.L.C.
Description:
NE/4 SE/4 of Section 000-000N-000W
Primary Term: 3 years
Royalty:
3/16
Shut-in Gas Clause:
Yes - $1.00 per year per acre.
Pooling Clause: Yes
Entireties Clause:
None
Special Provisions:
The lease contains a Pugh clause releasing all rights below the deepest formation
penetrated
Lease #3
Type:
Dated:
Recorded:
Lessor:
Paid –Up
July 9, 2005
Book 1016, Page 125
Del __________, Individually and as Trustee of the Del ________ Revocable Trust dated January
17, 2000
Lessee:
C____D_____ Energy, L.L.C.
Description:
Lot 3 and SE/4 NW/4 of Section 4-11N-16W
Primary Term: 3 years
Royalty:
3/16
Shut-in Gas Clause:
Yes - $1.00 per year per acre.
Pooling Clause: Yes
Entireties Clause:
None
Special Provisions:
None
Special Provisions:
The lease contains a Pugh clause releasing all rights below total depth plus 100 feet and a
no deduction of cost clause
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Exhibit #7 – Assignment of Leases
Assignment of Leases #1-#13
Dated:
Recorded:
Assignor:
Assignee:
Interest Assigned:
January 1, 0000
Book 0000, Page 0000
C___ C____Energy, L.L.C.
See below
All right, title and interest reserving an overriding royalty interest equal to the
difference between 79.25% and existing lease burdens
Assignee
% of Interest
O____ D_____, L.L.C.
12.75%
Tim Zapata
0 .85%
C___ J. D____, Trustee of the
4.25%
C___ J. D____ Revocable Trust
XYZ Energy, L.L.C.
4.25%
S_____ Resources, Inc.
9.35%
N______ Petroleum Corporation
4.675%
C_______ Energy, Inc.
3.75%
M______ Oil & Gas, L.L.C.
14.375%
L_______ Exploration, Inc.
3.0%
J____ E. W_____
2.25%
R______ E. G_______
2.25%
(retained 38.25%)
61.75%
Assignment of Leases #1-#13 (ORRI)
Dated:
Recorded:
Assignor:
Assignee:
Interest Assigned:
January 1, 0000
Book 0000, Page 0000
C____ C_____Energy, L.L.C.
C________ Energy, Inc.
The overriding royalty interest previously reserved to 79.25% in the previous
assignment
Assignment of Leases #1-#13 (ORRI)
Dated:
January 1, 0000
Recorded:
Book 0000, Page 0000
Assignor:
C____ C_____Energy, L.L.C.
Assignee:
J___D___ W_______
Interest Assigned:
A 1.25% overriding royalty interest on the working interest of assignor
Assignment of Leases #1-#13
Dated:
August 8, 2006
Recorded:
Book 1044, Page 175
Assignor:
M_____________ Oil & Gas, L.L.C.
Assignee:
V_____Z______ Energy, L.L.C.
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Interest Assigned:
All right, title and interest
Assignment of Leases #14 and #15
Dated:
Recorded:
Assignor:
Assignee:
Interest Assigned:
September 1, 0000
Book 1054, Page 53
____ Energy Company, L.L.C.
V_____Z_______ Energy, L.L.C.
All right, title and interest reserving an ORRI of 2.5%
Exhibit #8 - Possession
POSSESSION
No evidence of possession has been submitted to the undersigned for examination. Please refer to
Comment No. 1 below in regard thereto.
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Exhibit #9 - Encumbrances
TAXES
Payment of Ad Valorem Taxes are not certified to.
UNRELEASED MORTGAGES
1.
Dated:
Recorded:
Mortgagor:
Mortgagee:
Coverage:
Principal Amount:
Subordinated:
September 21, 2007
Book 1082, Page 439
Roger S_____ and Donna S_____
Oklahoma Bank & Trust Company, Bowlegs, Oklahoma
Lots 1 and 2 and S/2 NE/4
$1,039,800.00
No and none is required
2.
Dated:
Recorded:
Mortgagor:
Mortgagee:
Coverage:
Principal Amount:
Subordinated:
August 29, 1991
Book 775, Page 325
George F______ and Yvonne F______
Farm Credit Bank of Wichita
NE/4 SE/4
$300,000.00
No. This mortgage should be subordinated in favor of Lease #2
3.
Dated:
Recorded:
Mortgagor:
Mortgagee:
Coverage:
Principal Amount:
Subordinated:
September 23, 1981
Book 565, Page 354
Roger S______ and Donna S______
Commissioners of the Land Office
Lots 1 and 2 and S/2 NE/4
$98,700.00
No. This mortgage should be subordinated in favor of Lease #11
4.
Dated:
Recorded:
Mortgagor:
Mortgagee:
Coverage:
Principal Amount:
Subordinated:
January 6, 1978
Book 476, Page 829
Weldon S_______ and Joyce S_______
Farmers Home Administration
Lot 4 and SW/4 NW/4
$40,000.00
No. This mortgage should be subordinated in favor of Lease #4
UNRELEASED OIL AND GAS LEASES
Comment: The undersigned’s review of the tract index and the various documents submitted for
examination reveal no unreleased oil and gas leases that were executed prior to the effective date of the
Oklahoma Statutory Pugh Clause and which covered acreage other than in Section 4. It has been
assumed that all unreleased oil and gas leases whose primary terms have expired are of no further force
and effect and that there has been no production, a shut-in gas well, or other operations sufficient to
perpetuate any of the unreleased oil and gas leases to date. Please refer to Objections and Requirements
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below in regard thereto.
PENDING SUITS, JUDGMENTS OR LIENS
No evidence of any pending suits, judgments or liens appears filed of record against the captioned
premises in the Wahoo County Clerk’s Office. In connection with the foregoing, the undersigned did not
examine the civil direct/indirect indexes in the Wahoo County Court Clerk’s Office to verify that any
lawsuits had been filed by or against the record title owners to the subject premises nor did the
undersigned examined the probate index. Please refer to the Objections and Requirements below in
regard thereto.
EASEMENTS AND/OR RIGHTS-OF-WAY
1.
Dated:
January 26, 1984
Recorded:
Book 642, Page 654
Grantor: Donald S_____ et al
Grantee: Reliance Pipeline Company
Description:
SE/4 SE/4 and W/2 SE/4
2.
Dated:
December 22, 1983
Recorded:
Book 642, Page 677
Grantor: Manfred W______
Grantee: Reliance Pipeline Company
Description:
SW/4
Comment: A Memorandum of Lease Agreement appears filed of record referencing a surface lease
covering the SE/4 dated June 24, 2002 for a 30 year term by and between Leon and Gwen S_____ to
L_________ Wind Corporation, Inc.
Comment: You should ascertain the location of all easements and rights of way and note the surface
lease agreement as referenced above and ensure that your intended operations do not interfere or
encroach upon same.
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Exhibit #10 - Comments
 This Opinion is subject to the rights of all parties in possession of the subject property. You should
determine what interest is claimed by any such party in possession other than the record owners of the
surface. In the event a tenant is in possession, we require you to obtain a tenant’s consent agreement
prior to the commencement of operations upon the property.
 This examination does not cover rights of which possession might be notice or orders, rules and
regulations of governmental agencies, or mechanics, materialmens or waiver of liens, or future
installments of assessments or liens of federal or state governments or any other claim not shown of
record in the materials examined; nor can I certify as to the identity, competency, or majority of persons
executing the instruments shown in the chain of title.
 Matters stated in this Opinion are subject to all orders of the Oklahoma Corporation Commission with
respect to pooling, spacing, the establishment of drilling units, unitization and the like. These items are
not usually part of the public records and are not required to be. You should inquire as to the terms of all
such orders which may affect any one or more formations underlying the subject property and furnish
copies of all of same to me for my examination. Furthermore, the undersigned has assumed that all
orders of the Oklahoma Corporation Commission relating to spacing, pooling and location exceptions
have been properly issued pursuant to correct legal notice and the constitutionality of all rules and
statues pertaining to the Corporation Commission. The undersigned has also assumed the
constitutionality of all Oklahoma title curative statutes.
 The ownership as is reflected in this Opinion is based solely on the various documents which have been
filed of record in the county in which the subject property is located. Various matters, including
bankruptcy proceedings, are filed in the Federal District Court and are often not placed of record in the
County. The effect of any such matters filed in the Federal District Courts, therefore, has not been
incorporated in this Opinion.
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Exhibit #11 – Objections and Requirements
OBJECTION NO. 1
Your attention is directed to the unleased mineral interest owners as are set forth above under
“Ownership”.
REQUIREMENT
Previous to conducting drilling operations for your proposed test well you should obtain as applicable, 1)
an oil and gas lease from said mineral interest owners, 2) a Participation or Joint Operating Agreement
with those mineral interest owners that desire to participate in your proposed test well, or 3) force pool
those mineral interest owners with whom you cannot voluntarily agree to develop the unit.
OBJECTION NO. 2
Your attention is directed to the various working interest owners that own a record title working interest
under existing oil and gas leases.
REQUIREMENT
Previous to conducting drilling operations for your proposed test well you should obtain as applicable, 1)
an assignment or farmout of said working interest, 2) a participation or joint operating agreement with
those working interest owners that desire to participate in your proposed test well, or 3) force pool those
working interest owners with whom you cannot voluntarily agree to develop the unit.
OBJECTION NO. 3
Your attention is directed to the fact that the primary terms of a number of the base oil and gas leases as
set forth herein expired in July of 2008 (being Leases #1-#12 herein). The undersigned, pursuant to your
request, has shown these leases as being valid oil and gas leases based upon the assumption that you
shall commence drilling operations previous to July 9, 2008 on the subject premises. In the event that
one or more of the oil and gas leases’ primary terms expire, then changes in and to the ownership as set
forth herein would be necessitated.
REQUIREMENT
You must independently ensure that you commence drilling operations, as that term is defined by the
Oklahoma Supreme Court, previous to the expiration of the primary terms of the subject oil and gas
leases.
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OBJECTION NO. 4
As is noted under “Leases and Assignments” C_____Energy, L.L.C. executed an assignment effective as of
January 1, 2006 recorded in Book 1229 at Page 948. The Exhibit “A” attached to said assignment
referenced an oil and gas lease dated July 19, 2005 which was not recorded of record in Wahoo County as
executed by The Bureau of Indian Affairs on behalf of the heirs of Heap of ______in favor of
C_______Energy, L.L.C. The undersigned has now been orally advised that this oil and gas lease was
never approved and is not a valid oil and gas lease in favor of C________ Energy, L.L.C. and, therefore, the
undersigned has reflected this interest as unleased herein. The undersigned has further been orally
advised that the lease was subsequently put up for bid at the Bureau of Indian Affairs Auction and that
T_______ Properties, Inc. was the successful bidder on behalf of S____________Company. No records of
the Bureau of Indian Affairs or Concho agency have been examined.
REQUIREMENT
Investigation should be made as to the current existence and validity of the subject oil and gas lease and
whether, in fact, what is shown as the unleased mineral interest has been leased. P_________L.L.C.
should execute a disclaimer of any interest under the subject oil and gas lease in light of the fact that it
was included on the exhibit to the subject assignment as above referenced. You should name T______
Properties, Inc. and/or S__________ Company for your well proposal purposes. A status report of the
subject oil and gas leasehold and the records of the Bureau of Indian Affairs should be obtained and
submitted for examination. Depending upon what is submitted, additional objections and requirements
and/or changes in and to the ownership as set forth herein may be necessitated.
OBJECTION NO. 5
A number of assignments of oil and gas leases as set forth herein by and between C________ Energy,
L.L.C. et al referenced that the assignments were made subject to terms of an unrecorded letter
agreement (apparently an Exploration Agreement) dated November 15, 2004 by and between the
assignors and assignees. The undersigned has not examined a copy of the unrecorded Letter Agreement
and the effect of the terms, if any. Upon the ownership as is set forth herein by and between the various
assignees of C________ Energy, L.L.C. have, therefore, not been incorporated herein.
REQUIREMENT
The unrecorded Letter Agreement should be obtained and submitted for examination subject to possible
additional objections and requirements and/or changes in and to the ownership to be made in regards
thereto.
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OBJECTION NO. 6
C________ Energy, L.L.C. remains the record title owner of the working interest under Leases #1-#13
shown owned by P_________, L.L.C. The undersigned has credited this working interest in P__________,
L.L.C. as the apparent successor to the record title ownership of C_________ Energy, L.L.C.
REQUIREMENT
Evidence of the succession by P____________, L.L.C. to the record title working interest should be filed of
record against the subject premises.
OBJECTION NO. 7
A Mineral Patent appears filed of record #35-85-0085 from The United States of America to the Trust
Company of Oklahoma “Trustee 0000-50-05” conveying an undivided 37/624 mineral interest in Tract No.
3. In connection therewith, your attention is directed to the execution of Lease #17 by the Bank of
Oklahoma as Trustee of the William R. _______ IRA which purports to cover this same interest.
Subsequent to the above referenced mineral patent, a Trustees Quit Claim Mineral Deed and Conveyance
appears filed of record dated November 4, 2005 recorded in Book 1023 at Page 340 in which The Trust
Company of Oklahoma, “Trustee 0658-50-05” (grantor) conveys unto Donnie __________ Living Trust,
The Trust Company of Oklahoma as Agent (grantee) all of grantor’s right, title and interest referencing an
undivided 37/624 interest in all minerals underlying Tract No. 3. Subsequently, however, a Mineral Deed
appears filed of record dated June 27, 2006 recorded in Book 1041 at Page 650 wherein the Bank of
Oklahoma, N.A. (successor by merger to the interest of BancOklahoma Trust Company, successor by
merger to the interest of the Trust Company of Oklahoma, Oklahoma City, Trustee 0658-50-05 (grantor)
conveys unto Bank of Oklahoma N.A. Trustee of the William R.________ IRA an undivided 37/624 interest
in Tract No. 3. The undersigned, for the purposes of this Opinion, has assumed that the subsequent
mineral deed is a valid mineral deed conveying the undivided 37/624 mineral interest as originally
created under the Mineral Patent recorded in Book 1671 at Page 828.
REQUIREMENT
The Trust Company of Oklahoma as Agent for the Donnie _______Living Trust should execute a Mineral
Quit Claim Deed conveying an undivided 37/624 mineral interest in the SE/4 SE/4 and the W/2 SE/4 of
Section 4 and said mineral deed filed of record. You should name the Trust Company of Oklahoma as
agent of the Donnie__ ______Living Trust as a respondent in your force pooling proceedings if the quit
claim deed is not filed of record. In the event that the Trust Company of Oklahoma as Agent of the
Donnie_______ Living Trust is claiming the subject 37/624 mineral interest, which would appear likely in
light of the quit claim deed, then additional objections and requirements may be necessitated in this
regard. Depending upon what is submitted in connection with the foregoing, additional objections and
requirements and/or changes in and to the ownership may be necessitated.
OBJECTION NO. 8
Leon _____was vested with an undivided 3/208 mineral interest underlying Tract No. 3. Subsequently, a
Mineral Deed appears filed of record in Book 1742 at Page 2578 from Don S__________ to Leon
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______conveying an undivided 1.7 net mineral acre interest in Tract No. 3. Subsequently, a Mineral Deed
appears filed of record in Book 1742 at Page 2558 from Leon ______ in favor of Charles W. _____
purporting to convey “an undivided 1/2 interest” in the NW/4 SE/4 and S/2 SE/4. The undersigned, for
the purposes herein, has assumed that it was the intention of the subject mineral deed to convey 1/2 of
Leon_____ ’s mineral rights (i.e. an undivided 1/2 of grantor’s interest) rather than an undivided 1/2
interest as is referenced in the mineral deed.
REQUIREMENT
A Correction Mineral Deed should be executed and filed of record from Leon______ and approved by
Charles W. _____wherein an undivided 1/2 of grantor’s mineral rights as of June 5, 1989 were conveyed
by the subject mineral deed.
OBJECTION NO. 9
A Mineral Deed appears filed of record in Book 950 at Page 380 from Stephen R_______ and Diane
R_____ in favor of R_______ Energy, L.L.C. purporting to convey an undivided 6.96 net mineral acres in
Section 4. Stephen and/or Diane________ would appear to be strangers to the record title mineral
ownership based upon the documents examined by the undersigned.
REQUIREMENT
The muniment or basis of title by which Stephen R_____ and/or Diane_______ acquired any mineral
interest in Section 4 should be obtained and submitted for examination. You may desire to name
R_________ Energy, L.L.C. as a respondent in your force pooling proceedings for protection purposes.
Depending upon what is submitted in connection with the foregoing, additional objections and
requirements and/or changes in and to the ownership may be necessitated.
OBJECTION NO. 10
Your attention is directed to the unreleased mortgages as are set forth above under “Encumbrances”.
REQUIREMENT
As to those mortgages executed previous to the base oil and gas leases as executed by the mortgagors
(Nos. 2, 3 and 4) these mortgages should be subordinated in favor of the subject oil and gas leases. As to
the mortgage executed subsequent to the execution of the base oil and gas lease as executed by the
mortgagor, no requirement is deemed necessary for drilling purposes. In the event of production for all
the unreleased mortgages, the mortgagee should join in the execution of the relevant division order or
payment made to the mortgagee pursuant to the assignment of production as contained in said
mortgages.
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OBJECTION NO. 11
A Memorandum of Surface Lease Agreement appears filed of record in Book 1946 at Page 874 dated June
24, 2002. This Memorandum gives notice to third parties of a surface lease agreement between Leon and
Glenn _______and the L_________ Wind Corporation, Inc. This lease covers the SE/4 and is for a 30 year
term.
REQUIREMENT
Take notice of the existence of the lease agreement and ensure that your intended operations do not
interfere or encroach upon the rights of the lessee under the subject surface lease.
OBJECTION NO. 12
A number of unreleased oil and gas leases appear filed of record whose primary terms have expired.
There are no unreleased oil and gas leases executed previous to the effective date of the Oklahoma
Statutory Pugh Clause which covered acreage other than in Section 4. It has been assumed for the
purposes of this Opinion that all unreleased oil and gas leases whose primary terms have expired are of
no further force and effect.
REQUIREMENT
You must independently verify and ensure that there has been no production, a shut-in gas well, or other
operation sufficient to perpetuate the unreleased oil and gas leases to date.
Very truly yours,
S___________ Attorney at Law
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Exhibit #12 – DOTO Unit Summary
EXHIBIT "D"
DIVISION OF INTEREST
For purposes of distribution of revenues from the production of oil and gas from the Schumacher 2-10
Well, consisting of the N/2 of Section 10-7N-14E, Pittsburg County, Oklahoma, you should cause Division
Orders to be executed by the following parties in the following interests, subject to the Comments and
Requirements set forth in this Opinion:
ROYALTY
Robert G. Murrin and Angie Murrin, JT
James W. Murrin and Betty J. Murrin, JT
Monty Murrin and Lawanda Murrin, JT
Barbara Pitts, Deceased
Mary Alongi
Bill C. King and Patricia King
Michael King c/o Joe C. King
Nancy Loy
Curtis King
Joseph Loring King
Bruce A. Kruglick
Karen K. Kruglick
Jeffrey B. Werner
Connie L. Werner
Leslie W. Mayeron
Mary Minerva Bender
Emma Leah DeFord
Addie Carolyn Land
Terra Rosa Royalty Corp.
Dawkins Royalty, L.L.C.
Rulewicz Energy, L.L.C.
PetroTiger I, Ltd.
Jeff G. Slade
Arrowhead Oil and Gas Inc.
J.W. and D.L. Stewart 1987 Trust
TRACT/LEASE
CALCULATION
OF REVENUES
1/4
1, 2, 3 / 5
1/3
2/8
2 / 11
3 / 32
3 / 30
3 / 29
3 / 31
3 / Open
4, 5 / 13
4, 5 / 14
4, 5 / 9
4, 5 / 12
4, 5 / 10
5 / FP
5 / FP
5 / FP
6 / 34
6 / 18
6 / 33
6 / 24
6 / FP
6 / Open
6 / Open
3/16 x 10.00/320
3/16 x 80.00/320
3/16 x 10.00/320
3/16 x 10.00/320
3/16 x 10.00/320
3/16 x 13.333334/320
3/16 x 4.444445/320
3/16 x 4.444444/320
3/16 x 4.444444/320
1/8 x 13.333333/320
3/16 x 30.625/320
3/16 x 30.625/320
3/16 x 20.416667/320
3/16 x 20.416667/320
3/16 x 20.416666/320
1/8 x 2.50/320
1/8 x 2.50/320
1/8 x 2.50/320
3/16 x 9.25/320
3/16 x 10.50/320
3/16 x 2.00/320
3/16 x 1.8176339/320
1/8 x 2.6823661/320
1/8 x 3.3088235/320
1/8 x 0.4411765/320
TOTAL
OVERRIDING
ROYALTY
UNIT
NET REVENUE
0.00585938
0.04687500
0.00585938
0.00585938
0.00585938
0.00781250
0.00260417
0.00260417
0.00260417
0.00520833
0.01794434
0.01794434
0.01196289
0.01196289
0.01196289
0.00097656
0.00097656
0.00097656
0.00541992
0.00615234
0.00117188
0.00106502
0.00104780
0.00129250
0.00017232
0.18217467
TRACT/LEASE
CALCULATION
OF REVENUES
UNIT
NET REVENUE
None
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WORKING
INTEREST
TRACT/
LEASE
CALCULATION
OF REVENUES
COSTS
UNIT NET
REVENUE
1/4
1, 2, 3 / 5
1/3
2/8
2 / 11
4, 5 / 13
4, 5 / 14
4, 5 / 9
4, 5 / 12
4, 5 / 10
5 / FP
5 / FP
5 / FP
6 / 18
6 / FP
13/16 x 10.00/320
13/16 x 80.00/320
13/16 x 10.00/320
13/16 x 10.00/320
13/16 x 10.00/320
13/16 x 30.625/320
13/16 x 30.625/320
13/16 x 20.416667/320
13/16 x 20.416667/320
13/16 x 20.416666/320
7/8 x 2.50/320
7/8 x 2.50/320
7/8 x 2.50/320
13/16 x 10.50/320
7/8 x 2.68236610/320
0.031250000
0.250000000
0.031250000
0.031250000
0.031250000
0.095703125
0.095703125
0.063802084
0.063802084
0.063802082
0.007812500
0.007812500
0.007812500
0.032812500
0.008382394
0.822444894
0.02539063
0.20312500
0.02539063
0.02539063
0.02539063
0.07775879
0.07775879
0.05183919
0.05183919
0.05183919
0.00683594
0.00683594
0.00683594
0.02666015
0.00733458
0.67022522
3 / 32
3 / 30
3 / 29
3 / 31
13/16 x 13.333334/320
13/16 x 4.444445/320
13/16 x 4.444444/320
13/16 x 4.444444/320
0.041666669
0.013888889
0.013888888
0.013888888
0.083333334
0.03385417
0.01128472
0.01128472
0.01128472
0.06770833
6 / 33
6 / 24
6 / 34
13/16 x 2.00/320
13/16 x 1.81763390/320
13/16 x 9.25/320
0.006250000
0.005680106
0.028906250
0.00507813
0.00461509
0.02348633
3 / Open
6 / Open
6 / Open
7/8 x 13.3333333/320
7/8 x 0.44117647/320
7/8 x 3.30882353/320
0.041666666
0.001378676
0.010340074
0.03645833
0.00120633
0.00904755
1.000000000
0.81782533
Penn Virginia MC Energy L.L.C.
Plus (Robert and Angie Murrin)
Plus (James and Betty Murrin)
Plus (Monty and Lawanda Murrin)
Plus (Barbara Pitts, Deceased)
Plus (Mary Alongi)
Plus (Bruce A. Kruglick)
Plus (Karen K. Kruglick)
Plus (Jeffrey B. Werner)
Plus (Connie L. Werner)
Plus (Leslie W. Mayeron)
Plus (Mary Minverva Bender)
Plus (Emma Leah DeFord)
Plus (Addie Carolyn Land)
Plus (Dawkins Royalty)
Plus (Jeff G. Slade)
Subtotal Penn Virginia
BP America Production Company
Plus (Bill and Patricia King)
Plus (Michael King)
Plus (Nancy Loy)
Plus (Curtis King)
Subtotal BP America
Antero Resources Corporation (Rulewicz)
Muirfield Resources Corp. (PetroTiger)
Chesapeake Exploration Limited
Partnership (Terra Rosa)
(all formations except the Woodford Shale)*
Joseph Loring King
J. W. and D. L. Stewart 1987 Trust
Arrowhead Oil & Gas, Inc.
TOTAL LEASEHOLD
*
Per Assignment E detailed herein, XTO Energy, Inc. owns the leasehold for the Woodford Shale formation only, and
Chesapeake owns the leasehold for all other formations.
RECAP
Royalty Interests:
Overriding Royalty Interest
Net Revenue Interest
0.18217467
0.00000000
0.81782533
1.00000000
AAPL Titles Workshop 8-3-12
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Exhibit #13 - Production Revenue Standards Act
Production Revenue Standards Act
Oklahoma Statutes [52 O.S. §87.5 et seq]
§52-570.1. Short title.
Sections 1 through 15 of this act shall be known and may be cited as the "Production Revenue Standards Act".
Added by Laws 1992, c. 190, § 1, eff. Sept. 1, 1992.
§52-570.2. Definitions.
As used in the Production Revenue Standards Act:
1. "Owner" means a person or governmental entity with a legal interest in the mineral acreage under a well
which entitles that person or entity to oil or gas production or the proceeds or revenues therefrom;
2. "Produce", "Producing" and "Production" mean the physical act of severance of oil and gas from a well by an
owner and includes but is not limited to the sale or other disposition thereof;
3. "Producing owner" means an owner entitled to produce who during a given month produces oil or gas for its
own account or the account of subsequently created interests as they burden its interest;
4. "Proportionate production interest" means that interest in production which a working interest owner is
entitled to produce in order to adjust for shifting of royalty burdens among working interest owners under the
royalty payment provisions of this act, and is equal to the quotient of:
a.
the sum of that working interest owner's net revenue interests plus the net revenue interests of
any subsequently created interests as they burden such owner's working interest,
b.
divided by the remainder of one (1) less the royalty share;
5. "Proportionate royalty share" means the percentage of the royalty share owned by a royalty interest
owner calculated by dividing such owner's royalty interest in a well by the royalty share;
6. "Royalty interest" means the entirety of the percentage interest in production or proceeds therefrom:
a.
reserved or granted by a mineral interest owner exclusive of any interest defined as a working
interest or a subsequently created interest, or
b.
law.
otherwise provided or ascribed to a mineral interest owner by statute, rule, order or operation of
The interest of a participating mineral interest owner shall be designated in part as a royalty interest and
in part as a working interest as set forth in Section 87.1 of Title 52 of the Oklahoma Statutes;
AAPL Titles Workshop 8-3-12
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7. "Royalty interest in a well" means an owner's royalty interest multiplied by the quotient of:
a.
the gross mineral acres under the well attributable to such interest, divided by
b.
the total mineral acres under the well;
8. "Royalty proceeds" means the share of proceeds or other revenue derived from or attributable to any
production of oil and gas attributable to the royalty share, but shall not include payments of bonus, delay rentals,
shut-in royalties or any additional royalty payable to the Commissioners of the Land Office or other governmental
entity, pursuant to and valued according to the terms of its oil and gas lease, which is calculated separately from
the royalty portion of actual proceeds from the sale of oil or gas;
9. "Royalty share" means the percentage of the well equal to the sum of all royalty interests in a well;
10. "Subsequently created interest" means any interest carved from a working interest other than a royalty
interest. In addition to the royalty interest contained in a lease, a nonparticipatory interest created by a working
interest owner for the benefit of a mineral interest owner in excess of a one-eighth (1/8) royalty interest may, by
separate agreement other than the oil and gas lease, be a subsequently created interest and thereby not be
communitized under the terms of the Production Revenue Standards Act only if there is clear and unambiguous
language expressing that intent in the creating document. The additional royalty payable to the Commissioners
of the Land Office or other governmental entity, pursuant to and valued according to the terms of its oil and gas
lease, which is calculated separately from the royalty portion of actual proceeds from the sale of oil or gas shall
also be a subsequently created interest and thereby shall not be communitized under the Production Revenue
Standards Act;
11. "Well" means an oil or gas well, and shall include:
a.
a well having uniform ownership as to all producing zones,
b.
a drilling and spacing unit having uniform ownership wherein multiple wells producing gas are
commonly metered, and
c.
each separately metered producing zone within a single wellbore wherein ownership varies by
zone; and
12. "Working interest" means the interest in a well entitling the owner thereof to drill for and produce oil and
gas, including but not limited to the interest of a participating mineral owner to the extent set forth in Section
87.1 of Title 52 of the Oklahoma Statutes.
AAPL Titles Workshop 8-3-12
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Exhibit #14 - NADOA Article
(Portion of CDOA Review Manual
Used with NADOA permission)
Overview of Oklahoma Royalty Payment and Revenue Sharing Legislation and History
The following is a chronological chart outlining the history of royalty payments, revenue sharing and the
problems which lead to today's legislation.
1930s The theory and practice of oil and gas conservation were established, including the spacing
statute of 87.1.
1945 Oklahoma enacts forced pooling which enables anyone with a leasehold interest to pool an area
according to the conservation rules and drill a well.
1963 The Blanchard Decision states that all royalty owners should be paid their normal % royalty no
matter who sells. At this point in time almost every royalty is I/s and for a standard value.
1975 An arbitrary date to denote that royalty owners are obtaining increasingly larger fractional
royalties. The royalty above the normal 1/s is named the Excess Royalty and generally paid only when
the working interest owner who took the lease sells gas.
1983 House Bill 1221 (Sweetheart Gas Bill) is passed in response to small working interest owners
who are unable to sell their gas in the traditional contract bound market. Due to downturn in gas prices,
some working interest owners continue not to sell.
1985 Senate Bill 160 is passed which makes all first purchasers joint and severally liable to all royalty
owners. SB160 also causes all working interest owners selling gas to be responsible for paying all royalty
owners, even those royalty interests which they did not lease, for their full royalty fractions; SB160 is
currently in the courts. Judge Phillips ruled that the law does not apply to contracts prior to the passage
of SB160 (10/18/85). Still at issue in the courts is whether the law is constitutional
1987 The gas market in Oklahoma begins to shift to a spot market which makes SB160 even more
of a problem with its first purchaser liability.
1989 Inter-industry meetings begin to attempt to resolve the problems of SB 160 which include
multiple interpretations and the ongoing litigation for constitutionality. The royalty owners want
payments whenever gas is sold no matter who sold it and the independents want to withhold gas from
the market and not have to pay royalties out of pocket. Additionally, the group begins to also address
revenue sharing problems which some of the industry is suffering.
1990 House Bill 2357 evolves as one method to address the payment and the revenue sharing
problems of Senate Bill 160. It fails and an interim study known as the 'Commission on Oil and Gas
Production Practices' is set up in order to find a solution for the next session. They concentrate on the
same method as HB2357, which is full volume and value communitization of royalty.
1991
The product of the Commission is introduced as Senate Bill 168.
AAPL Titles Workshop 8-3-12
60
1992
Senate Bill 168 is passed by the Legislature and signed into law by the Governor.
The Production Revenue Standards Act applies as follows:
Type of Well I Production
Applicable Provisions
All Wells
Provisions for.
Definitions
Timing
Interest
Division Order
Payment Information
Corporation Commission Authority
Jurisdiction
Wells with gas production -
Additional Provisions for.
NOT under unitized management
NOT subject to written agreement by
all owners on method of royalty
payment
New Royalty Payment Method
Entitlements based on Proportionate
Production Interest
Lessee Pays Lessor
It is important to understand that in all states but
Oklahoma and Arkansas, the royalty owner
(lessor) is paid gas proceeds by the working interest
owner (lessee) with which it has a lease contract. In
this arrangement, the lease contract as it contributes
to the
drilling and spacing unit controls the production to
which each working interest owner is entitled
(otherwise known as gross working interest). An
illustration of two working interest owners and two
royalty owners in a drilling and spacing unit is
illustrated below:
640 Acre Unit
Lease Contract #1 covering 320 acres
Royalty Owner #1
Proceeds = 1/8 of 320 acres
Working Interest Owner #1
Proceeds = Net 7/8 of 320 acres
Gas Entitlement and Billing = Gross Working Interest of 8/8ths of
320 acres
Lease Contract #2 covering 320 acres
Royalty Owner #2
Proceeds = 1/4 of 320 acres
AAPL Titles Workshop 8-3-12
61
Working Interest Owner #2
Proceeds = Net 3/4 of 320 acres
Gas Entitlement and Billing = Gross Working Interest of 8/8 of
320 acres
In the above example, whenever the working
interest owner in Lease Contract #1 sells, it would
pay Royalty Owner #1. If payment is made under a
sales method, the royalty owner would receive 1/8th
of only the production proceeds from Working
Interest Owner #1's sales. If the payment is made
under an entitlements method, the royalty owner
would receive half of (320/640 acres) of the total
production volume of the unit paid by Working
Interest Owner #1.
Note that in the above example, gas balancing is
performed based on the Gross Working interest of
8/8ths of 320 acres in a 640 acre unit which
calculates to a 50% Gross Working Interest for each
working interest owner. This Gross Working Interest
is both the amount of gas to which they are
ultimately entitled and the amount which they are
billed for joint expenses.






SB 168 Method
In this method of payment, both Working Interest
Owner #1 and Working Interest owner #2 would be
responsible for payment of production proceeds
attributable to Royalty Owner #1 and Royalty Owner
#2. Note that the two royalty fractions agreed upon
are different. The calculations outlined in SB168 are
designed to reallocate production entitlements to
accommodate the shifting of the royalty burdens.
The primary calculations used to accomplish the
SB168/PRSA method of payment are
640 Acre Unit
Lease Contract #1 covering 320 acres
Royalty Owner #1
Proceeds = 1/8 of 320 acres
Working Interest Owner #1
Proceeds = Net 7/8 of 320 acres
Gas Entitlement = PPI *
AAPL Titles Workshop 8-3-12
62
Royalty Share - sum of all royalty interests
in a well
Royalty Interest - fraction reserved in a
lease or by statute
Royalty Interest in a Well - royalty interest
times acreage of lease divided by acres in
unit
Proportionate Royalty Share - royalty
interest in well divided by royalty share
Proportionate Production Interest (PPI) –
net working interest plus subsequently
created interest divided by one (1) minus
the royalty share.
Subsequently created Interest (SCI) - nonroyalty interest (i.e., overriding royalty or
production payment) or additional value of
State of Oklahoma royalty interests (also
classification of Federal or Indian royalty
not subject to Oklahoma jurisdiction) The
following illustrates the same unit shown
before but in accordance with SB168:
Billing = Gross Working Interest of 8/8ths of 320 acres
Lease Contract #2 covering 320 acres
Royalty Owner #2
Proceeds = 1/4 of 320 acres
Working Interest Owner #2
Proceeds = Net 3/4 of 320 acres
Gas Entitlement = PPI *
Billing = Gross Working Interest of 8/8 of 320 acres
The Royalty Share for the above unit is 3/16 or (1/8 x
320/640 plus 1/4 x 320/640) or .1875
Net Working Interest (share of proceeds/production)
= 3/4 of 320 acres in a 640 acre unit or 3/4 x 320/640
or .375
* Proportionate Production Interest or
Entitlement = net revenue of .375 divided
by one (1) minus the royalty share of 3/16
or (.375 / 13/16) or.46154
The calculations for Lease Contract #1 would be as
follows:
Royalty Owner #1
Royalty Interest= 1/8 or. 1250
Royalty interest in a well = 1/8 of 320 acres in a 640
acre unit or 1/8 x 320/640 or .0625
Working Interest Owner #1
Gross Working Interest (for billing joint interest
expenses) = 8/8 of 320 acres in a 640 acres unit or
8/8 x 320/630 or.5000
Net interest (share of proceeds/production) = 7/8 of
320 acre in a 640 acres unit or 7/8 x 320/640 or
.4375
* Proportionate Production Interest or
Entitlement = net revenue of .4375 divided
by one (1) minus the royalty share of 3/16
or (.4375 / 13/16) or .53846
Note that the only calculation which differed in the
lessee/lessor payment method and the SB168
payment method was the gas entitlement. The
amount of gas which an owner is entitled to produce
shifts in accordance with its new responsibility to
pay all royalty owners. This ensures that a working
interest owner ultimately receives the same net
working interest which it agreed to in its lease
contract.
Sample of a payment process in a new gas well,
subject to SB168:

The calculations for Lease Contract #2 would be as
follows:
Royalty Owner #2
Royalty Interest = 1/4 or.250
Royalty Interest in a well = 1/4 of 320 acres in a 640
acre unit or 1/4 x 320/640 or. 1250
Working Interest Owner #2
Gross Working Interest (for billing joint interest
expenses) = 8/8ths of 320 acres in a 640 acre unit or
8/8 x 320/630 or .5000
AAPL Titles Workshop 8-3-12
63


Operator requests information from each
working interest owner regarding the royalty
owners leased to that working interest owner.
This information may be provided via a division
order title opinion and must include the royalty
owners' names, addresses, royalty interests, tax
identification numbers, and payment status.
From this information, the operator sets up a
royalty division of interest.
Purchaser pays production proceeds to the
working interest owner with whom it is
contracted.
Working interest owner multiplies its sales
proceeds times the royalty share, values the
amount according to any special private lease
agreements it has, and then forwards this
royalty share amount to the operator. Note that
the purchaser may also remit the royalty share
of proceeds directly to the operator on behalf of
the selling working interest owner.

Operator redistributes the royalty share
amounts it receives from working interest
owners and from its own sales to all the royalty
owners.
Oklahoma. The State of Oklahoma receives its
royalty proceeds from the operator and its
additional value as a subsequently created interest
from its lessee (working interest owner). This special
provision for state leases has been a cause of
confusion for many working interest owners and
operators.
Interest
Provisions of Federal Leases
The payment process statutorily allows for six
months to elapse before initial payment of proceeds
for any production. For ongoing payments of gas
production subject to the PRSA method of
accounting, ninety (90) days are allowed to elapse
for steps 2 through 4 before the proceeds are
determined to be late and interest begins accruing.
Approximately 60 days are allowed for oil payments
and gas payments where wells are not subject to this
PRSA method of accounting. The rates for interest
payments for these delayed payments are basically
six percent (6 %) where title is unmarketable and
twelve (12%) where title is marketable.
Responsibility for late payments reside with the
party or parties causing the payment to be delayed.
A meeting regarding SB168 was held by the Minerals
Management Service (MMS) on March 5, 1993.
Representatives of the Council of Petroleum
Accounting Societies, National Association of
Division Order Analysts, National Association of
Royalty Owners, and industry trade associations
were present. The representatives of the MMS
stated that the interests which they manage do not
come under the jurisdiction of the State of
Oklahoma. Also, they felt they could be paid
effectively when treated as a subsequently created
interest paid by the MMS's lessee (working interest
owner) in accordance with the Federal and/or Indian
lease terms as well as the Federal regulations (30
CFR 202 and 206 (1992)). When the MMS interest is
treated as a subsequently created interest, the MMS
lessee is still calculated to have a royalty share
obligation so that all private royalty owners can
share in all sales. The Proportionate Production
Interest calculations allow for the shifting of the
royalty in this manner. Note that this method was
published in the July 11, 1993, Federal Register
Notice as an acceptable method of payment to the
MMS.
Provision in Private Owner Leases
Another significant difference between Oklahoma
royalty payment according to SB 168 and other
states is that all private royalty owners share in the
valuation terms of their leases. In other words,
special royalty valuation for the private royalty
owner is communitized among all royalty owners.
For example, if royalty owner #12 had a lease which
provided for no post production transportation costs
to be deducted, then working interest owner #2
would not deduct this type of cost from the royalty
share when it was paid to the operator for
disbursement. However, instead of directing this
beneficial valuation in its entirety to royalty owner
#2, the operator would simply distribute the
proceeds among the owners. 'Therefore, both the
royalty owners would benefit from the special
valuation provision of royalty owner #2.
Provisions in State of Oklahoma Leases
The additional value benefits which are
communitized for the private owners are treated as
subsequently created interests for the State of
AAPL Titles Workshop 8-3-12
64
Nominations and Other Information
Guidelines to provide the operator with information
regarding nominations and reporting of sales were
originally included in SB168. In 1993, Senate Bill 294
revised the timing of the nominations and reporting
to stagger the time requirements in order to allow
for the full flow of the necessary information to the
operator. Penalties in the form of a zero nomination
were amended to not only provide for working
interest owners/sellers who do not provide the
royalty information but also for a working interest
owner whose shipper or purchaser does not provide
the information required. Changes in any of the
information required must also be provided to the
operator.
Affected royalty owners can request information
from the operator or make a confidential inspection
of records regarding receipts of payments of the
royalty share and of their payments. These records
must be retained by the operator for a period of not
less than five years. The records are to be made
available to a royalty owner for inspection upon
reasonable notice.
Fees for Implementation
Fees to cover the operator's cost of implementation
of SB168 and the ongoing maintenance of such
payments was provided for in SB168. The Oklahoma
Corporation Commission Order No. 372796 adopted
rules to cover the fees. The effective date of this
order was June 25, 1993. Fees are based on the
number of royalty owners and the number of
working interest owners involved in a property.
Retroactive Balancing of Excess Royalty
Although royalty owners should be paid in balance
as of the effective date of SB 168 (PRSA) excess
royalty, as previously discussed, may have been over
or under paid. An agreement to balance royalty
owners for periods prior to the July 1993 effective
date of PRSA may be made between the affected
working interest owners. ?his balancing may include
additional payments or recoupment from current
proceeds from production. However, the working
interest owners balancing excess royalty owners
must have a plan to use a different payment
method. This plan must only be to the extent
necessary to achieve balancing, must have all the
affected working interest owners' agreement to
effect such a plan, and the royalty owners must be
notified of the plan.
Prospective Gas Balancing
Prospective balancing from July, 1993, or first
production, if after the implementation of SB 168, is
to be accomplished by using the new gas
entitlement calculation known as the Proportionate
Production Interest. Wells which produced prior to
implementation of this law will have the gas
balancing performed for the prior periods according
to gross working interests and from implementation
forward according to proportionate production
interests.
The implementation process was accomplished over
AAPL Titles Workshop 8-3-12
65
approximately a fourteen month time period. While
many of the companies were proactive in their
approach by requesting and voluntarily providing
information, some of the smaller companies appear
to still be in the process of implementation.
Some of the obstacles to implementation included
the immense amount of knowledge required to
implement this law. It is detailed enough to give
directions on an exact method of payment; but, all
the detailed instructions created a complex piece of
legislation.
Also, some of the working interest owners faced
problems regarding special royalty payment
situations-such as no royalty leases, flat rate
royalties and other unusual arrangements. The most
complex piece, in this author's opinion, was
understanding how one could not be the operator,
not be responsible for royalty payments, and still
owe the additional royalty value to the State of
Oklahoma. Many working interest owners also faced
the problem of not having any royalty information
regarding their leases because payments had been
made in accordance with the Blanchard Decision for
so many years.
The industry has performed remarkably well in
mobilizing forces to implement SB168. It is by far the
most complex piece of legislation regarding the
payment of private royalty owners. For more
complete information regarding Senate Bill 168 as to
the Production Revenue Standards Act and for
information regarding the Natural Gas Market
Sharing Act, you should contact your professional or
trade association. Also, it is imperative that you read
all of Senate Bill 168 (1992), Senate Bill 294 (1993),
and the rules promulgated by the Oklahoma
Corporation Commission.
Exhibit #15 –Split Stream Division of Interest
EXHIBIT B; DIVISION OF INTEREST
R________#1.-5 WELL
Section 0-T00N-R00W
Wahoo County, Oklahoma
Surface to Base of Skidrow
Unit Acres
639.00
ROYALTY OWNERSHIP Tract/Lease
Delmar L S_______
Delmar L S
Delmar Leroy S
Trust d:1-17-00
1/B
Royalty
3/16
Acres
Unit Revenue
PRS
39.86250000
0.01169674 0.06237449
39.86250000
0.01169674 0.08237449
as Trustee of the
1/B
3/16
Arlene K. B______
1/C
3/16
79.72500000
0.02339349 0.12474899
Mike S
2/E
3/16
80.00000000
0.02347418 0.12517929
Karen J S______
2/1)
3/16
40.00000000
0.01173709 0.06258965
David S
2/F
3116
40.00000000
0.01173709 0.06258965
John R________
3/A
3/16
160.00000000
0.04694836 0.25035859
John R________
4/A
3116
39.89500000
0.01170628 0.06242535
John R________
5/A
3/16
39.88000000
0.01170188 0.06240188
S_______ Royalties, LLC
4/G
3/16
38. 29920000
0.01123603 0.05992833
OMG, Inc
4/G
3116
1.59580000
0.00046825 000249701
Delores A. L
5/H
3116
17.44000000
000511737 0 02728909
Ron G_______
51J
3/16
17.44000000
0.00511737 0.02728909
Lachel D______
5/1
3/18
1.25000000
0.00036678 0.00195593
Tamara H_____
5/K
3116
125000000
0.00038678 0.00195593
Christy R
5/1-
3116
1.25000000
0.00036678 0.00195593
Paul R________
5/M
115
1.25000000
0.00039124 0.00208632
639.00000000
AAPL Titles Workshop 8-3-12
0.18752445 1.00000000
66
Working Interest Owners
WI OWNERS
Tract
C C Rider Energy LLC
A-L
Oxcart Resources LLC
A-L
Tom Hooter
A-L
Kent Clark,
Tre of the Kent Clark Rev.
Trust d. 4/8/98
A-L
RR Energy, LLC
A-L
Sionara Resources. Inc
A-L
Noway Petroleum
A-L
Cyanide Energy, Inc.
A-L
Mojo Oil Gas LLC
A-L
Lowrider Exploration
A-L
John L. Sullivan
A-L
Richard F. Grademaker
A-L
A. Jamima Energy Co., LLC M
Less
Royalty
13/16
13/16
13/16
13/16
13/16
13/16
13/16
13/16
13/16
13/16
13/16
13/16
4/5
TOTAL ROYALTY
0.18752445
TOTAL NRI (INCLUDES ORRIs)
0.81247555
Acres
24.1939375
81.31312500
5.42087500
Unit GWI
0.38175176
0.12725059
0.00848337
WIW
0.31017331
0.10339110
0.00689274
PPI
0.38176325
0.12725442
0.00848363
27.10437500
27.10437500
59.62962500
29.81481250
23.91562500
91.67656250
19.13250000
14.34937500
14.34937500
01.25000000
639.00000000
0.04241686
0.04241688
0.09331710
0.04665855
0.03742864
0.14346880
0.02994131
0.02245599
0.02245599
0.00195618
1.00000000
0.03446370
0.03446370
0.07582014
0.03791007
0.03040916
0.11656840
0.02432732
0.01824549
0.01824549
0.00156495
0.81247555
0.04241814
0.04241814
0.09331990
0.04665995
0.03742777
0.14347312
0.02994222
0.02245666
0.02245666
0.00192614
1.00000000
1.00000000
AAPL Titles Workshop 8-3-12
67
OVERRIDING ROYALTY INTEREST
Owner
Tom Hooter
John Mogumbo
John L. Sullivan
(plus)
Cyanide Energy
Lease
A- L
A-L
A,B,C
D-L
A-L
Acres
81.313125
81.313125
152.70358
91.235812
637.75000
AAPL Titles Workshop 8-3-12
ORRI
0.0075000
0.0075000
0.0029872
0.0125000
0.0200000
C. C. Rider
Energy
0.00000000
0.00000000
0.01250000
0.00178474
0.00763604
0.00124069
Oxcart
Resources
0.00095438
0.00095438
0.00298716
0.00000000
0.00264601
0.00445377
Tom
Hooter
0.00000000
0.00000000
0.00000000
0.00000000
0.00016967
0.00016967
Kent Clark
Rev Trust
0.00000000
0.00000000
0.00000000
0.00000000
0.00084834
0.00084834
RR
Energy
0.00000000
0.00000000
0.00000000
0.00000000
0.00084834
0.00084834
Sionara
Resources
0.00000000
0.00000000
0.00000000
0.00000000
0.00186634
0.00186634
Mojo
Oil & Gas
0.00000000
0.00000000
0.00000000
0.00000000
0.00286938
0.00286938
Noway
Petroleum
0.00000000
0.00000000
0.00000000
0.00000000
0.00093317
0.00093317
68
Cyanide
Energy
Lowrider
Exploration
John L.
Sullivan
Richard F.
Grademaker
A. Jemima
Energy
0.00000000
0.00000000
0.00000000
0.00000000
0.00000000
0.00000000
0.00000000
0 00000000
0.00000000
0.00000000
0.00000000
0.00000000
0.00000000
0 .00000000
0.00000000
0.00000000
0.00000000
0.00000000
0.00000000
0.00000000
0.00074863
0.00069883
0.00044912
0.00044912
0.00000000
0.00074853
0.00059883
0.00044912
0.00044912
0.00000000
AAPL Titles Workshop 8-3-12
69
Tract I
Tract 2
Tract 3
60.98962500 20.40000000
61.20000000
20.32987500
1.36000000 20.40000000
1.35532500
6.80000000
1.36000000
6 77662500
6 80000000
6.60000000
6.77662500
14.96000000
6.60000000
14.90857500
7.48000000
14.96000000
22.92093750
6.00000000
7.48000000
7.45428750 23.00000000
6.00000000
5.97937500
4.80000000 23.00000000
4.78350000
3.60000000
4.80000000
3.60000000
3.58762500
3.60000000
3.58762500 61.20000000
3.60000000
159.45000000 160.00000000 160.00000000
159.45000000
160.00000000
160.00000000
79.79000000
79.76000000
639.00000000
AAPL Titles Workshop 8-3-12
Tract 4
15.25983750
15 25983750
5.08661250
5.08661250
0.33910750
0,33910750
1.69553750
1 69553750
1 69553750
1.69553750
3 73018250
3.73018250
1.86509125
1.86509125
1.49606250
1.49606250
5.734 90625
5.73490625
1.19685000
1.19685000
0.89763750
0.89763750
0.89763750
0.89763750
79.79000000
Tract 5
15 25410000
14 77597500
5.08470000
4.92532500
0 33898000
0.32835500
1.69490000
1.64177500
1.69490000
1.64177500
3.72878000
3.61190500
5.73275000
5.55306250
1.86439000
1.80595250
1.4 9550000
1.44862500
1.19640000
1.15890000
0.89730000
0.86917500
0.89730000
0.86917500
1.25000000
79.76000000
Tract 1
A.B,C Percentages
60 98962500
0,38250000 C C Rider
20.32987500
0 12750000 Oxcart
1. 35532500
0.00850000 Hooter
6.77662500
0.04250000 Clark Trust
6 77662500
0.04250000 RR
14.90867500
0.09350000 Sionara
22.92093750
0.04675000 Noway
7.45428750
0.03750000 Cyanide
5.97937500
0.14375000 Mojo
4.78350000
0.03000000 Lowrider
3.58762500
0.02250000 Sullivan
3.58762500
0.02250000 Grademaker
159.45000000
1.00000000
0.00000000
0.00000000
0.38250000
0.12750000
000850000
0.04250000
0.04260000
0.09350000
0.14375000
0.04675000
0.03750000
0.03000000
0.02250000
0.02250000
1.00000000
14.77597500
4.92532500
0.32835500
1.64177500
1.64177500
3.61190500
5.55306250
1.80595250
1.44862500
1 15890000
0.86917500
0.86917500
38.63000000
14 775975
39.88
38.63
LeaseA-Tr. 5
15.25410000
5.08470000
0.33898000
1.69490000
1.69490000
3.72878000
1.86439000
1.49550000
5.73275000
1.19640000
0.89730000
0.89730000
39.88000000
39.88000000
1.25000000
17.44000000
17.44000000
1.25000000
1.25000000
1.25000000
79.76000000
70
CC Rider
Oxcart
Hooter
ClarkTrust
RR
Sionara
Noway
Cyanide
Mojo
Lowrider
Sullivan
Grademaker
0 38250000
012750000
000850000
0.04250000
0.04250000
0.09350000
0.04675000
0.03750000
014375000
0.03000000
0.02250000
0.02250000
1.00000000
159.45
60.98962500
2032987500
1.35532500
5.77662500
677662500
14.90657500
7.45428750
5.97937500
22.92093750
4.78350000
3.58762500
3.58762500
159.45
159.45
160
160
79.79
78.51
637.75
1.25
639
AAPL Titles Workshop 8-3-12
160
61.20000000
20.40000000
1.36000000
6.80000000
6.80000000
14.96000000
7.48000000
6.00000000
23.00000000
4.80000000
3.60000000
3.60000000
160
160
6120000000
20.40000000
1.36000000
6.80000000
6.80000000
14 96000000
7.48000000
6.00000000
23.00000000
4.80000000
3.60000000
3.60000000
160.00
79.79
30.51967600
10.17322500
0.67821500
3.39107500
3.39107500
7.46036500
3.73018250
2.99212500
11.46981250
2.39370000
1.79527500
1.79527500
79.79
78 78.61
30.03007500 243.93937500
0.38175176
10.01002500 61.31312500
012725059
0.66733500
5.42087500
0.00848337
3.33667500 27.10437500
0.04241686
3.33667500 27.10437500 0.04241686
7.34068500 59.62962500
0.09331710
0,04665855
3.67034250 29.81481250
2.94412500 23.91562500
0.03742664
11.28581250 91.67656250
0.14346880
2.35530000 19.13250000
0.02994131
1.76647500 14.34937500
0.02245599
1.76647500 14.34937500
0.02245599
78.51 637.75000000
0.99804382
1.25
1.25000000
0.00195618
79 76 639.00000000
1.00000000
71
EXHIBIT "C" TO DIVISION ORDER TITLE OPINION - UNIT BASIS
DISTRIBUTION OF PROCEEDS - LIMITED TO PRODUCTION OF OIL AND GAS FROM
THE
M_______#1-2H WELL AND THE_______________ FORMATION
Section 0-00N-00W, Wahoo County, Oklahoma, containing 641.18 acres, more or less
TRACT 1: Lots 3 and 4 and S/2 NW/4 Section 2, containing 160.29 acres, more or less
TRACT 2: Lots 1 and 2 and S/2 NE/4 Section 2, containing 160.89 acres, more or less
TRACT 3: NW/4 SW/4 Section 2, containing 40 acres, more or less
TRACT 4: SW/4 SW/4 Section 2, containing 40 acres, more or less
TRACT 5: E/2 SW/4 Section 2, containing 80 acres, more or less
TRACT 6: W/2 SE/4 of Section 2, containing 80 acres, more or less
TRACT 7: E/2 SE/4 of Section 2, containing 80 acres, more or less
A. OWNERSHIP OF ROYALTY INTEREST
Tract
Owner, Last Name
Street or Box
City, State, Zip
Leas
Type
Unit Fractional Interest
Net Acres
e
1
1
Americana Realty
3750 West Deerfield
Riverwoods, IL
Company
Rd.
60015
Schumacher,
P. O. Box 8
Clinton, OK
Schumacher,
P. O. Box 1263
Clinton, OK
1
Giles, (A)
1302 N. Willow Drive,
Claremore, OK
#339
74017
Semkoff,
Claremore, OK
Wheeler,
Arapaho, OK
Kliewer,
Route 4, Box 2193
Branson, MO
40.07250
0.1875
0.0117184
0.0650690
12
RI
20/160.29*160.29/641.18*3/1
20.00000
0.1875
0.0058486
0.0324756
20.00000
0.1875
0.0058486
0.0324756
6
11
RI
Americana Realty
3750 West Deerfield
Riverwoods, IL
Company
Rd.
60015
AAPL Titles Workshop 8-3-12
20/160.29*160.29/641.18*3/1
6
9
RI
20.2175/160.29*160.29/641.1
20.21750
5
0.1875
0.0059122
0.0328288
20.00000
5
0.1875
0.0058486
0.0324756
20.00000
5
0.1875
0.0058486
0.0324756
20.00000
5
0.1875
0.0058486
0.0324756
0.1875
0.0117622
0.0653125
8*3/16
9
RI
20/160.29*160.29/641.18*3/1
6
9
RI
20/160.29*160.29/641.18*3/1
6
9
RI
65616 (1991)
2
PRS
1/4*160.29/641.18*3/16
(1982)
1
RIW
RI
(1982)
1
Royalty
2
73601
1
Suspend
No.
73601
1
Req.
20/160.29*160.29/641.18*3/1
6
2
RI
1/4*160.89/641.18*3/16
40.22250
72
2
2
3
Jantz,
Jantz,
13644 County Road
Kilgore, TX
173 N
75662
13644 County Road
Kilgore, TX
173 N
75662
United States
8
RI
38267/64356*160.89/641.18*
95.66750
1
Yes
0.1875
0.0279760
0.1553431
0.1875
0.0073107
0.0405945
0.2000
0.0000000
0.0000000
0.1875
0.0116972
0.0649512
3/16
8
RI
2500/16809*160.89/641.18*3/
25.00000
16
5
RI
40/641.18*1/5
40.00000
6,7,8,9
Yes
1
RI
40/641.18*3/16
40.00000
3
7
RI
1/2*80/641.18*3/16
40.00000
0.1875
0.0116972
0.0649512
6
RI
1/2*80/641.18*3/16
40.00000
0.1875
0.0116972
0.0649512
4
RI
1/2*80/641.18*1/5
40.00000
0.2000
0.0124770
0.0692813
3
RI
3/8*80/641.18*1/4
30.00000
10
Yes
0.2500
0.0116972
0.0649512
RI
1/8*80/641.18*1/8
10.00000
4
Yes
0.1250
0.0019495
0.0108252
RI
80/641.18*1/5
80.00000
0.2000
0.0249540
0.1385626
0.1800918
1.0000000
Department of the Interior
Bureau of Indian Affairs,
4
MC Mineral Company,
P. O. Box 18201
LLC
5
Moser,
Oklahoma City,
OK 73154-0496
RR 1, Box 630
Clinton, OK
73601
5
Moser,
RR 1, Box 616
Clinton, OK
73601
6
Morrison,
900 Camelot Drive
Clinton, OK
73601
6
Farmers Union
3829 North Classen
Oklahoma City,
Cooperative Royalty
Blvd., Ste. 201
OK 73118
1021 NW Grand Blvd.
Oklahoma City,
Parti
OK 73118
cip.
Clinton, OK
4
Company
6
Devon Energy Production
Company, LP
7
Morrison,
900 Camelot Drive
73601
ROYALTY TOTALS
641.18000
B. OWNERSHIP OF WORKING INTEREST
Tract
Owner, Last Name
Street or Box
City, State, Zip
Leas
Type
Unit Fractional Interest
Net Acres
e
1
1
2
2
3
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
9,11,
LLC (1)
1800
74103
12
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
2
LLC (3)(4)
1800
74103
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
LLC (1)
1800
74103
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
LLC (3)(4)
1800
74103
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
LLC (3)(4)
1800
74103
AAPL Titles Workshop 8-3-12
Lease
SCI
Suspend
WIW
PPI
Unit NRI
Unit GWI
0.02000000
Yes (Req
0.09730653
0.1186798
0.0949113
0.1197619
0.03243551
0.0395599
0.0310383
0.0399206
0.09767077
0.1191240
0.0952666
0.1202102
0.03255692
0.0397080
0.0311545
0.0400701
0.03984840
0.0486011
0.0304840
0.0398484
NRI
WI
63.875%*120.2175/160.29*16
76.78893
0.8125
0.29/641.18*13/16
WI
63.875%*40.0725/160.29*160
15)
25.59631
0.8125
0.03500000
77.07637
0.8125
0.02000000
.29/641.18*13/16
8
WI
63.875%*3/4*160.89/641.18*
13/16
2
WI
63.875%*40.2225/160.89*160
Yes (Req
15)
25.69212
0.8125
0.03500000
25.55000
1.0000
0.23500000
.89/641.18*13/16
5
WI
63.875%*40.00/641.18*4/5
Yes (Req
6-9)
73
4
4
5
6
6
7
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
LLC (1)(2)
1800
74103
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
LLC (1)
1800
74103
Penn Virginia MC Energy,
110 W. 5th, Suite
LLC (1)
1800
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
LLC (3)(4)
1800
74103
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
LLC (3)(4)
1800
74103
Penn Virginia MC Energy,
110 W. 5th, Suite
Tulsa, OK
LLC (3)(4)
1800
74103
1
WI
38.25%*40/641.18*13/16
15.30000
0.8125
0.03250000
0.01938808
0.0236466
0.0186126
0.0238623
1
WI
14.375%*40/641.18*13/16
5.75000
0.8125
0.02000000
0.00728637
0.0088868
0.0071070
0.0089678
6,7
WI
63.875%*80/641.18*13/16
51.10000
0.8125
0.02000000
0.06475366
0.0789767
0.0631597
0.0796968
Yes (Req
15)
3
WI
63.875%*30.00/641.18*3/4
19.16250
0.7500
0.03500000
0.02241473
0.0273381
0.0213687
0.0298863
4
WI
63.875%*40.00/641.18*4/5
25.55000
0.8000
0.03500000
0.03187872
0.0388808
0.0304840
0.0398484
4
WI
63.875%*80.00/641.18*4/5
51.10000
0.8000
0.03500000
0.06375745
0.0777617
0.0609681
0.0796968
0.50929716
0.6211636
0.4845547
0.6217696
Penn Virginia Subtotal
398.66623
B. OWNERSHIP OF WORKING INTEREST (continued)
Tract
Owner, Last Name
Street or Box
City, State, Zip
Leas
Type
Unit Fractional Interest
Net Acres
e
1
Chesapeake Exploration,
P. O. Box 18496
LLC (1)
1
Chesapeake Exploration,
P. O. Box 18496
LLC (3)(4)(5)
1
Chesapeake Exploration,
Chesapeake Exploration,
9,11,
OK 73154-0496
12
Oklahoma City,
2
P. O. Box 18496
Oklahoma City,
WI
WI
Chesapeake Exploration,
Chesapeake Exploration,
P. O. Box 18496
2
WI
Chesapeake Exploration,
P. O. Box 18496
8
WI
Chesapeake Exploration,
P. O. Box 18496
Chesapeake Exploration,
P. O. Box 18496
Chesapeake Exploration,
Unit GWI
29.325%*120.2175/160.29*16
35.25378
0.8125
0.02000000
Yes (Req
0.04467341
0.0544859
0.0435738
0.0549827
50%*12.75%*40.0725/160.29
12,15)
2.55462
0.8125
0.05000000
0.00323720
0.0039483
0.0030380
0.0039843
22.95%*40.0725/160.29*160.
9.19664
0.8125
0.03500000
0.01165393
0.0142137
0.0111519
0.0143433
29.325%*3/4*160.89/641.18*
35.38574
0.8125
0.02000000
0.04484063
0.0546898
0.0437369
0.0551885
WI
Oklahoma City,
Oklahoma City,
Oklahoma City,
50%*12.75%*40.2225/160.89
Yes (Req
15)
2.56418
0.8125
0.05000000
0.00324932
0.0039630
0.0030494
0.0039992
9.23106
0.8125
0.03500000
0.01169756
0.0142669
0.0111937
0.0143970
2.55000
1.0000
0.25000000
0.00397704
0.0048506
0.0029828
0.0039770
*160.89/641.18*13/16
2
WI
22.95%*40.2225/160.89*160.
89/641.18*13/16
5
WI
50%*12.75%*40.00/641.18*4/
5
Yes (Req
6-9)
5
WI
22.95*40.00/641.18*4/5
9.18000
1.0000
0.23500000
0.01431735
0.0174621
0.0109528
0.0143174
1
WI
50%*12.75%*40/641.18*13/1
2.55000
0.8125
0.03500000
0.00323135
0.0039411
0.0030922
0.0039770
13.68000
0.8125
0.02000000
0.01733523
0.0211429
0.0169085
0.0213357
OK 73154-0496
P. O. Box 18496
LLC (1)(5)
4
2
OK 73154-0496
LLC (3)(4)
4
Oklahoma City,
OK 73154-0496
LLC (3)(4)(5)
3
Unit NRI
29/641.18*13/16
OK 73154-0496
LLC (3)(4)
3
PPI
13/16
LLC (3)(4)(5)
2
WIW
*160.29/641.18*13/16
LLC (1)
2
Suspend
0.29/641.18*13/16
OK 73154-0496
P. O. Box 18496
SCI
NRI
OK 73154-0496
LLC (3)(4)
2
Oklahoma City,
Lease
Oklahoma City,
OK 73154-0496
P. O. Box 18496
LLC (1)
AAPL Titles Workshop 8-3-12
Oklahoma City,
6
1
WI
34.20%*40/641.18*13/16
OK 73154-0496
74
5
Chesapeake Exploration,
P. O. Box 18496
6,7
WI
29.325%*80/641.18*13/16
23.46000
0.8125
0.02000000
LLC (1)
6
Chesapeake Exploration,
Chesapeake Exploration,
P. O. Box 18496
Chesapeake Exploration,
P. O. Box 18496
Chesapeake Exploration,
P. O. Box 18496
Chesapeake Exploration,
P. O. Box 18496
Chesapeake Exploration,
P. O. Box 18496
Oklahoma City,
3
WI
Oklahoma City,
Oklahoma City,
Oklahoma City,
P. O. Box 18496
Oklahoma City,
50%*12.75%*30.00/80.00*80/
22.95%*30.00/80.00*80/641.1
4
WI
50%*12.75%*40.00/80.00*80/
2
2
3
4
5
6
6
7
4
WI
22.95%*40.00/80.00*80/641.1
4
0.7500
0.05000000
0.00223709
0.0027285
0.0020879
0.0029828
6.88500
0.7500
0.03500000
0.00805351
0.0098225
0.0076777
0.0107380
2.55000
0.8000
0.05000000
0.00318163
0.0038805
0.0029828
0.0039770
9.18000
0.8000
0.03500000
0.01145388
0.0139697
0.0109528
0.0143174
WI
50%*12.75%*80.00/641.18*4/
5.10000
0.8000
0.05000000
0.00636327
0.0077610
0.0059656
0.0079541
18.36000
0.8000
0.03500000
0.02290776
0.0279394
0.0219055
0.0286347
0.24213856
0.2953240
0.2302487
0.2956947
0.00971161
0.01184475
0.0092933
0.0119528
0.00323720
0.00394825
0.0030380
0.0039843
0.00974796
0.01188909
0.0093281
0.0119975
0.00324932
0.00396303
0.0030494
0.0039992
0.00397704
0.00485059
0.0029828
0.0039770
0.00323135
0.00394111
0.0030922
0.0039770
0.00646269
0.00788222
0.0061843
0.0079541
5
4
WI
OK 73154-0496
22.95%*0.85%*80.00/641.18*
4/5
189.59354
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
9,11,
(1)(5)
Suite 770
74119
12
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
2
(3)(4)(5)
Suite 770
74119
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
(1)(5)
Suite 770
74119
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
(3)(4)(5)
Suite 770
74119
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
(3)(4)(5)
Suite 770
74119
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
(1)(5)
Suite 770
74119
Oxley Resources, LLC
1437 S. Boulder,
Tulsa, OK
(1)(5)
Suite 770
74119
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
(3)(4)(5)
Suite 770
74119
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
(3)(4)(5)
Suite 770
74119
Oxley Resources LLC
1437 S. Boulder,
Tulsa, OK
(3)(4)(5)
Suite 770
74119
Tom Hoefling (1)
1.91250
8*4/5
WI
6.375%*120.2175/160.29*160
7.66387
0.8125
0.03500000
.29/641.18*13/16
WI
50%*12.75%*40.0725/160.29
Yes (Req
13,15)
2.55462
0.8125
0.05000000
7.69255
0.8125
0.03500000
*160.29/641.18*13/16
8
WI
6.375%*3/4*160.89/641.18*1
3/16
2
WI
50%*12.75%*40.2225/160.89
Yes (Req
15)
2.56418
0.8125
0.05000000
2.55000
1.0000
0.25000000
*160.89/641.18*13/16
5
WI
50%*12.75%*40.00/641.18*4/
5
1
WI
50%*12.75%*40/641.18*13/1
Yes (Req
6-9)
2.55000
0.8125
0.03500000
5.10000
0.8125
0.03500000
6
6,7
WI
6.375%*80/641.18*13/16
Yes (Req
15)
3
WI
50%*12.75%*30.00/80.00*80/
1.91250
0.7500
0.05000000
0.00223709
0.00272846
0.0020879
0.0029828
2.55000
0.8000
0.05000000
0.00318163
0.00388048
0.0029828
0.0039770
5.10000
0.8000
0.05000000
0.00636327
0.00776095
0.0059656
0.0079541
0.05139917
0.06268893
0.0480042
0.0627557
0.00064744
0.00078965
0.0006315
0.0007969
641.18*3/4
4
WI
50%*12.75%*40.00/80.00*80/
641.1/*4/5
4
WI
50%*12.75%*80.00/641.18*4/
5
Oxley Subtotal
1
0.0365888
641.18*4/5
Chesapeake Subtotal
1
0.0289966
8*3/4
OK 73154-0496
LLC (3)(4)
1
0.0362582
641.18*3/4
OK 73154-0496
LLC (3)(4)(5)
7
WI
OK 73154-0496
LLC (3)(4)
7
3
OK 73154-0496
LLC (3)(4)(5)
6
Oklahoma City,
OK 73154-0496
LLC (3)(4)
6
0.02972839
15)
LLC (3)(4)(5)
6
Yes (Req
40.23773
1437 S. Boulder,
Tulsa, OK
9,11,
Suite 770
74119
12
AAPL Titles Workshop 8-3-12
WI
0.425%*120.2175/160.29*160
.29/641.18*13/16
0.51092
0.8125
0.02000000
Yes
(Req
75
14,15)
1
2
2
3
4
5
6
6
7
Tom Hoefling (3)(4)
Tom Hoefling (1)
Tom Hoefling (3)(4)
Tom Hoefling (3)(4)
Tom Hoefling (1)
Tom Hoefling (1)
Tom Hoefling (3)(4)
Tom Hoefling (3)(4)
Tom Hoefling (3)(4)
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
1021 NW Grand Blvd.
2
WI
50%*0.85%*40.0725/160.29*
8
WI
0.425%*3/4*160.29/641.18*1
Devon Energy Production
0.8125
0.03500000
0.51284
0.8125
0.02000000
3/16
2
WI
50%*0.85%*40.2225/160.89*
Yes
0.17095
0.8125
0.03500000
5
WI
50%*0.85%*40.00/641.18*4/5
0.17000
1.0000
0.23500000
Yes
1
WI
50%*0.85%*40/641.18*13/16
0.17000
0.8125
0.02000000
6,7
WI
0.425%*80/641.18*13/16
0.34000
0.8125
0.02000000
Yes
3
WI
50%*0.85%*30.00/80.00*80/6
4
WI
50%*0.85%*40.00/80.00*80/6
WI
50%*0.85%*80.00/641.18*4/5
Oklahoma City,
Parti
WI
1/8*80.00/641.18*7/8
OK 73118
cip.
United States Department
4
Wilson,
Leas
5
0.0002666
0.00026514
0.00032337
0.0002028
0.0002651
0.00021542
0.00026274
0.0002101
0.0002651
0.00043085
0.00052548
0.0004202
0.0005303
0.0001422
0.0001989
0.17000
0.8000
0.03500000
0.00021211
0.00025870
0.0002028
0.0002651
0.34000
0.8000
0.03500000
0.00042422
0.00051740
0.0004057
0.0005303
0.00342661
0.00417926
0.0032630
0.0041837
0.8750
0.00000000
0.01364671
0.0166442
0.0136467
0.0155962
0.81990822
1.00000000
0.7797174
1.0000000
10.00000
Type
Unit Fractional Interest
Net Acres
SCI
Suspend
Unit NRI
ORRI
1/5*40/641.18
10.00000
0.20000
Yes
0.0124770
( Req
6,7,8,9)
427 S. Boston, Ste.
Tulsa, OK
1,6,7
502
74103
,8,9,
427 S. Boston, Ste.
Tulsa, OK
2,3,4
502
74103
,5
13251 S. 117th E.
Broken Arrow,
1
Court
OK 74011
AAPL Titles Workshop 8-3-12
0.0002073
0.00018190
ORRI
360.885/641.18*2%
360.88500
0.0200
0.0112569
ORRI
270.295/641.18*1%
270.29500
0.0100
0.0042156
ORRI
15.3/641.18*1.25%
15.30000
0.0125
0.0002983
2
6,7
0.00026420
0.00014914
11,1
Cyanostar Energy, Inc.
0.00021662
0.03500000
Indian Affairs,
1,2,3,
0.0007998
0.7500
of the Interior Bureau of
Cyanostar Energy, Inc.
0.0006339
0.12750
e
3
0.00079261
41.18*4/5
4
City, State, Zip
0.00064986
41.18*3/4
641.18000
Street or Box
0.0002656
(Req 15)
Totals
Owner, Last Name
0.0002065
(Req 6-9)
C. OWNERSHIP OF SUBSEQUENTLY CREATED INTERESTS (SCI)
Tract
0.00026322
(Req 15)
2.68252
Company, LP
0.00021581
160.89/641.18*13/16
Hoefling Subtotal
6
0.17031
160.29/641.18*13/16
76
1,2,4,
Hoefling,
6,7
1,2,4,
1437 S. Boulder,
Tulsa, OK
Suite 770
74119
Muselmann,
1-12
ORRI
60.01903/641.18*0.75%
60.01903
0.0075
Yes
0.0007021
(Req 13)
1-12
ORRI
60.01903/641.18*0.75%
60.01903
0.0075
6,7
Yes
0.0007021
(Req 13)
1,2,3,
JMA Energy Company,
1021 N.W. Grand
Oklahoma City,
2,3,4
6,7
LLC
Blvd
OK 73118
,5
ORRI TOTAL
ORRI
270.295/641.18*2.5%
270.29500
0.0250
0.0105390
0.0401908
UNIT SUMMARY TOTALS:
Total Royalty
0.1800918
Total SCI
0.7797174
Total NRI
0.0401908
Unit Totals
1.0000000
1.0000000
0.0000000
(1) Burdened w/ a 2% ORRI owned by Cyanostar Energy, Inc.
(2) Burdened with a 1.25% ORRI owned by John E. Wilson
(3) Burdened with a 1% ORRI owned by Cyanostar Energy, Inc.
(4) Burdened w/ a 2.5% ORRI owned by JMA Energy Company
(5) Burdened with 1.5% Tom Hoefling and John Muselmann = shares
AAPL Titles Workshop 8-3-12
77
AAPL Titles Workshop 8-3-12
78