National Association of Division Order Analysts April / May / June 2024
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Volume MMXXIV • No 2
www.NADOA.org
Contents Feature
Articles
NADOA 2024 Officers President Vicki Danielson, CDOA 1st Vice President Kimberly Bowman 2nd Vice Presiden t Jean Hinton Treasurer Valerie Wible, CDOA Corresponding Secretary Lola Strickland Recording Secretary Melanie White, CDOA
Legal Updates Texas Division Order Statute.............................................14 Oklahoma SB212 or Don’t Let Your Deal Get Abducted.....................................................19 What Happens if the Original Will is Missing?...........26 Devon v. Sheppard..................................................................28 Johnson v. Dunham - Post-Divorce Partition..............30 Sonda v. WV Oil & Gas Conservation Commission (Challenge Dismissed).............................32 Institute Preview........................................................................34
In This
Issue
The NADOA News Magazine is a quarterly publication of the National Association of Division
President’s Corner.............................................................1 Decimal Points....................................................................2 2025 Candidate Nominations.........................................3 2024 Membership Recognition Nominations...........4 Certification......................................................................... 6 Cob Webs...............................................................................7 New Members......................................................................9 Counterpart Connection................................................10 Ellis Rudy Memorial Scholarship..............................33 2024 NADOA Board & Committee Chairs................40 Calendar of Events..........................................................42
Order Analysts P O Box 1656 Palm Harbor, FL 34682
Subscription: By membership to NADOA, at $100.00 per year. News Magazine Editor Rona L. Erickson, CDOA rona.nadoa@gmail,com
Graphic Design, Paul Beach
On the Cover: Myriad Gardens
Photo courtesy of Oklahoma City Convention and Visitors Bureau
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
Vicki Danielson, CDOA 2024 NADOA President
Tired of all the chaos and uncertainty around you?
Put your worries aside, take a deep breath, and get ready for an incredible experience that will leave you feeling refreshed and inspired.
Introducing the 2024 NADOA Institute in Oklahoma City, OK happening on October 2-4. We’ve got THREE amazing keynote speakers lined up that you won’t want to miss.
Under the expert guidance of Luanne Johnson and Jean Hinton, our dedicated team is working tirelessly to make this year’s conference an absolute standout! Prepare to be amazed by the impressive lineup of speakers we have in store for you. Registration is NOW OPEN, and if you sign up before June 30, you’ll enjoy the exclusive early bird special for just $750.
With 798 active fully paid members, we’re expecting an unforgettable turnout.
Don’t miss out on this incredible opportunity to connect, learn, and grow with fellow active members. Join us at the conference and make lasting memories.
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NADOA
Decimal Points
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. 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. NADOA online Job Bank has new postings. Visit http://www.nadoa.wildapricot.org/page-662233 Special Institute Edition........................July 12 Third Quarter....................................August 23 Fourth Quarter............................November 15 2024 News Magazine Deadlines ADVERTISE WITH NADOA Advertising in the NADOA Newsmagazine is a great way to get your business name out to NADOA members. Contact Cheryl Hampton at champton@limerockresources.com for details.
Regional Reporters
ABADOA
Steptoe & Johnson PLLC Ryan.daniels@steptoe-johnson.com
CAPDOA DADOA
OPEN
Kelly Sandoval, CDOA Kelly.sandoval@sitio.com
DALWORTH Lewis Box, CDOA lewis.box@gmail.com HADOA Emily Sheffield
esheffield@oglawyers.com
PBADOA
OPEN
SADOA
Dena Blevins Drblevins2014@gmail.com
Arkansas
OPEN
Kansas
Amy Flaming Amy.flaming@chsinc.com Kimberly A. Backman kbackman@crowleyfleck.com Zachary P. Oliva zoliva@oglawyers.com Margaret Patton mpatton@pattonfirm.com
North Dakota
New Mexico
Louisiana
2024 News Magazine Team Rona Erickson , CDOA Editor Susan Bradley, CDOA Associate Editor Cheryl Hampton Associate Editor
Armando Lopez Associate Editor
Sonya Turner, CDOA Associate Editor
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Raise Your Hand If You Want To Be A Candidate For The 2025 NADOA Board
LOOKING TO FILL THE FOLLOWING POSITIONS:
2ND VICE PRESIDENT RECORDING SECERETARY
TREASURER (2 YR TERM)
CORRESPONDING SECRETARY
Contact Norma Dooley by July 1, 2024 at ndooley@wagneroil.com or 817-335-2222
For more information on open positions, log in to NADOA.org / Publications / Bylaws
Trusted Legal Counsel to Energy Companies
Oil & Gas | Utilities | Mining | Renewables Steptoe & Johnson PLLC is a law firm with over 400 lawyers and other professionals across 18 offices serving all sectors of the energy industry
for more info visit steptoe-johnson.com
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G rowth T hrough E ducat i on - A pr i l / M ay / J une 2024 400 White Oaks Boulevard, Bridgeport, WV 26330 THIS IS AN ADVERTISEMENT
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2024 Nomination form for NADOA Membership Recognition
DO YOU HAVE A MENTOR, TRAINER, SPEAKER OR COMPANY YOU FEEL DESERVES A PAT ON THE BACK FOR ALL THEY DO??? NOMINATE THEM FOR ONE OF THE AWARDS BELOW!!
I would like to nominate ___________________________________________________ for the Ellis Rudy Memorial Lifetime Achievement Award. This award is presented to the NADOA member who has exemplified the Division Order profession through demonstrated leadership contributions to the industry and the profession during his/her career. Please detail the nominee’s involvement in NADOA, the services they have performed and/or contributions they have made on page 2 (You may attach a separate sheet if necessary).
I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Corporate Award. Presented to the group or company that has contributed to NADOA’s growth and development, the Division Order profession, and/or the industry during the past year.
I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Award for Education. This award is presented to the NADOA member who has dedicated their time and service to the betterment of Division Order Professionals through influence and mentorship.
I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Award for Interaction. This award is presented to the NADOA member or affiliated organization who has had a positive community impact and extraordinary service and dedication in leading and promoting the Division Order profession. I would like to nominate ___________________________________________________ for the Russell Schetroma Memorial Speaker’s Award. This award is presented to an individual who has contributed to NADOA’s growth and development by speaking, educating, and sharing knowledge on numerous occasions to the NADOA Membership, the Division Order profession, and/or the industry during the past year.
N at i onal A ssociation of D i v i s i on O rder A nalys t s Send nominations to: Member Recognition Awards Committee, c/o Sonya Turner (sturner@farmersnational.com) Nominations will be accepted through JUNE 30, 2024
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2021 Nomination Form for NADOA Membership Recognition 2024 Nomination Form for NADOA Membership Recognition
I would like to nominate ___________________________________________ for the NADOA Membership Recognition Award for Interaction . This award is presented to the NADOA member or affiliated organization who has had a positive community impact and extraordinary service and dedication in leading and promoting the Division Order profession. Please detail the nominee’s involvement in NADOA, the services they have performed and/or contributions they have made (You may attach a separate sheet if necessary). Please detail the nominee’s involvement in NADOA, the services they have performed and/or contributions they have made (You may attach a separate sheet if necessary).
___________________________________________________ Signature ____________________________________________________ Please Print Name ____________________________________________________ Email Address
G rowth T hrough E ducat i on - A pr i l / M ay / J une 2024 Send nominations to: Member Recognition Awards Committee, c/o Sonya Turner (sturner@farmersnational.com) Nominations will be accepted through June 30, 2024
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CERTIFICATION S TEPHANIE D. MOORE, CDOA Chair 2024 !!!ATTENTION ALL JULY CDOA’S!!!
year. Recertification credits will begin accumulating, post recertifi- cation date, upon receipt by the Committee of the certification fee. Updated Language The effective date of certification will be January 1 for ALL pass- ing applicants who have successfully completed the certification process, within 12 months of application approval. If passing the CDOA test prior to July 1, new CDOA’s certification term will begin January 1 of current year. If passing the CDOA test after July 1, new CDOA’s certification term will begin January 1 of the next year. All passing applicants will be able to add CDOA credits by request to the Certification Committee. Continuing Education credits AND Employment credits completed prior to the passing exam date will be applied upon request. This applies to year exam was passed. CDOA Testing WILL be offered at the upcoming NADOA Institute in Oklahoma City, OK. Look for additional details in the NADOA Institute Edition magazine. On a separate note, if you applied to test and become a CDOA in 2023 AND HAVE NOT TESTED, please touch base with CDOA@NADOA.ORG quickly as time is running short for you to test.
The CDOA committee and NADOA board have decided to eliminate mid-year certifications and recertifications. If you are a January CDOA, you are not impacted. As a mid-year recertification candidate, you have the option to slide forward (from July current year to January current year i.e. July 1, 2024 to Jan 1, 2024) or backward (July current year to January 1 following year i.e. July 1, 2024 to Jan 1, 2025). If you are due to recertify in ANY July, please reach out to the CDOA committee at cdoa@nadoa. org so we can update your recertification date to reflect this change. We will be reaching out to all CDOAs with mid-year recertifications. Because of this change, the CDOA policy is being updated as follows: Language to Strike The effective date of certification will be July 1 for those applicants who have successfully completed the certification process during the first six (6) months of the year; for those applicants successfully completing the certification process during the last six (6) months of the year, the effective date will be January 1 of the following
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 CERTIFICATION
CANDIDATES FOR RECERTIFICATION Cyrus L. Perkins – Houston, TX Keletha Kay Brown – Plano, TX
Stacey A. West – San Antonio, TX
CONGRATULATIONS TO THE FOLLOWING NEW CDOA!! Amy Potter
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Cob Webs
Educational webinars can be approved for 1 (one) CDOA certification point. NADOA webinars, Steptoe & Johnson
Opportunities include: creating webinar flyers, contacting speakers before a webinar event to obtain biographies and presentations, help modernize NADOA’s GoToWebinar site. Please email webinars@ nadoa.org if you are interested. The 2024 Webinar Co-Chairs, Gordon Gallet, Heather Lister and Jamie Meyer would love to hear from you! Steptoe & Johnson PLLC – Visit: https://www.steptoe-johnson.com and click on News for details. The Steptoe webcasts are recorded. To access previously recorded webcasts, go to www.Steptoe- Johnson.com and enter Webcasts in the search feature. Oliva Gibbs LLP – Energy Education Series: Visit www.oglawyers.com/ events for further information. NARO – Visit https://www.naro-us.org/events/list for webinar schedule. If you are aware of other educational webinars, please advise the NADOA News Magazine of details to be added to the Calendar of Events ( magazine@nadoa.org ).
PLLC webcasts and Oliva Gibbs LLP webinars are pre-approved. Please check the certification page to determine if other webinars are pre-approved or need to be submitted for approval to the NADOA Certification Committee. Contact the CDOA committee to obtain pre-approvals at cdoa@nadoa. org . Certification points should only be applied for after completing the event. If you are unable to attend an event due to unforeseen circumstances, it is an ethics violation to apply for the credit. NADOA – Webinar information and registration links will be posted on the website ( www.nadoa.org ). Webinars are free for NADOA members and $15.00 for non- members. NADOA members may use the following link to log in and register for upcoming webinars as well as listen to previously recorded webinars: https://nadoa.wildapricot.org/ page-1709226 or by using the Webinar link in the Members Only section on the homepage. Please send suggestions for NADOA webinar topics/ speakers to webinars@nadoa.org . Details for upcoming NADOA Webinars can be found at: https://nadoa.org/news-events/ The webinar committee is looking for volunteers.
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NADOA Welcomes The Following New Members:
Aethon Energy Inc Rachel Sloan Andrea Welch
EXCO Resources Inc Michelle Kitchens
Merit Energy Company Jimena Norena
ExxonMobil
Oxy
Apache Corporation
Stacye Shields
Heather Johnson
Danielle Bedingfield
Formentera Operations Peyton LeCorgne
Permian Resources Robert Mitchell
Black Stone Minerals Company, LP Zina Kadic Tate Williams
Frost Bank
Presidio Petroleum LLC Libby Chambers
Allison Kidwell Jennifer Puga Hector Venegas Michael Garcia
CAMS
Analisa Garcia
Raisa Energy, LLC
Brianna McAndrew
Chevron
Lourdes Bakenhus
Gulfport Energy Kelly Wagner
Red Dirt Land Resources, LLC Tim Sullivan
Comstock Resources Sunnie Earls
Independent
Red Willow Production Company Tammie Bates Victoria Frost
Donna Hardin Rigoberto Perez Chris Schwind
Lane Branum
Independent
Dianna Lynn Callahan
Regions Permian II CruzElena Suarez
Continental Resources Inc Burdis Boyd
Independent
Sara Guerra
Saxum Energy Partners Alyssa Lawver
Covenant Royalties Blake Warwick
Independent
Patty Pettijohn
Sitio Royalties
Diamondback Energy Lindsay Adams Drew Haymaker Ramsey Schweighart Clay Skoch
Edward Bonilla Amber Brown Cynthia Tierney
J Dub Enterprises Jimmy Wright
Magnolia Oil and Gas LLC Erin Garcia Martindale Consultants, Inc. Jennifer Broomfield Mike Bruce Elizabeth Nordin Kayla Simpson
SM Energy
Sadie Olson
Endeavor Energy Resources, LLC Samuel Ingram Mary Quintana
Verdad Resources LLC Noemi Robles
EOG Resources
Ebony McAfee
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Counterpart
Connection
Lola Strickland Local Association Coordinator
CAPITAL ASSOCIATION OF PROFESSIONAL DIVISION ORDER ANALYSTS (CAPDOA) Association based in the Oklahoma City, OK Area
APPALACHIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (ABADOA) Association Based in the Pittsburgh, Pennsylvania Area Serving NY, OH, PA, WV (Inactive)
………………………………… ARKLATEX ASSOCIATION OF DIVISION ORDER ANALYSTS (ALTDOA) Association based in the Shreveport, LA Area (Inactive) …………………………………
Our April Business meeting featured Melissa Gardner from Ball Morse Lowe who presented “Non-Executive Owners: Who Owns What?” helping us understand the different types of reversionary owners and who needs to sign what.
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Our annual summer seminar will be June 18 at Remington Park and we will have 5 speakers and a DO Panel to expand our knowledge and also networking with fellow Division Order colleagues. We are working on some great door prizes including 2 registrations to NADOA’s Institute in our fabulous home of Oklahoma City this October. CAPDOA would like to give a huge THANK YOU to our very generous sponsors for our summer seminar: Ascent Resources, Devon Energy, Chesapeake Energy and Energy Point LLC.
Interpretations”. This YEAR promises to be full of top-notch Education and peer socialization. Plans are in the works for reviewing college scholarship candidates once again. It is so rewarding to give back and DALWORTH is proud to do so. Inspiring our Future Leaders is such a positive message in today’s times. Be on the lookout for additional information regarding DALWORTH’s 2024 Fall Seminar. DALWORTH now has a LinkedIn page, please follow our new page for quick industry updates, event posts and other news.
We are so excited to see everyone in OKC!
For more information regarding CAPDOA, please visit our website at www.capdoa.org. ………………………………… DALWORTH ASSOCIATION OF DIVISION ORDER ANALYSTS (DALWORTH) Association serving the Dallas/Fort Worth, TX Area
DALWORTH 2024 BOARD Kimberly Bowman, Finley Resources – President OPEN – 1st Vice President Katrina Villarreal, Dorchester Minerals – 2nd Vice President Christy Ewert, Resource Royalty – 3rd Vice President Sara Buck, Comstock Resources – Recording Secretary Eli Murray, Dorchester Minerals – Corresponding Secretary Somchay Fairbanks, Aethon Energy – Treasurer Gorden Gallet, Elk Range, Director – Compliance OPEN Director – House Katrina Villarreal, Dorchester Minerals, Director – Hospitality Somchay Fairbanks, Aethon Energy, Director – Hospitality Brenda Pirozzolo, Steptoe & Johnson Land Admin Services – Contract, Director – Historian Lewis Box, Riverbend Energy Group, Director – Scholarship Eli Murray, Dorchester Minerals – Board Advisor Brenda Pirozzolo, Steptoe & Johnson Land Admin Services – Contract – NADOA Liaison DALWORTH 2024 is off to a great start. Our February Luncheon was held at La Calle Doce in Dallas and Conrad D Hester & Meaghan Nowell spoke on “Evolving Royalty
For information regarding DALWORTH, please visit our website at www.dalworth.wildapricot.org. ………………………………… DENVER ASSOCIATION OF DIVISION ORDER
ANALYSTS (DADOA) Association based in the Denver, CO Area
We have good news for 2025!! Several members have stepped up and want to continue DADOA into 2025. Due to lack of volunteers, we were planning to dissolve DADOA and let NADOA take over the education for the Denver Region. With
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new volunteers, we hope that DADOA can thrive into 2025 and beyond. It has been a quiet period for DADOA so far this year. Our Education Committee is planning a two-part luncheon series on Fraud. One session will concentrate on Law Enforcement’s ideas to detect fraud in our workplace and a view from the perspective of the County Clerk’s office regarding what counties are doing to prevent fraudulent documents from being filed. Another session of the series will feature attorneys from Steptoe & Johnson PLLC who will discuss fraudulent cases and advise us on ways we can prevent fraud in owner transfers and ACH payments. We hope to provide remote registration for those not residing in Denver. More to come soon. We will participate in a joint webinar with PBADOA sometime late summer or fall. A half or full day seminar is also in the planning for September or mid to late October. We will let the NADOA membership know about our activities in case you want to join us. We encourage our members to check out the 2024 NADOA Institute. It will be held in Oklahoma City OK, October 2-4 at the Omni Hotel. There will be great speakers, fun activities, and times to network and meet your counterparts at companies you work with. For more information regarding DADOA, please visit our website at www.dadoa.org. ………………………………… HOUSTON ASSOCIATION OF DIVISION ORDER
announce and congratulate new HADOA committee member, Callen Prochaska. Callen graduated from A&M with a BA in Agriculture Economics. She joined PO&G Operating last year as a Division Order Technician and is new to the Oil & Gas industry but has already made a big impact. HADOA would like to give a big thank you to Coterra for hosting our May luncheon and to Repsol for hosting our upcoming luncheon in August. If you are interested in hosting a HADOA luncheon, please send an email to president@hadoa.org. Stay tuned as we will soon post details for our Summer Seminar in July. The keynote speaker will be Paul Guillory with EOG Resources. Paul is also a past HADOA President. We hope to see you soon! For additional information regarding HADOA please view our website: www.HADOA.org. ………………………………… MID-AMERICA ASSOCIATION OF DIVISION ORDER ANALYSTS (MAADOA) Association based in the Wichita, KS Area (Inactive)
………………………………… PERMIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (PBADOA) Association based in the Midland, TX Area
ANALYSTS (HADOA) Association based in the Houston, TX Area
Greetings from west Texas! PBADOA has had an eventful spring so far. We were excited to host a happy hour that provided free headshots for our members. Endeavor Energy Resources & Montego Minerals, LP were gracious enough to sponsor our event. We are thankful for their generosity. We had a great turnout and enjoyed getting to catch up with our members and guests. In April, we had our joint seminar with PALTA at the Bush Convention Center. This year’s seminar was a big hit. We had
Hello fellow NADOA Members, I hope everyone is doing well. The first half of this year has been a busy time for HADOA and we are implementing a lot of changes. With changes come unexpected delays. We are reworking our website and membership portal to better serve you and apologize if you have not been able to access resources from the HADOA website. If you need immediate assistance, please feel free to contact me directly at michelle_davila@pogresources.com or admin@hadoa.org. We appreciate your understanding and patience. I would like to
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a lot of good feedback from multiple members, some said it “was the best one in years”. Everyone seemed interested in all the topics presented, and the food was great! We want to thank our speakers: Adrianne Lopez from Texas Pacific Water Resources, Jenna Wallace from Cotton, Bledsoe, Tighe & Dawson PC, Ryan Latham with Diamondback Energy, John Phillips with Endeavor Energy, Blake Pitcock with Henry Resources, and Paula Rauchfuss with Steptoe & Johnson. Also, a huge thank you to our board members who worked very hard planning the event. We are thrilled to announce that we were able to award two scholarships this year to the NADOA Institute in Oklahoma City. Hopefully, many PBADOA members will be able to attend. We look forward to networking and gaining valuable insight from professionals in our field. For more information regarding PBADOA, please visit our website at www.pbadoa.org. ………………………………… SOONER ASSOCIATION OF DIVISION ORDER ANALYSTS (SADOA) Association based in the Tulsa, OK Area
can we improve, etc. Eye opening feedback was gained, recorded, and presented to the board for study and discussion on ways we can improve our attendance and better serve our membership. SADOA’s April Luncheon was presented in Webinar format on Wednesday, April 17, 2024. Jamie Meyer, Senior Commercial Contracts Analyst for The Williams Companies presented the topic “Introduction to the Primary U. S. Survey Systems, With A Deep Dive Into the Rectangular Survey System: Reading, Writing, Mapping, and Calculating Acreage”. It was a definite success with 21 members in attendance as well as 11 guests. Our SADOA Annual Seminar was held Wednesday, May 22 at the Tulsa Country Club. Registration opened May 5, and all were invited to join us for a full day of fun, food, education, and networking. The cost was $125.00 for members and $150.00 for non-members, with a webinar option available for those who could not attend in person ($100.00 for members and $125.00 for non-members). Future activities include Webinars to be offered June 12 and October 16, an in-person luncheon at the Tulsa Country Club scheduled for August 21 featuring a presentation by the Oklahoma Energy Resources Board (OERB) and finishing out the year with our Annual Dinner on December 5. Check out our website for more information. We would love for you to join us! For more information regarding SADOA, please visit our website at www.oksadoa.org. ………………………………… “Practice doesn’t make perfect, practice makes progress.” -Yo Yo Ma
It has been a busy year for the SADOA team. Our first luncheon of the year was held at the Tulsa Country Club on Thursday, February 15, 2024. It was a joint meeting of TALTA (Tulsa Association of Lease and Title Analysts) and SADOA, in which Ron Barnes and Grayson Barnes of Barnes Law, PLLC presented “The Operator Fight at the OCC”. The turn-out was excellent, food was delicious and the networking even better. Both associations thoroughly enjoyed the event and are looking forward to more like it in the future. Our membership was invited to take part in an Engagement Survey in February, as well. A survey prepared by our own Jamie Meyer was emailed to all our contacts, not just members, and we received 29 responses. Questions asked were regarding states/areas worked, possible previous service on a Board of an organization, if your company provides support for membership activity, particular interests, how
Avoid headaches from explaining the ins and outs of royalty ownership to your interest owners... ...Let us help! National Association of Royalty Owners PO Box 131090, Spring, TX 77393 www.naro-us.org Phone: 918-794-1660
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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.
The Texas Division Order Statute: How It Works and Who It Serves to Protect By Madison Schrutka, Oliva Gibbs LLP
Texas
Introduction
reliance. Generally, detrimental reliance protects payors, while unjust enrichment protects underpaid payees. This binding rule serves as a safeguard for payors who would otherwise be unfairly subjected to double liability 8 .Typically, that danger arises when payors, relying on division orders, “pay out the correct total of proceeds owed, but err in the distribution, overpaying some royalty owners and underpaying others.” 9 If the resulting lawsuits were not estopped, payors “would pay the amount of the overpayment twice—once to the overpaid royalty owner under the division order and again to the underpaid royalty owner through his suit.” 10 In this scenario, the division order remains binding and the underpaid signatory royalty owner’s only relief lies in a suit to recover from the overpaid royalty owner. The basis of that recovery is unjust enrichment: the overpaid royalty owner has erroneously claimed, and is not entitled to, the sum of overpaid royalties that rightfully belongs to the underpaid payee. 11 Therefore, under these 1). Gavenda v. Strata Energy, Inc., 705 S.W.2d 690, 691 (Tex. 1986). 2). Tex. Nat. Res. Code Ann. § 91.402(c)(1) (Vernon); Prize Energy Res., L.P. v. Cliff Hoskins, Inc., 345 S.W.3d 537, 560 (Tex. App.— San Antonio 2011, no pet.), abrogated on other grounds by Nath v. Tex. Children’s Hosp., 576 S.W.3d 707 (Tex. 2019). 3). Joseph Shade & Ronnie Blackwell, Primer on the Texas Law of Oil & Gas 62 (5th ed. 2013). 4). § 91.402(g) (Vernon). 5). Id. at (c)(2). 6). Id. at (h). 7). Gavenda, 705 S.W.2d at 690. 8). Id. at 692. 9). Id.
A division order is a statement executed by all owners of interests in an oil and gas well. The division order’s essential purpose is to “authorize and direct to whom and in what proportion to distribute” proceeds from the sale of produced oil and gas. 1 While, in Texas, the payor is entitled to a signed division order from the payee as a prerequisite for payment, it is the payor’s burden to submit the order to the payee for its signature. 2 Upon the division order’s execution, “the payor is [generally] protected from liability even if there is a mistake as to who receives what percentage of production.” 3 Creating a contractual relationship, the signed division order is binding from the moment, and to the extent it has been acted on. 4 However, it “does not amend any lease or operating agreement between the interest owner and the lessee or operator or any other contracts for the purchase of oil or gas.” 5 Moreover, any provision within the division order that is “in contradiction with any provision of an oil and gas lease is invalid to the extent of the contradiction.” 6 Erroneous Division Orders: Handling the Danger of Double Liability In the landmark case of Gavenda v. Strata Energy, Inc. , the Supreme Court of Texas (SCOT) addressed whether division orders are “binding until revoked when an operator prepares erroneous division orders [and] underpays royalty owners.” 7 Texas’ standard rule is that until revoked, division orders bind underpaid royalty owners – subject to the principles of unjust enrichment and detrimental
10). Id. 11). Id.
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circumstances, the statute’s purpose is to protect the payor who detrimentally relied on the signed division order, but also the underpaid payee from an unjustly enriched, overpaid payee. Nonetheless, payors are the parties most routinely protected by the rule that division orders are binding until revoked. This trend was validated five years before Gavenda , when the SCOT held that an erroneous division order was binding in favor of the payors, even though there was no detrimental reliance on the payors’ part, so long as “they had not profited from their error in preparing the division order.” 12 Per the SCOT, the Gavenda holding provides “stability in the oil and gas industry.” 13 To put it plainly, as long as payors do not benefit from their own mistake, it is a losing battle for payees if they sue to recover from them. Accordingly, when a payor prepares an “erroneous division order and retains the benefits, Texas courts have held that the division orders were not binding.” 14 Therefore, the payor is liable for the entirety of the payee’s royalties it erroneously retained, but not liable for any royalties it erroneously paid out to other payees. 15 Strongly Construing the Texas Code in Favor of Payors While division orders establish the mechanism of settlements and payments, they can be terminated upon thirty days of written notice and no longer bind their signatories. 16 Until then, Section 91.402 of the Texas Natural Resources Code explicitly requires a payor to distribute production proceeds to each payee within certain deadlines after the oil and gas is sold. 17 Nevertheless, there seems to be a discrepancy between the statute’s explicit language and the meaning the courts have given it. In a nutshell, the Code states that on or before 120 calendar days following the end of the month of the first sale of production, payment is due to each payee, and all subsequent payments must be made in a timely manner based upon the frequency specified in the written agreement; however, if there is no specified frequency, subsequent payments “must be paid no later than 60 days after
the end of the calendar month in which subsequent oil production is sold or 90 days after the end of the calendar month in which subsequent gas production is sold.” 18 In a 2018 case, the SCOT “allowed payees to maintain a cause of action for breach of contract where their lease specified a time limit for payment of royalties,” after holding that Section 91.402 did not distinctly preclude common law claims. 19 Nonetheless, with the aim of ruling that payees cannot bring a common law breach of contract action for overdue royalty payments, the SCOT held that it first needed “clear language from the Legislature indicating an intent to abrogate a common law cause of action,” as Section 91.402 clearly left out that language. 20 In 2021, the Legislature responded and unanimously passed Senate Bill 1259, which provided the explicit legislative intent the SCOT found previously deficient. 21 In view of the 2018 case where the SCOT recognized that Section 91.402 was “designed to protect the interest of royalty owners,” it is no surprise that the industry supported SB 1259, while royalty owners opposed it. 22 On May 24, 2021, the Bill became effective, enforcing from that day forward that “a payee does not have a common law cause of action against a payor for withholding payments under the Natural Resources Code unless the contract requiring payments specifies that payments to the payee may 12). Id. (discussing Exxon Corp. v. Middleton, 613 S.W.2d 240 (Tex. 1981)). 13). Id. 14). Gavenda, 705 S.W.2d 690; Perdido Properties LLC on Behalf of Bremer v. Devon Energy Prod. Co., L.P., 669 S.W.3d 535, 549 (Tex. App. 2023) (emphasis added). 15). Id. 16). § 91.402(g) (Vernon). 17). Id. at (a). 18). Id. (emphasis added). 19). John H. H. Bennett, Oil, Gas, and Mineral Bills Enacted by the 87th Texas Legislature, 18 Tex. J. Oil Gas & Energy L 61, 71 (2023). 20.) Bennett, supra note 18; ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 879 (Tex. 2018). 21). Bennett, supra note 18. 22). Koopmann, 547 S.W.3d at 878; Bennett, supra note 18.
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not be withheld beyond the time limits set out in the Natural Resources Code.” 23 Even in the chance that a payee does have a cause of action under this new legislation, it is required to first give the payor written notice of nonpayment by mail before pursuing judicial action.24 Upon receipt, the payor then has thirty days to either pay the overdue proceeds or respond with the reasonable cause for such nonpayment. 25 Broadening the Safe Harbor Provision Section 91.402 also includes the “safe harbor” provision, which permits payors to withhold payment “if there is a dispute concerning title that would affect distribution of payments,” but payors must establish two facts: “(1) that a ‘dispute concerning title’ existed during the time it withheld production payments and (2) that dispute ‘ would affect distribution of payments.’” 26 On May 19, 2023, the Freeport-McMoRan Oil & Gas LLC v. 1776 Energy Partners, LLC opinion came down in which the SCOT adopted a very broad interpretation of what a “title dispute” includes within the Texas Suspense Statute. The court reversed a 2021 court of appeals (COA) decision finding that a constructive trust in a related suit does not fall within that category. In the opinion, the SCOT rejected the COA’s pro-payee argument that the phrase “would affect” requires a “current effect” on payment distribution, and instead, held that “would affect” simply requires “an expected future effect.” 27 Accordingly, the COA incorrectly held that the payor owed the payee interest on the suspended payments solely because the dispute does not “currently” affect payment distribution. 28 Thus, the SCOT clarified that (2)’s only necessary condition required to permit the payor “to withhold the payments without interest” is that “the dispute concerning the title was, at that time, at least expected or likely to influence or alter the distribution of the payments” owed to the payee. 29 This broadens the safe harbor provision’s power in the sense that meeting the invalid “current affect” requirement has a higher threshold in comparison to the lower threshold the valid “would affect” requirement has. Another portion of the safe harbor
provision permits a payor to withhold payments if there is a “ reasonable doubt” that the payee had “clear title to the interest in the proceeds of production.” 30 The SCOT additionally rejected this COA’s holding that “issues of reasonableness must be resolved by a factfinder as a question of fact rather than by a court as a matter of law.” 31 While the COA reasoned their holding by stating that “the determination as to whether something is reasonable is often an issue of fact that should be adjudicated by the factfinder because it requires comparison to surrounding circumstances,” the SCOT pointed out that “[r]easonableness has always entailed an objective inquiry.” 32 The SCOT went on to enforce its own precedent that:
While questions of reasonableness must be submitted to a factfinder when a genuine disagreement about the facts prevents the law from generating an objective answer, . . . no case citing that proposition can be understood to say that a factfinder must resolve all issues touching on reasonableness. Rather, the legal standard for reasonableness remains objective even if the “controlling facts” are in doubt.
Thus, reasonableness may present a question of law “when from the facts in evidence but one rational inference can be drawn.” 33 Applying that holding to the case at hand, the SCOT found the payee’s contention that the 23). Katy Wehmeyer & Jordan Stevens, Withholding Royalty Payments After ConocoPhillips Co. v. Koopmann, 52 Tex. Tech L. Rev. 439, 481 (2020); Bennett, supra note 18. 24). Tex. Nat. Res. Code Ann. § 91.404 (Vernon). 25). Id. at (b). 26). § 91.402(b)(1)(A). 27). Freeport-McMoRan Oil & Gas LLC v. 1776 Energy Partners, LLC, 22-0095, 2023 WL 3556695, at *4 (Tex. May 19, 2023) (emphasis added). 28). Id. 29). Id. (emphasis added). 30). Id. at *5 (emphasis added). 31). Id. 32). Id. (emphasis added) (internal quotation marks omitted). 33). Id.
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constructive trust placed on its own interests “established its title to the production proceeds” to be the opposite of what is true. 34 It reasoned that upon “imposing a constructive trust, a court concludes the party should not be holding the property at all, which makes the party’s title anything but clear.” 35 When rightfully withheld, payees do not have a viable cause of action for breach of contract against payors unless, “for a dispute concerning the title, the contract requiring payments specifies otherwise.” 36 Alternatively, when erroneously withheld for any reason after thirty days of receipt of the payee’s notice, the payor is liable to the underpaid payee for the amount of payment the division order entitles it to plus interest. 37 In the first instance, the statute’s function is to protect the payor from the dangers of a clouded title. Meanwhile, in the second instance, the statute’s function is to protect the underpaid payee from a, more or less, opportunistic payor. A Shift Away from the Pro-Payor Trend? While Freeport-McMoRan reinforces the Texas Division Order and Suspense Statute’s strength, the Perdido Properties LLC on Behalf of Bremer v. Devon Energy Prod. Co., L.P. opinion, which came down just the day before, appears to undermine it. Although the case also upheld the precedent established in Gavenda , it steps away from Texas’ tradition of being pro-payor. Due to lack of Texas precedent concerning non-signatories of a division order suing payors that paid royalties to incorrect royalty owners, the COA heavily relied upon North Dakota precedent. 38 Meanwhile, North Dakota has a substantially weaker division order arrangement than Texas. In the situation involving a royalty owner who has not executed a division order with the payor, the North Dakota Supreme Court (NDSC) held that the payor’s reliance on the title opinion does not absolve it of double liability and the royalty owner can recover underpayment or total nonpayment from the payor. 39 In other words, North Dakota division orders are designed to provide the payor double liability protection from only those that are a signatory of the document
itself, while non-signatories face no legal barriers provided by such protection. Nonetheless, the NDSC holds that to be entitled to such protection from an underpaid signatory’s suit, the payor must have “detrimentally relied” on the division order by making underpayments according to the signed and executed, yet erroneous document. 40 Meanwhile, in suits brought by non-signatories, it is of absolutely no consequence that a payor detrimentally relied and may be exposed to double liability because it has “not relied to its detriment on any actions taken by the non-signatory” plaintiff. 41 Theoretically, the Texas COA possibly adopts North Dakota’s philosophy on the issue with the logic that by utilizing due diligence and the self-help provided to payors by the safe harbor provision, double liability to a non-signatory is something that can be easily avoided. After all, that is the purpose of the Suspense Statute: permitting payors to suspend royalty payments without interest, if there is any suspicion of a clouded title. Although the payors took a loss in Perdido , the Texas safeguards favoring payors prevented it from being worse than it could have been. For the payor’s protection, the statute of limitations bars all claims for royalty nonpayment that accrued prior to four years from the date that suit is filed by or on behalf of the royalty owner. 42 However, an even more pervasive caveat to the statute is crucial to note: “a cause of action accrues and the statute of limitation begins to run when facts come into existence that authorize a party to seek a judicial remedy.” 43 Therefore, such a cause of action accrues upon a wrongful act causing legal injury regardless of whether it goes undiscovered until thereafter, and regardless of whether the entirety of resulting damages have not yet occurred. 44 34). Id. at *6. 35). Id. (internal quotation marks omitted). 36). § 91.402(b-1) (Vernon). 37). Tex. Nat. Res. Code Ann. § 91.403 (Vernon). 38). Perdido Properties LLC on Behalf of Bremer, 669 S.W.3d 535, 551 (Tex. App. 2023).
39). Id. 40). Id. 41). Id.
42). Id. at 555. 43). Id. at 556. 44). Id.
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The Perdido Case’s Petitions for Review Devon filed a petition for review on August 8, 2023, and Perdido filed a petition for review on September 5, 2023, and it will be interesting to see the SCOT’s response this pro-payee case receives. Although the SCOT has not yet granted either party’s petition, four briefs on the merits have been submitted to the Court. Devon’s appeal challenges the COA’s holding regarding (1) the sufficiency of the email signatures; (2) the alleged acknowledgement of debt to Perdido; and (3) the validity of enforcing double liability. Devon argues that: (a) the emails do not satisfy an acknowledgement’s signature requirement because Devon manifested an intent to be bound by only written agreements with wet-ink signatures; (b) the COA’s reliance on “the combined force of all Devon’s emails” is a “tortured attempt to reach the result of an unambiguous acknowledgement” of their debt to Perdido 51 ; and (c) imposing double liability on Devon goes against the SCOT’s precedent as Devon was not unjustly enriched and Perdido had a restitution remedy against the third party that wrongfully received Perdido’s royalty share. 52 On the other hand, Perdido’s cross-appeal challenges the COA’s holding regarding (1) Devon’s compliance with its statutory fiduciary duty as the holder of unclaimed funds; (2) the improper application of the statute of limitations; and (3) the denial of Devon’s fraudulent inducement. Perdido argues that: (a) Devon breached its duty to hold Perdido’s unclaimed funds “in trust for the benefit of the state” or when timely claimed, pay Perdido because Devon negligently distributed them to an unentitled third party instead 53 ; (b) the COA misapplied the statute of limitations because the
Nevertheless, a plaintiff-payee can dodge a defendant-payor’s limitations defense by invoking equitable estoppel, which requires the following elements to be proven: (1) the payor “made a false representation or concealed material facts; (2) with actual or constructive knowledge of those facts; (3) with the intent that” the payee would act on the payor’s misrepresentation; (4) to the payee, “who had no means of knowledge of the facts;” and (5) the payee “detrimentally relied” on the misrepresentations. 45 As it functions in all contract claims, equitable estoppel offers protection from the unconscionable acts of an exploitative party. Moreover, while a debt may be otherwise barred by the statute of limitations, the statute’s effect can be precluded “if the party to be charged acknowledges the debt in writing” thus creating a new obligation. 46 To be successful, it must be proven that the acknowledgement: (1) is “in writing and signed by the party to be charged;” (2) contains an unambiguous “acknowledgement of the justness or the existence of the particular obligation;” and (3) refers to the specific obligation and expresses a willingness to honor it. 47 To differentiate between elements (2) and (3), when the debt is unambiguously acknowledged, “the promise to pay is implied,” but to sufficiently refer to the specific obligation, the amount of the obligation must be capable of “ready ascertainment.” 48 Although it is agreed that modern communication largely occurs via email, there is a split in Texas authority surrounding whether a signature, as required in element (1), is satisfied by an email signature block. 49 However, Perdido might have set the record straight by concluding that “either a typed name or a signature block at the end of an email is sufficient.” 50 While Perdido appears to shift away from the pro-payor trend, the various Texas safeguards that remain in place for the payor’s protection will continue to substantially limit the amount a payee can recover from it. Nonetheless, it is more than likely that the SCOT will take a hard look at this case and possibly even reverse the COA’s decision, as they have done time and time again, to maintain the pro-payor status quo.
45). Id. at 557. 46). Id. at 558–59. 47). Id. at 559. 48). Id.
49). Id. at 560. 50). Id. at 561. 51). Pet’r’s Br. at 55-56. 52). Pet’r’s Br. at 67. 53). Cross-Pet’r’s Br. at 15.
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Texas Property Code suspends such limitations until the unclaimed royalties are paid to the comptroller via the escheat statutes 54 ; and (c) Devon’s representations in the release agreement equitably tolled limitations because they were misleading and fraudulently induced Perdido to hold off on filing suit. 55 Conclusion The standard rule is that Texas division orders “bind underpaid royalty owners until revoked” with detrimental reliance protecting the payor and unjust enrichment protecting the underpaid payees who are signatories to the division order. Nonetheless, detrimental reliance is merely a sufficient condition for the payor’s protection from double liability, while unjust enrichment of the payor is the necessary condition for the payees’ protection. To provide “stability in the oil and gas industry,” the SCOT and the Texas Legislature tend to be pro- payor by minimizing the duties the Texas Division Order and Suspense Statute assigns to payors and maximizing the hoops payees must jump through for a successful cause of action. 56
Meanwhile, the COA’s holding in Perdido completely disregards Texas’ following foundational principles for royalty mis-payment cases. 57 Exposing payors to double liability is unjust when they rely on an erroneous division order “but have not personally benefited from the errors.” 58 In a few circumstances, a royalty owner has a viable claim against the payor based on unjust enrichment, but only when the payor “profited at the royalty owner’s expense .” 59 At that point, the payor then becomes liable but only for the part of the royalty owner’s payment the payee unjustly retained; the payor “is not liable for the amounts it paid out to other interest owners.” 60 54). Cross-Pet’r’s Br. at 12. 55). Cross-Pet’r’s Br. at 14. 56). Gavenda, 705 S.W.2d at 692. 57). Pet’r’s Br. at 76. 58). Gavenda, 705 S.W.2d at 692 (citing Middleton, 613 S.W.2d at 249); see Pet’r’s Br. at 76. 59). HECI Expl. Co. v. Neel, 982 S.W.2d 881, 891 (Tex. 1998); see Pet’r’s Br. at 76. 60). Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 123 (Tex. 1996) (citing Gavenda, 705 S.W.2d at 692-93).
Don’t Let Your Deal Get Abducted (Rejected) by Alien (Affidavits! Updates to 60 O.S. § 121)
Oklahoma
By Melissa P. Martin and Scott P. Sullivan of The Title Law Group, PLLC, and Melissa R. Gardner of Ball, Morse, and Lowe.
One of the most exciting times in a person’s life is buying a house. One of the most important tenets of our country is the ability for citizens to hold and own real property. Oklahoma, in particular, is a lovely place to own real property with the warm temperatures, many days of sunshine, and a BIG, beautiful sky. Now imagine, buying your piece of paradise, taking your Deed to the County Clerk’s Office for recording to stake your claim, and your deed being rejected, all because you failed to attach an “alien affidavit”. This is Oklahoma, in the United States of America, on Earth; what in outer space are they asking you for? Well, the good news is that they are not asking you for any documentation from the extraterrestrial type of alien (Hi, ET!). Instead, they are referring to a new affidavit now required by an update to Oklahoma
Statute 60 O.S. § 121, effective November 1, 2023, regarding land ownership by non-resident aliens of the United States. But…
How on Saturn Did We Get Here? The United States is a nation founded on
immigration. From the first settlement at Jamestown in 1607, to today, most Americans can trace their heritage to foreign lands. Prior to the Naturalization Act of 1870 1 , immigration was primarily regulated by the states where ports of entry were located. It was not until 1875 that immigration was held to be the purview of the Federal Government 2 although the U.S. 1.) 16 Stat. 254. 2.) Henderson v. Mayor of City of New York, 92 U.S. 259; Chy Lung v. Freeman, 92 U.S. 275.
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