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therefore estopped from asserting title to any interests in contradiction to Leo’s duty to defend the Dragons against all claims to “all that certain parcel or tract of land.” (Note that Leo Trial conveyed to the Dragons in 1992 and died in 1996, when his wife and sons inherited.) Rationale: The Duhig Rule is at its core a rule of fairness. Under the circumstances, it would not have been fair for the Trial sons to claim an interest in the land that their father sold, the Dragons paid for, and their mother accepted note payments on.
Manning Wolfe
Manning Wolfe, an author and attorney residing in Austin, Texas, writes cine- matic-style, smart, fast-paced thrillers. Her series featuring Austin lawyer Merit Bridges includes “Dollar Signs: Texas Lady Lawyer vs Boots King” and “Music
Notes: Texas Lady Lawyer vs L.A. Baron”. A graduate of Rice University and the University of Texas School of Law, Ms. Wolfe’s practice is focused on the oil and gas industry and her novels include landman, oil and gas and legal themes. Man- ning Wolfe, PLLC www.manningwolfe.com
Judgment: Reversed.
Commission Orders No Payment Due to ORRIs During Cost Recovery Period
By: James Parrot and Jill Fulcher
At its September 11, 2017 hearing in Durango, Colorado, the Colorado Oil and Gas Conservation Commission (“COGCC”) considered, for the first time, an issue of great concern to any party who owns or pays an overriding royalty interest (“ORRI”). Specifically, the Commission determined that under Colorado’s compulsory pooling statute (C.R.S. § 34-60-116(7)) (“Pooling Statute”), consenting owners do not have to pay ORRI owners whose interests derive from a working interest (“WI”) that is nonconsenting until the consenting owners have recovered well costs. Background In this case, a party who owned leases (“Nonop”) assigned various ORRIs in its leases to several individuals (“ORRI Owners”), which in aggregate were equal to 30.0%. The ORRI assignments were recorded. A second party who owned other leases in the same area (“Operator”) established a drilling and spacing unit and planned to drill a well. Operator mailed packets to Nonop that contained an election to participate and authorization for expenditure. Nonop did not elect to participate in the well. Operator subsequently obtained a pooling order from the COGCC, which authorized cost recovery under
C.R.S. § 34-60-116(7) for the well. C.R.S. § 34-60- 116(7)(a) provides: As to each nonconsenting owner… the order shall provide for reimbursement to the consenting owners… of the nonconsenting owner’s share of the costs and risks of such drilling and operating out of, and only out of, production from the unit representing his interest, excluding royalty or other interest not obligated to pay any part of the cost thereof. (emphasis added). C.R.S. § 34-60-116(7) (b) further provides that the recoverable costs are equal to 200% of downhole and equipment costs and 100% of surface costs. 1 1 This is a rough paraphrase of the various costs that are recoverable at either 200% or 100%—the statute is considerably more specific about such costs. For full details about what costs are recoverable at what percent, please consult C.R.S. § 34-60-116(7)(b) or contact us for further information. Operator subsequently drilled the well and obtained production. Operator notified Nonop and ORRI Owners that it did not intend to pay the ORRIs during the pendency of the cost recovery period. In other words, Operator would pay no ORRIs until it had recovered
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