Overriding Royalty Owners • 5% ORR * 100%WI * 2,115’ Tr1 Lateral / 9,883’ Tot Lateral = 0.01070019 (Patton ORRI) Working Interest Owners 0.17746382 (Total RI Burden) + 0.01070019 (Total ORRI Burden) = 0.18816401 (Total Burdens) 1 – 0.18816401 (Total Burdens) = 0.81183599 (Wellbore Net Revenue Interest) • 25%WI under the JOA (Powell GWI) • 81.183599%WB NRI * 25%WI = 0.20295900 (Powell NWI) • 25%WI under the JOA (MacArthur GWI) • 81.183599%WB NRI * 25%WI = 0.20295900 (MacArthur NWI) • 50%WI under the JOA (Moore GWI) • 81.183599%WB NRI * 50%WI = 0.40591799 (Moore NWI)
variations to calculating divisions of interest for allocation and production sharing wells. Until common law, the regulatory body, or legislature creates a consistent method for companies to follow, the industry will continue to face uncertainty of whether the methods will be standardized. In the meantime, the industry will continue to calculate the interests of allocation wells and production sharing wells to the best of its ability.
About the Author:
Eli Murray Eli Murray is currently a Landman with Dorchester Minerals, LP. She has held various positions at other companies ranging from File Clerk to Property Administration and Division Order Manager. She is a Certified
Division Order Analyst and Certified Professional Lease and Title Analyst. She has a B.A. from Texas A&M University and a M.L.S. from the University of Oklahoma, and she is a veteran of the United States Army Reserves.
In conclusion, there isn’t a clear-cut formula for navigating this uncharted territory, and there are many
Legal
Update
These materials reflect only the personal views of the authors and are not individualized legal advice. It is understood that each case is fact-specific, and that the appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the authors and their law firm cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship with the authors or their law firm. While every attempt was made to insure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed.
North Dakota
North Dakota Clarifies Allocation of Oil & Gas Proceeds Between Life Tenants and Remaindermen & Adopts the Open Mines Doctrine
In 2005, Dennis and Tia Reese-Young, co-owners of a tract of land in Mountrail County, North Dakota, executed an oil and gas lease covering their interest. Oil production was obtained on the leased lands in 2007. In 2008, Dennis and Cheryl Reese quitclaimed their entire mineral interest in said tract to Tia Reese-Young, reserving a joint tenancy life estate. However, the quitclaim deed did not address how proceeds from the production of oil and gas were to be allocated as between the life tenants and remaindermen. Dennis died later that year, leaving Cheryl Reese as the sole remaining life tenant.
In Reese v. Reese-Young, 938 N.W.2d 405 (N.D. 2020), the Supreme Court of North Dakota provided long overdue guidance on the allocation of oil and gas proceeds as between life tenants and remaindermen. Formerly, practitioners were relegated to the “general rules” that had emerged from legal treatises and the laws of other states. The statutory guidance provided only that the owner of a life estate must “do no act to the injury of the inheritance,” and must prevent “ordinary waste.” See N.D. Cent. Code §§ 47-02-33, 34. In addressing these successive estates, the court also formally adopted the Open Mines Doctrine.
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