2021 Q3

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Volume MMXXI • No 3

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Contents Feature

Articles

Membership Recognition. ............................................................4 NADOA 2022 Election................................................................5 Curing Title with Affidavits Part II.............................................7 Legal Updates Opiela v Railroad Commission of TX.....................................13 Broadway Nat’l Bank v Yates Energy et al............................. 15 BPX v Strickhausen.................................................................17 National Niche...........................................................................25 Renewable Natural Gas.............................................................26 Institute Highlights....................................................................27

NADOA 2021 Officers President

Lewis Box, CDOA 1st Vice President Michele Lawton 2nd Vice Presiden t

Treasurer Michelle Harris-Fairclough, CDOA

Corresponding Secretary Vicki Danielson, CDOA Recording Secretary

The NADOA News Magazine is a quarterly publication of the National Association of Division

In This

Issue

Order Analysts P O Box 1656 Palm Harbor, FL 34682

President’s Corner. ............................................................. 1 Decimal Points................................................................... 3 Certification....................................................................... 6 Cob Webs (Wild Apricot App). ........................................... 6 Sympathies. ...................................................................... 20 New Members................................................................... 20 Counterpart Connection................................................... 21 2021 NADOA Board & Committee Chairs....................... 41 Calendar of Events. .......................................................... 42

Subscription: By membership to NADOA, at $75.00 per year.

News Magazine Editor Rona L. Erickson, CDOA Kaiser-Francis Oil Company Ronae@KFOC.net 918.491.4319 Associate Editor Cheryl Hampton champton@limerockresources.com

Graphic Design, Paul Beach

On the Cover: Marriott Harbor Beach Hotel, Ocean View Beach Bar

All rights reserved. No part of this publication may be reproduced/copied without written permission. Editorial disclaimer: The contents of this newsletter are intended for member use only and any other use without permission from the NADOA Board of Directors is strictly prohibited. Articles published herein represent the view of the authors; publication neither implies approval of the opinions expressed nor accuracy of the facts stated and NADOA accepts no liability for misprints.

President’s

Corner

Lewis Box, CDOA 2021 NADOA President

First and foremost, I would like to extend a huge round of applause and outpouring of gratitude to this year’s Institute committee and NADOA board. We had many tough decisions to make and because of each of your hard work and leadership, we managed to pull off a successful Institute this year! To our members who were able to attend Institute this year we thank you for your continued support of your organization. For our NADOA members who couldn’t attend Institute this year, I hope that you have been keeping up your continued education through the webinars offered so far in 2021. The Education committee has done a phenomenal job keeping us connected throughout Covid this year. Through our Long-Range Planning committee, the NADOA board is exploring a few changes to Institute in the coming years. Our membership in NADOA is no longer growing as Analysts (DO/Land/Lease) take on more responsibilities across several former job functions with the help of increasingly advanced software & technology. I whole heartedly welcome any and all input from you, as members of this organization! This is all of our organization, and we need your ideas and support in seeing its continued success into the future. Any ideas you may have please reach out with your input to me personally (lewis.box@gmail.com C: 325-234-5741 ) or any member of the board. I hope that each of you are excited about going to the Riverwalk in San Antonio at the Marriott RiverCenter ( https:// www.marriott.com/hotels/travel/satrc-san-antonio-marriott-rivercenter ) for NADOA’s 49th Annual Institute. Michele Lawton has already started planning for conference next year. Don’t forget to save the date Oct. 26-28, 2022 and start thinking about a Halloween costume to wear to our Thursday night dinner.

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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

NADOA

Decimal Points

Regional Reporters

Rona Erickson, CDOA Editor

Cheryl Hampton Associate Editor

ABADOA

Steptoe & Johnson PLLC Ryan.daniels@steptoe-johnson.com

NADOA online Job Bank has new postings. Visit http://www.nadoa.wildapricot.org/page-662233 Remember to keep your NADOA directory information updated. Due to all the changes taking place in our industry and the world, it is more important than ever to maintain professional contacts and receive the educational benefits of membership in NADOA.

CAPDOA

OPEN

DADOA OPEN DALWORTH Lewis Box, CDOA

lbox@comstockresources.com

HADOA

Emily Sheffield esheffield@kolawllp.com Angie Coady, CDOA acoady@vessoil.com

MAADOA

PBADOA

OPEN

2021 NADOA Article Deadlines

SADOA

Joe Anderson Janderson96@cox.net

Arkansas

Jackie Clotfelter, CDOA jclotfelter@hannaoilandgas.com Kimberly A. Backman kbackman@crowleyfleck.com

Fourth Quarter......... November 5, 2021

North Dakota

If you have a suggestion for someone to act as a Regional Reporter to help NADOA keep abreast of current legislation and legal issues for your region, please submit the name or the name of the firm.

New Mexico

Zachary P. Oliva zoliva@kolawllp.com

Louisiana

OPEN

Opinion is really the lowest form of human knowledge. It requires no accountability, no understanding. The highest form of knowledge is empathy, for it requires us to suspend our egos and live in another world. It requires profound purpose larger than the self kind of understanding. Plato

LINES

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Membership Recognition Awards

Ellis Rudy Memorial Lifetime Achievement Award – Brenda Pirozzolo, CDOA Brenda has worked in the oil and gas industry for many years and been a member of NADOA for almost as long. Brenda was in the very first group of CDOA’s after the certification program began. In 2013 and 2014 Brenda served as Chairman of the CDOA Certification Committee. She has been active on the DALWORTH board for many years and served as President in 1992 and 2011. Brenda served on the NADOA board for many years and served as President in 2016. Over the years Brenda has served as Chair of various committees such as Education, Long Range Planning, Interaction, and others. Brenda has served on the NADOA Institute Committee every year, with the exception of 2016 when she was the NADOA President. This lady truly deserves the honor of the Ellis Rudy Memorial Lifetime Achievement Award. Interaction Award – Jennifer Kegans Jennifer Kegans was the recipient of the NADOA Interaction award. Jenn has jumped in to volunteering for NADOA with both feet. She never hesitates to raise her hand when people need help. She is always ready to learn new things and is fully involved in the tasks she is given. Jennifer was instrumental in many Institute committees and with her candid advice, she has helped steer people away from disasters. She has helped with vendors, food selections, program speakers and signs and never says no to a new NADOA adventure. She represents NADOA in a positive light and people love her sense of humor in stressful situations.

Russell Schetroma Memorial Speaker’s Award – Eli Murray, CDOA

Eli Murray was presented the award for her outstanding work in educating the NADOA membership in various calculation classes the past several years. She has taught sessions at Institutes and in webinars, and contributed articles to the NADOA News Magazine, as well as promoting our business association throughout the oil and gas industry. Eli served on the NADOA Certification Committee and chaired the committee in 2019 and 2020. Eli is a great asset to NADOA and someone from whom we can all benefit.

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

NADOA 2022 Election

2022 Board (l to r): Norma Dooley, Michele Lawton, Kimberly Bowman, Vicki Danielson, Lewis Box, Valerie Wible, Jennifer Oden (not pictured: Jason Alexander)

President. .................................... Michele Lawton First Vice President........................ Norma Dooley Second Vice President. ... Vicki Danielson, CDOA Recording Secretary. ...............Kimberly Bowman Corresponding Secretary............. Jason Alexander Treasurer. ............................Valerie Wible, CDOA Board Advisor. .........................Lewis Box, CDOA Directors (TBD and represent each of the Local Associations) CAPDOA DADOA DALWORTH

Many thanks to the Nominating Committee, chaired by Luanne Johnson:

Stephanie Moore Betty Davidson Kodi Foreman Stan Vargas Lucretia Jones Melissa Fontana

And the Teller’s Committee: Lisa Buffaloe

Betty Davidson Stephanie Moore Brenda Pirozzolo

HADOA PBADOA SADOA

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CANDIDATES FOR CERTIFICATION Publication of the following “Certified Division Order Analyst” applicant(s) fulfills the requirement as stated in the Voluntary Certification Policy, III C.2 which states: “… applicant’s name will be published in the NADOA Newsletter or other official publication of NADOA.” This allows the NADOA membership an opportunity to present objections to the certification of the applicant. Any objection to the certification of the applicant must be in writing and signed by a NADOA member or non-member who qualifies his knowledge and objection of the applicant. All such letters will be considered confidential and must be received by the NADOA Certification Committee at the following address within thirty (30) days following the last day of the month in which the Newsletter or other official publication of NADOA was published NADOA Certification Committee P O Box 1656 Palm Harbor, FL 34682 If the objection warrants denial of the certification or temporary withholding of certification, the applicant will be notified by Certified Mail. CANDIDATES FOR RECERTIFICATION

Jami Borden – Midland, TX Deanne Cariker – Jenks, OK

Kelly England – Tulsa, OK Carrie Hughes – Tulsa, OK

Cob Webs

Is your company’s server blocking NADOA emails? Do you have issues logging into the NADOA website? There’s an app to make your life easier!

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N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

Title Examination

Update Curing Title with Affidavits PART II

1. Interested Person - Defect of Substance

inadmissible hearsay. The declaration which was attributed to L. C. Adams, his claim that he was a son of Joseph Adams, deceased, was not admissible under the exception to the hearsay rule which in proper circumstances permits the introduction of hearsay to prove pedigree. The applicable rule is thus expressed in Texas Law of Evidence (McCormick & Ray) Sec. 601, p. 762: ‘Bias or prejudice would be fatal to the trustworthiness of the declaration. To guard against it the courts have established the rule that the declarant must have been disinterested, i. e. had no interest or motive to deceive, at the time when the declaration was made. Under this rule declarations as to the declarant’s heirship or relationship to a certain person, made after descent cast upon him as to property belonging to such person are not admissible in behalf of the declarant or persons claiming that property under him.’ The declaration by Adams was made after descent had been cast as to the property of Joseph Adams, deceased, and at a time when he himself was endeavoring to sell or was in process of selling his asserted interest in the land in controversy; it was a self-serving declaration, was hearsay in the form in which it was introduced in evidence, and was inadmissible. Byers v. Wallace, 87 Tex. 503, 28 S.W. 1056, 29 S.W. 760; Jamison v. Dooley, 98 Tex. 206, 82 S.W. 780; Wolf v. Wilhelm, Tex.Civ.App., 146 S.W. 216, error refused. Fenley v. Ogletree, 277 S.W.2d 135, 144 (Tex.Civ.App. —Beaumont 1955) (emphasis added) Dismissal of suit Many corroborating affidavits are often flawed as well in that they only deliver conclusory statements (See 3. in Part I of Curing Title with Affidavits published in Second Quarter 2021 issue). That is, the affidavit issued by the corroborating affiant usually states that the affiant personally

The first instruction the author received from his mentors in writing title opinions and requesting curative documents was to never, never allow a family member or interested party give the affidavit in the absence of a corroborating affidavit by a disinterested third party. The why had a two part answer. First, and foremost, in the absence of a corroborating affidavit, the family member/ affiant, especially in heirship/family history affidavits, is probably an interested party. As such, the affidavit, and its contents, may very well be inadmissible in later cases where the heirship or family history is an issue. Second, family members tend to see “heirship” in a less than legal fashion. For example, in one case, the family member only listed three children in the heirship affidavit as being the intestate heirs-at-law of the deceased fee simple mineral owner of the drillsite tract. Of course, after the well was drilled and completed making two million cubic feet a day, the fourth “child” came forth. When confronted, the affiant stated that he just knew his mother would not have wanted his sibling to have any interest in the “old homestead”. Thus, no mention was made in the affidavit of an undivided one-fourth un-leased interest under the drillsite tract. Ultimately, the issue becomes whether the affiant is an interested party in the subject matter of the affidavit. If so, a self serving affidavit is inadmissible on a trial of the matter for which it was issued under the hearsay rule. Fenley v. Ogletree, 277 S.W.2d 135, 144 (Tex.Civ. App. —Beaumont 1955) (emphasis added) Dismissal of suit In this state of the record, we think the appellants’ contention that the evidence at least showed Fenley and Faulkner to be joint owners with the plaintiffs of the land in controversy is without merit. The testimony given by the defendant Fenley was

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knows the facts and conclusions made in the main affidavit to be true and correct. Without a full rendition of the facts and circumstances of why and how the affiant knows the facts contained in the main affidavit to be true, the corroborating affidavit is of no import and will not serve to make admissible the affidavit of the interested party. More importantly, if the party giving the corroborating affidavit is familiar with the facts such that he can confirm the main affidavit, why is not that party giving the main affidavit to the exclusion of the interested party? Over the years it has become apparent to the author that, in many instances, only a family member has the knowledge to be able to give an affidavit on family history. There simply are no third parties available with the requisite family knowledge. Given that the affidavit will be taken from a potentially interested party, and that no corroborating affidavit will be available, does the affidavit have any use? Of course it does. However, that use is only to answer the immediate question raised by the examining attorney concerning family history. Even when used for that purpose, it is also only as accurate as the facts contained in it. That is, ultimately the client will be faced with the business decision of whether or not to accept the facts as set forth in the affidavit as being accurately stated. No affidavit is any better than the truth of the facts sworn to be the affiant. Further, the affidavit will probably not be admissible if the question of heirship has to be tried. Or can it? If there is a passage of more than five years after the filing of the affidavit in the pertinent deed records in “ any county in this state in which such real or personal property is located at the time the suit is instituted, or in the deed records of any county of this state in which the decedent had his domicile or fixed place of residence at the time of his death ...”, the affidavit may very well stand as prima facie evidence of the facts stated therein. § 52. Recorded Instruments As Prima Facie Evidence, Texas Probate Code. See also Wood v. Paulus, 524 S.W.2d 749 (Tex.Civ.App. — Corpus Christi 1975) Directed Verdict I. How Does an Affidavit “Cure” Title? The author debated where this part of the article should be placed. The title of this article is “Curing Title With

Affidavits”. It fits quite nicely at the beginning of the article but, after reading, could easily negate the reader’s interest in understanding the uses and pitfalls of affidavits. An affidavit is, in the end, the client and title examiner’s last hope of bringing into focus the facts and circumstances surrounding a title requirement made in a title opinion. Most title examiners assume (often with the dreaded negative result of “assuming”) that the abstractor has looked into all possible documents of record or otherwise available in an attempt to find out the pertinent facts and circumstances raised by the title examiner. The affidavit obtained from a person with knowledge of the important facts and circumstances can rise no higher than the true knowledge of the affiant coupled with their interest in revealing the full and complete truth. It is the author’s opinion that no affidavit “cures” a title problem. It presents to the examiner a set of facts, which if true and accurate, may be made the basis of advice from the examiner that the particular title requirement is deemed satisfied. However, the decision to accept the facts as accurate is one to be made NOT by the examiner but by the client. It may be, depending on the significance of the title requirement, a very serious risk decision which could have dire consequences if the affidavit is not correct. The author has seen numerous affidavits which, in light of subsequent litigation, have proven to be totally incorrect but which were relied on when “curing” the title to the drillsite tract. Juries, the penalty of actual perjury, a judge’s ruling, the availability of additional persons with knowledge etc. all play a role where the facts as initially set forth in an affidavit are distinguished or overruled. In the end, affidavits are an aid to the title examiner/ client in evaluating title requirements. There is only one “cure” - trespass to try title litigation. Anything short of a trespass to try title case places risk on the client that the facts set out in the affidavit are not correct. It is appropriate, in the author’s opinion, to always place that risk in writing in any supplemental title opinion which analyzes the submitted affidavit(s) and renders a decision of whether a particular title requirement has been satisfied.

II. Selected Affidavits and Their Title Requirement Antecedents

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The following are the three most often called for affidavits which are commonly used by landmen/title examiners to satisfy specific title requirements. Perhaps one of the most significant failings with title attorneys today is the failure to fully and completely set forth the precise facts which the affidavit must contain. For example, in a situation where reliance on adverse possession will be necessary, it is not unusual for the title attorney to request “an affidavit of adverse possession showing the use and occupancy of the lands under examination for the past ten (10) years.” What facts and circumstances does the examining attorney want/need to deem the requirement satisfied? “Your usual adverse possession affidavit” is not an answer. There is no such thing! What facts and circumstances does the title attorney need to develop such that a risk decision can be made to accept the title subject to a reasonable expectation that, if the title is ever questioned, it can be affirmed via proof of adverse possession by the party(ies) leased by the client. While no form of title requirement or affidavit can ever set forth all of the facts and circumstances that could be encountered, the author has attempted to set forth those matters which can be used a starting point for the development of both the title requirement and affidavit. The author has crafted an initial set of title requirements and a possible affidavit which responds to the title requirements. The form of affidavit contains check lists which the landman can use as a starting point in developing the final affidavit. Given the status of today’s computer technology, all unused or non- checked boxes can be deleted, leaving only the actual factual framework to inquire of the affiant in the preparation of the affidavits. A. The Unwaiveable Title Requirement - Affidavit of Use and Occupancy Opinions vary on whether there is any title requirement which can never be waived. The author believes that there is one - The Affidavit of Use and Occupancy. It simply must be obtained prior to the drilling of each and every well. The client is charged with all defects in the title which are visible on the surface of the lands - oil and gas wells, rivers, lakes, streams, structures, roads, railroads, cemeteries etc. Lands under examination simply must be inspected and the results of the findings reported since, reported or not, the client is charged with their existence.

The following is a suggested title requirement for an affidavit of use and occupancy. It is followed by a suggested form of affidavit of use and occupancy. The suggested form of affidavit is in checklist format. It allows the landman/ affiant to think about each area of interest which the examining attorney has pointed out in the title requirement that needs to be addressed. It is intended that the affiant note with specificity the facts which lead to the decision to check the particular box. The alternative provisions not utilized may be deleted from the final form of affidavit for easier reading by the examining attorney. At the end of the suggested form is a place for the landman/affiant to note additional facts not encompassed by the specific areas of inquiry.

SUGGESTED TITLE REQUIREMENT REQUIREMENT: You should secure an affidavit from one or more persons personally familiar with Examined Lands for the past twenty-five (25) years, giving the names and addresses of such persons and reciting the man- ner in which they are acquainted with the facts sur- rounding the property insofar as they relate to pos- session, use and occupancy. If the primary affiant is from one of the owners of the surface/minerals set out herein, you should also secure a corroborating affidavit from a disinterested third party which con- firms the factual statements of the primary affiant based on personal knowledge of that corroborating affiant. Suggested affidavit/corroborating affidavit forms are attached to this opinion as Exhibit “A” and “A-1” respectively. Without intending to limit the breadth and scope of the Affidavit of Use and Occupancy, please address with particularity the following: A. Boundaries. Ascertain whether or not de- finitive corners and boundaries of the property have been established and if so, then address in what manner, (i.e.: fences, markers, blaze lines, etc.), such boundaries and corners are marked and set. Determine if fences were constructed, paying special attention to the dates of construction and whether the fences follow the metes and bounds de- scription of the lands. Address whether or not such corners and boundaries, if having been established,

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are recognized by contiguous land owners. If such corners and boundaries have not been established, then ascertain whether or not there are any existing boundary or corner disputes. Submit any survey plats which reflect the surveyed outline of Exam- ined Lands. Surface. Address the topographical features of the property, in particular as to whether or not there are any navigable waters or lakes upon the property or in the immediate vicinity thereof, and whether or not in recent history the property has constituted a portion of a lake bottom or been tra- versed by any navigable streams. B. C. Land Use. Discuss whether or not any agri- cultural activities have taken place upon the prop- erty, if so giving dates and nature of such activi- ties and names of parties conducting same. Discuss whether or not there has been any timber harvested from the property, and, if so, set forth dates of such harvesting and names of parties conducting same. State whether or not there have been any forestry enhancement activities on the properties. Address whether or not there have been any hunting leases; grazing leases, agricultural leases, or any other like and similar agreements entered into. Structures and Improvements. Determine whether or not there are or have been any houses, churches, cemeteries, schools, public buildings, barns, silos, equipment sheds, mobile homes, or other like and similar structures on the property, and if so, determine who constructed same, wheth- er or not they are presently occupied or in use, and if so, by whom, for what purpose, and under whose authority. Please furnish a plat of the lands showing the location of any such structures. D. E. Possession. If anyone other than the record title owners as set forth above are in possession of the surface of Examined Lands, then address who, the type of possession, dates of possession, and whether or not they are claiming adverse to the record owners. In the event there is a person who claims title to the property, either past or present,

through adverse possession, then inquire as to those parties in the chain of record title as to whether or not there have been any conveyances of the surface, minerals or royalties by such record title holders to other parties, and whether or not to their knowledge such conveyances have not been placed of record. Rights-of-Way and Servitudes. Address whether or not there are any roads, pipelines, utility lines, microwave towers, or other like and similar rights-of-way or servitudes on the Examined Lands. Address with particularity the dates same were con- structed, whether or not they are in use and if so by whom. F. G. Exploration and Production Facilities. De- termine whether or not there are any present oil and gas operations being conducted on Examined Lands and whether or not there have been any oil and gas operations in the past including, but not limited to, any old locations or facilities which have been plugged and abandoned, or locations temporarily abandoned but not plugged. When applicable to any of the above, please address with detail the history surrounding the matters, in- cluding names, years, and dates.

Affidavit of Adverse Possession

An affidavit of adverse possession is somewhat similar to the affidavit of use and occupancy by the underlying facts requested in the title requirement. However, the title examiner needs to alert the landman/affiant which statute will be relied on (5, 10 or 25 year statute - See Texas Statutes and Code (2008), Civil Practice and Remedies Code, Title 2. Trial, Judgment, and Appeal, Subtitle B. Trial Matters, Chapter 16. Limitations) The nature of the possession will be developed from the facts set forth by the affiant much in the same way as those set forth in the use and occupancy affidavit. It has become the recent practice of the author, where an affidavit of adverse possession is called for, to also call for an affidavit of use and occupancy since the focus of these two affidavits is somewhat dissimilar. The

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

affidavit of use and occupancy calls for an inspection of the lands noting any use of the surface which may lead to additional questions concerning ownership of all of part of the lands under examination. The affidavit of adverse possession is focused solely on the nature of the possession of the party(ies) noted by the title examiner to be the apparent fee simple owner (of the surface and/or mineral estate) vis a vis all other potential claimants to the title. Key to the suggested title requirement for an affidavit of adverse possession is the insertion of the applicable number of years the title examiner believes that will be necessary to rely on for adverse possession to be proven coupled with the exact date those years are to commence. It is not unusual for adverse possession to develop some time earlier than the present in a chain of title, thus necessitating an older, longer resident in the area familiar with the use and possession of the lands under examination.

what manner, (i.e.: fences, markers, blaze lines, etc.), such boundaries and corners are marked and set. Determine if fences were constructed, paying special attention to the dates of construction and whether the fences follow the metes and bounds description of the lands. Address whether or not such corners and boundaries, if having been established, are recognized by contiguous land owners. If such corners and boundaries have not been established, then ascertain whether or not there are any existing boundary or corner disputes. Submit any survey plats which reflect the surveyed outline of Examined Lands. Land Use. Discuss whether or not any agricultural activities have taken place upon the property, if so giving dates and nature of such activities and names of parties conducting same. Discuss whether or not there has been any timber harvested from the property, and, if so, set forth dates of such harvesting and names of parties conducting same. State whether or not there have been any forestry enhancement activities on the properties. Address whether or not there have been any hunting leases; grazing leases, agricultural leases, or any other like and similar agreements entered into. B. C. Structures and Improvements. Determine whether or not there are or have been any houses, churches, cemeteries, schools, public buildings, barns, silos, equipment sheds, mobile homes, or other like and similar structures on the property, and if so, determine who constructed same, whether or not they are presently occupied or in use, and if so, by whom, for what purpose, and under whose authority. Please set forth the dates of construction of any structures as the same relate to the time period identified herein. Please furnish a plat of the lands showing the location of any such structures. Possession. During the time period set out above, determine if anyone other than ____________ were ever in possession of the surface of Examined Lands, then address who, the type of possession, dates of possession, and D.

1. SUGGESTED TITLE REQUIREMENT

REQUIREMENT: You should secure an affidavit of adverse possession from one or more persons personally familiar with Examined Lands for the past (5, 10 or 25) years from and after the __ day of ___________, 19________, giving the names and addresses of such persons and reciting the manner in which they are acquainted with the facts surrounding the property insofar as they relate to possession, use and occupancy. If the primary affiant is one of the owners of the surface/minerals set out herein, you should also secure a corroborating affidavit from a disinterested third party which confirms the factual statements of the primary affiant. Suggested affidavit/corroborating affidavit forms are attached to this opinion as Exhibit “A” and “A-1” respectively. Without intending to limit the breadth and scope of the Affidavit of Adverse Possession, please address with particularity the following: Boundaries. Ascertain whether or not definitive corners and boundaries of the property have been established and if so, then address in A.

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whether or not they are/were claiming adverse to _______________. In the event there is a person who claims title to the property, either past or present, through adverse possession, other than ____________, then inquire as to those parties in the chain of record title as to whether or not there have been any conveyances of the surface, minerals or royalties by such record title holders to other parties, and whether or not to their knowledge such conveyances have not been placed of record. Exploration and Production Facilities. Determine whether or not there were any oil and gas operations being conducted on Examined Lands during the above time period including, but not limited to, any old locations or facilities which have been plugged and abandoned, or locations temporarily abandoned but not plugged. Ascertain the dates these operations took place. E. When applicable to any of the above, please address with detail the history surrounding the matters, including names, years, and dates.

B. Names of children, if any, their dates of birth and if deceased, their dates of death and names and dates of birth of their children, if any. If no surviving children or grandchildren, names of brothers/sisters, dates of death and if survived by children, their names, dates of birth and if deceased, dates of death.

Articles are not intended to be and should not be relied upon as legal advice or to establish any kind of an attorney- client relationship with the author. Please contact the author of this article if you have any questions This newsletter was prepared by Terry E. Hogwood for use by his clients and prospective clients as a reference tool only. Any comments and/or legal conclusions contained in this newsletter are solely those of the author and reliance thereon by any reader of this newsletter is at the reader’s sole risk. ADVERTISEMENT

C. Affidavit of Heirship

SUGGESTED TITLE REQUIREMENT

REQUIREMENT : You should secure from a disinterested, third party an affidavit of heirship which sets out the heirs at law of _________ (or, if affidavit is from family member with a potential interest in Examined Lands, you should also secure a corroborating affidavit from a disinterested third party which confirms the factual statements of the primary affiant). Suggested affidavit/corroborating affidavit forms are attached to this opinion as Exhibit “A” and “A-1” respectively. Without intending to limit the breadth and scope of the Heirship Affidavit, please address with particularity the following:

EX T EX Division Order Services, LLC 4865Ward Road, Suite 200 Wheat Ridge, CO 80033 303-463-8799 303-463-8808 extexllc.com Fax Division Orders, Revenue Distribution, 1099’s Dennis Pade Boyd Sanstra Chris Pennels President Vice President Vice President

How long affiant knew ___ and degree of

family relationship, if any.

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Legal

Updates Articles are not intended to be and should not be relied upon as legal advice or to establish any kind of an attorney-client relationship with the author.

Travis County District Court Finds that Texas Railroad Commission Lacks Power to Issue Allocation and Production Sharing Well Permits

Texas

Plaintiffs appealed the RRC’s decision to the Travis Coun- ty Court arguing that the RRC erred when it granted the allocation well permit due to the lack of pooling author- ity in the lease. Ultimately, Opiela held that the RRC wrongfully granted the permit because Magnolia failed to establish a good faith claim of right to drill the well, as is required under RRC rules. Magnolia asserted that its good faith claim was supported by the plain language of the lease permitting it to drill a well on Plaintiffs’ tract and Texas authority supporting allocation and production sharing wells. Further, Magnolia argued that the permit was supported by RRC’s precedent and public policy in maximizing the recovery of resources and preventing waste. Although, the court held that the RRC erred and remanded the case to the RRC for further proceedings, the order did not explain why Magnolia’s showing was insufficient, nor did it explain the importance of the pool- ing clause. Importantly, Opiela did not invalidate allocation or pro- duction sharing permits, per se. Rather, Opiela, directed that RRC that it must scrutinize those permits to deter- mine whether there is a good faith basis for the right to drill. Opiela explained that it was incorrect for the RRC to take the position that it does not interpret the lease “or other relevant title documents” when reviewing a permit application. In other words, Opiela, contrary to other Texas decisions, is directing the RRC to conduct a de- tailed title analysis of the lease and any other relevant title documents prior to granting a permit. Opiela appears to take a contrary position to the Texas Supreme Court’s position in Magnolia Petroleum Co. v. Railroad Comm’n of Texas, 170 S.W.2d 189 (Tex. 1943).[4] As a result, Opiela also concluded that the RRC should have consid- ered the effect of pooling clause of the lease in evaluating whether to grant an allocation or production sharing well permit. However, such a requirement is in contrast to the type of permit sought. An application for allocation or production sharing well is not application for a pooled

In Opiela v. Railroad Commission of Texas, No. D- 1-GN-20-000099, the 53rd District Court of Travis County, Texas, concluded that the Texas Railroad Com- mission (“RRC”) violated the Administrative Procedure Act, Tex. Gov’t Code § 2001.001 et seq., by adopting rules for issuing allocation and production sharing well permits. Further, the court held that the permit appli- cant, EnerVest (and subsequently Magnolia Oil & Gas), failed to make the requisite showing that it had a good faith claim of right to drill the proposed well under RRC rules. In Opiela, the Plaintiffs objected to an application filed by EnerVest with the RRC for a drilling permit on a well, claiming that EnerVest lacked authority to drill an alloca- tion well. Plaintiffs asserted that the express authority allowing an allocation must be in the lease and Plaintiffs’ lease prohibited pooling, which also prohibited the issu- ance of an allocation well permit.[1] After drilling the well, EnerVest then assigned its interest in the property to Magnolia Oil & Gas, who then applied to the RRC to amend the original permit application to convert the well from an allocation well to a production sharing agreement well. The Plaintiffs objected to Mag- nolia’s existing permit involving the property, arguing that the RRC did not have the authority to grant a permit for horizontal drilling across multiple leased but unpooled tracts. After the RRC adjudicated and dismissed Plain- tiffs’ objection, Magnolia proceeded with its operations. The RRC’s dismissal of Plaintiffs’ objection was consistent with the RRC’s long-standing practice of allowing al- location and production sharing wells.[2] In those other RRC decisions, the RRC concluded that its position was not to adjudicate title and interpret leases, but to grant or deny permits to prevent waste and protect correlative rights, provided that the permit applicant established a good faith basis that it had a right to drill the proposed well. In accordance with that practice, the RRC included disclaimers on allocation well permits.[3]

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unit well and the RRC should not be considering inappli- cable or irrelevant provisions of a lease when determining whether to grant a permit or not. Rather, those disputes should be between the lessor and lessee and adjudicated in the courts and not adjudicated in quasi-trial before the RRC. Opiela is significant in that it is the first challenge to an allocation that has resulted in a decision issued by a district court. Does Opiela represent an invalidation of allocation wells? We do not believe so. Rather, Opiela at- tempts to impose additional obligations and requirements on the RRC prior to granting an allocation or produc- tion sharing well permit. Opiela should not invalidate the thousands of allocation and production sharing well permits already issued throughout Texas. If Opiela stands and is not reversed on appeal, then the RRC will be forced to develop additional steps and scrutinize the lease and potentially other relevant title documents before issuing an allocation or production sharing well permit. Operators considering seeking an allocation well permit should evaluate the specific provisions in their lease and be prepared to make a more detailed showing to the RRC based upon the Opiela decision. Additionally, Opiela is also a reminder that any decision of the RRC is subject to judicial scrutiny by the district court. [FINAL JUDGMENT – Opiela v. Railroad Commission of Texas, No. D-1-GN-20-000099] [1] Plaintiffs asserted that the following language in the oil and gas lease prohibited an allocation or production sharing well permit: “Nothing contained herein shall authorize Lessee in any manner whatever to pool said land or any part of the same for oil, and for the production of oil from said land under this lease. . . .” [2] See Klotzman v. Railroad Comm’n of Texas, No. GN-13-004306, filed Dec. 23, 2013, in the District Court of Travis County, 98th Judicial District; Monroe Properties, Inc. et al. v. R.R. Comm’n of Texas, No. D- 1-GN-18-001111, 53rd Judicial District, Travis County, Texas. [3] The disclaimer, in part, provides: “Commission Staff expresses no opinion as to whether a 100% ownership interest in each of the leases alone or in combination with a “production sharing agreement” confers the right to drill across lease/unit lines or whether a pooling agreement is also required.…Issuance of the permit is not an endorsement or approval of the appli- cant’s stated method of allocating production proceeds among component leases or units…Payment of royalties is a contractual matter between the lessor and lessee. Inter-

preting the leases and determining whether the proposed proceeds allocation comports with the relevant leases is not a matter within Commission jurisdiction but a matter for the parties to the lease and, if necessary, a Texas court of competent jurisdiction.” [4] The Texas Supreme Court has explained that a “reason- ably satisfactory showing of good-faith claim of ownership in the property” is what is required to obtain a drilling permit and that the function of the RRC “is to administer the conservation laws. It does not undertake to adjudicate questions of title or rights of possessions. These questions must be settled in the courts.” Magnolia Petroleum Co. v. Railroad Comm’n of Texas, 170 S.W.2d 189 (Tex. 1943). If you have any questions regarding this case law update or suggestions for topics to be covered in future issues, please call Kiefaber & Oliva LLP at 713-229-0360 or contact:

Brad Gibbs Partner bgibbs@kolawllp.com

Eli Kiefaber Partner rkiefaber@kolawllp.com

Zachary Oliva Partner zoliva@kolawllp.com

The content of this publication and any attachments are not intended to be and should not be relied upon as legal advice or to create a lawyer-client relationship. © 2021 Kiefaber & Oliva LLP. All rights reserved. This publication may qualify as “Attorney Advertising” requir- ing notice in some jurisdictions. Houston (principal of- fice): 815 Walker St., Suite 1140, Houston, Texas 77002, 713-229-0360 | Columbus: One East Livingston Avenue, Suite B, Columbus, Ohio 43215, 614-349-4525

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BROADWAY NATIONAL BANK, TRUSTEE OF THE MARY FRANCES EVERS TRUST, ET AL., PETITIONERS V. YATES ENERGY CORPORATION, EOG RESOURCES, INC., JALAPENO CORPORATION, ACG3 MINERAL INTERESTS, LTD., GLASSELL NON-OPERATED INTERESTS, LTD., AND CURRY GLASSELL, RESPONDENTS No. 19-0334 Argued December 2, 2020

This month’s newsletter analyzes the above identified VERY recent Texas Supreme Court case and its potential effect on every Texas title where a correction deed is found ANYWHERE in the chain of title (this newsletter will briefly look at § 5.031. Correction Instruments Recorded Before September 1, 2011). The factual situation is somewhat complex but can be boiled down to the following: A conveyed her interest to an inter vivos trust with Bank as sole trustee. Bank, without authority under the trust agreement, conveyed a full one-fourth share of A’s mineral ownership to J (and the remainder of the interest to other beneficiaries under the trust) when J was only entitled to a life estate per the terms of the trust. J thereafter conveyed his conveyed his interest to XYZ Oil Company et al. Several correction deeds were entered into after the deed by Bank to J et al by some/ all of the original parties to Bank’s deed, including Bank, to reflect that J did not own anything but a life estate in the mineral interest originally conveyed to him. However, none were signed by XYZ Oil Company et al. This case involves the Correction Deed Statutes found at § 5.027 - § 5.031, Texas Property Code. Specifically, the court reviewed § 5.029 quoted in pertinent part: “(b) A correction instrument under this section must be: (1) executed by each party to the recorded original instrument of conveyance the correction instrument is executed to correct or, if applicable, a party’s heirs, successors, or assigns ; and (emphasis added)

the court’s reasoning in this decision was given the fact that one of the original signatory parties, at one time owning of record a full one-fourth mineral interest, executed a correction deed when he no longer owned any mineral interest whatsoever. The Texas Supreme Court, based on the following reasoning, held that J’s execution of the correction deed was good and the correction deed was valid (retroactively changing the ownership of XYZ Oil Company et al from an undivided fee simple mineral interest to a life estate in that mineral interest only). The court did potentially offer XYZ Oil Company et al the protection of § 5.030 which protects good faith purchasers. Big deal! It could have correctly interpreted the statute and never have had to reach that issue. The arguments of the parties are quite simple and distinct. XYZ Oil Company et al argued that it is not the agreement of the original parties to the deed that must sign the correction instrument but rather the then owner of the property/interest who must sign to have an effective correction deed. Bank argued that subsequent owners of an interest in the property/interest are not required to execute the correction deed if the original parties thereto are available. Without reviewing the extremely long and inconsistent analysis the court makes on the intent of the legislature as found in the words of the statute above quoted, the court holds that § 5.029 is satisfied (and the correction deed at issue is therefore deemed valid) when all of the original parties agree to sign the correction instrument. Wait for it!

This is a fact driven case. It cannot be emphasized enough how simple the issue was and how totally incorrect

“…Because this section provides for unanimous

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