Revisiting the Executive Right to Lease Oil & Gas Interests

09/01/2009

In Texas, a fee simple absolute ownership of the entirety of a parcel of land includes both a surface and mineral estate.1 These two estates can be separated, as the Texas Supreme Court noted in Acker v. Guinn explaining that “[a] grant or reservation of minerals by the fee owner effects a horizontal severance and the creation of two separate and distinct estates: an estate in the surface and an estate in the minerals.”2 The mineral estate consists of five interests: “(1) the right to develop (the right of ingress and egress), (2) the right to lease (the executive right), (3) the right to receive bonus payments, (4) the right to receive delay rentals, (5) the right to receive royalty payments.”3 These attributes, when taken together, are often referred to as a “bundle of sticks,” and it has been recognized that individual “sticks” can be sold while others are retained.4 In addition to being defined as one of the five rights of a mineral owner, the executive rights to lease have been defined by courts and treatises as the exclusive right to execute oil and gas leases.5

Reprinted by permission, Texas Tech Law Review, V. 42, No. 1, 2009.  To read the full article, please click on the linked PDF below.

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* Associate, Energy & Power Practice Group, Haynes and Boone, LLC, Houston, Texas; licensed in New Mexico and Texas; B.S. (Geology) 1993, Wright State University; M.S. (Geophysics) 1995, Wright State University; Ph.D. (Geophysics - Petroleum Seismology) 1999, Texas A&M; J.D. 2005, University of Oklahoma College of Law.
1. Texas Co. v. Daugherty, 176 S.W. 717, 720 (1915); 1 ERNEST E. SMITH & JACQUELINE LANG WEAVER, TEXAS LAW OF OIL AND GAS § 2.1 (2d ed. 2000).
2. Acker v. Guinn, 464 S.W.2d 348, 352 (Tex. 1971).
3. Altman v. Blake, 712 S.W.2d 117, 118 (Tex. 1986) (quoting RICHARD W. HEMINGWAY, THE LAW OF OIL AND GAS §§ 2.1-.5 (1971)).
4. See Concord Oil Co. v. Pennzoil Exploration & Prod. Co., 966 S.W.2d 451, 467 (Tex. 1998); Pinebrook Props., Ltd. v. Brookhaven Lake Prop. Owners Ass‟n, 77 S.W.3d 487, 504 (Tex. App. -Texarkana 2002, pet. denied).
5. Altman, 712 S.W.2d at 118; 2 PATRICK H. MARTIN & BRUCE M. KRAMER, WILLIAMS & MEYERS OIL AND GAS LAW § 338 (2008); OWEN L. ANDERSON ET AL., HEMINGWAY OIL AND GAS LAW AND TAXATION § 2.2 (4th ed. 2004).

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