2022 Q4

National Association of Division Order Analysts October / November / December 2022

PERSONAL ATTENTION • ETHICAL STANDARDS • PROFESSIONAL SERVICE

PURCHASING ROYALTIES ACROSS THE NATION

Quick, no-obligation offers

Royalty valuations

Mineral rights appraisals

Free estate and title transfer consults

Pro bono Medicaid & social services appraisals

Info@LegacyRoyalties.com • 1-800-950-6954 • www.LegacyRoyalties.com

A RELATIONSHIP OF TRUST

Consider Russell T. Rudy Energy, LLC MINERAL, ROYALTY, & WORKING INTEREST ACQUISITIONS NATIONWIDE

Ownership Transfers Stop Here! We Do Not Reassign, Broker or Repackage Any Interest We Buy

Legal, Engineering, Land & Division Order Expertise On Staff

Known For Integrity and Fair Dealing

NADOA Member 30 Years

1-800-880-0940 | info@rudyenergy.com | www.RudyEnergy.com Russell T. Rudy Energy, LLC - Buying Oil & Gas and Mineral Interests Nationwide Since 1983

www.NADOA.org

Volume MMXXII • No 4

Contents Feature

Articles

Unclaimed Property North Dakota VDA.................................................................11 Texas HB1514.........................................................................12 Legal Updates Ohio Dormant Mineral Act.....................................................13 Samson Exploration v Bordages..............................................14 Concho v Ellison – Second look...............................................17 National Niche...........................................................................19 Texas Online Databases.............................................................20 Institute Highlights and Thank You Notes................................21

NADOA 2022 Officers President Michele Lawton 1st Vice President Norma Dooley 2nd Vice Presiden t Vicki Danielson, CDOA Treasurer Valerie Wible, CDOA Corresponding Secretary Jason Alexander Recording Secretary Kimberly Bowman

In This

Issue

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

President’s Corner..............................................................1 Bylaw Change and 2023 Election Results...........................2 2022 Membership Recognition Awards...............................3 Decimal Points...................................................................4 Certification....................................................................... 5 Ellis Rudy Memorial Scholarships......................................6 Save the Date – 2023 Institute...........................................6 New Members.....................................................................6 Counterpart Connection.....................................................7 OERB News......................................................................20 NADOA Board & Committee Chairs................................30 Calendar of Events...........................................................31

Order Analysts P O Box 1656 Palm Harbor, FL 34682

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

Graphic Design, Paul Beach

On the Cover: Holiday lights on the River, Photo courtesy of the City of San Antonio

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

Michele Lawton, CDOA 2022 NADOA President

Thank you for the honor of serving as NADOA’s 2022 president. I would like to thank all of our sponsors, advertisers, vendors, and companies that sent their employees to Institute this year.Without all of you we could not have a successful Institute.Also, a huge thank you to the board and Institute Committees who worked so hard for the membership this year to put on such a successful Institute in San Antonio. We had a great educational Institute and hope you took the opportunity to learn and grow your network. I would like to reiterate that in this ever-changing industry, it is vitally important to stay up to date through continuing education.Your membership in NADOA provides you with free webinars, a quarterly newsmagazine with informative articles on changing legislation and industry news, and CDOA certification to show you are a qualified professional in the industry. Again, thank you all so much for such a successful year and we hope to see everyone again in beautiful Kentucky for our 50th anniversary Institute. Mark your calendars for September 6 thru 8, 2023! I know your president, Norma Dooley, and her Institute Committee are already working hard to make 2023 an awesome year for NADOA.

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 1

Election of 2023 Board By Lewis Box, CDOA The Bylaw changes to Article IX were approved by the membership. This change altered the term of the Treasurer to 2 years (24 months). The election results for the 2023 NADOA Board were verified by the Teller’s Committee. We couldn’t have done this task without Chris Tucker; anytime you get the chance please tell him thank you for all the time he puts in for NADOA! The Teller Committee volunteers this year were Lewis Box, Chairman, Lisa Buffaloe, Betty Davison, Melanie Finnegan, & Cheryl Hampton. With a total of 212 votes cast; next year’s NADOA Board as chosen by popular vote of the NADOA Membership:

President

Norma Dooley (Automatic advancement from 1st VP) Vicki Danielson, CDOA (Automatic advancement from 2nd VP)

1st Vice President 2nd Vice President

Kimberly Bowman

Treasurer

Valerie Wible, CDOA (2 year term)

Recording Secretary

Sonya Turner, CDOA

Corresponding Secretary

Kelly Sandoval

Board Advisor

Michele Lawton (Automatic advancement from President)

Local Association Directors

Chosen by the local associations

2

N at i onal A ssociation of D i v i s i on O rder A nalys t s

2022 NADOA Membership Recognition

CORPORATE AWARD

Georgeson, LLC This corporation has been a strong supporter of NADOA for several years. They have sponsored a vender booth at Institute for many years and allow their employees to join us and educate Institute attendees on updates associated with unclaimed property. It is our great pleasure to present the 2022 Corporate Award to Georgeson, LLC

RUSSELL SCHETROMA MEMORIAL SPEAKER’S AWARD Pam Wentz, Georgeson, LLC

This speaker has taken the time to educate us at both the National and Local level anytime she is requested. She is happy to speak with NADOA members to further understanding of the Escheat Process, which has saved our companies many dollars in fines and penalties. It is with great pleasure we present the 2022 Russell Schetroma Memorial Speaker’s Award to Pam Wentz with Georgeson, LLC.

ELLIS RUDY MEMORIAL LIFETIME ACHIEVEMENT AWARD Vicki Danielson, CDOA

This member’s division order career expands more than 30 years in the industry. She is active in her local organization, has served many years on different NADOA Institute Committees, and currently serves on the NADOA Board. Over the course of her career she has been a Division Order Analyst, Supervisor, Manager and mentor to many young analysts. It is our honor to present the 2022 Ellis Rudy Memorial Lifetime Achievement Award to Vicki Danielson.

EDUCATION AWARD Yoli Bazan, CDOA, Coterra Energy

This NADOA member has been involved with educating the membership for several years. She is very enthusiastic about the CDOA program, teaches classes for those wanting to earn their CDOA credentials and goes out of her way to help. She has been part of the webinar committee for the past several years, making sure everything is in running order, finds topics of interest, locates qualified speakers and promotes them on LinkedIn. With great pleasure we present the 2022 Education Award to Yoli Bazan.

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 3

NADOA

Decimal Points

Regional Reporters ABADOA Steptoe & Johnson PLLC Ryan.daniels@steptoe-johnson.com CAPDOA OPEN DADOA OPEN DALWORTH Lewis Box, CDOA lewis.box@gmail.com HADOA Emily Sheffield esheffield@oglawyers.com PBADOA Rosanne Kidder Rosanne.kidder@pxd.com SADOA Joe Anderson Janderson96@cox.net Arkansas Jackie Clotfelter, CDOA jclotfelter@hannaoilandgas.com Kansas Amy Flaming Amy.flaming@chsinc.com North Dakota Kimberly A. Backman kbackman@crowleyfleck.com New Mexico Zachary P. Oliva zoliva@oglawyers.com Louisiana Margaret Patton mpatton@pattonfirm.com

2023 NADOA Article Deadlines

February 10..............................First Quarter

April 21...............................Second Quarter

June 16...................Special Institute Edition

September 22.........................Third Quarter

November 10.......................Fourth Quarter

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. NADOA online Job Bank has new postings. Visit http://www.nadoa.wildapricot.org/page- 662233

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.

2022 News Magazine Team

Kim Bowman Associate Editor, Photography

Rona Erickson CDOA, Editor

Susan Bradley CDOA Associate Editor

Michelle Davila Associate Editor

Cheryl Hampton Associate Editor

4

N at i onal A ssociation of D i v i s i on O rder A nalys t s

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

Somchay Fairbanks – Fort Worth,TX

CANDIDATES FOR RECERTIFICATION

Susan Bradley – Tyler,TX Brenda Dickey – Glenpool, OK

Rona Erickson – Tulsa, OK Janise Powell – Plano,TX

Trusted Legal Counsel to Energy Companies

Oil & Gas | Utilities | Mining | Renewables

For more information visit steptoe-johnson.com

COLORADO | KENTUCKY | OHIO | OKLAHOMA | PENNSYLVANIA | TEXAS | WEST VIRGINIA

400 White Oaks Boulevard, Bridgeport, WV 26330 THIS IS AN ADVERTISEMENT

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 5

ELLIS RUDY MEMORIAL SCHOLARSHIP Thank you for providing registration for 8 NADOA members and two night Hotel stay for 2 NADOA members. This Scholarship provides assistance to NADOA members who plan on attending Institute and are looking for some assistance to cover their costs. If you plan on attending the conference in 2023, please make sure you are an active NADOA member and look for the scholarship forms in the first quarter of 2023.

AND THEY’RE OFF SAVE THE DATE 50th ANNIVERSARY of NATIONAL ASSOCIATION of DIVISION ORDER ANALYSTS

September 6 - 8, 2023 OMNI Hotel – Rate $189.00 Louisville, Kentucky

NADOA Welcomes The Following New Members: Amber Hudson Amber Hudson

Sitio Royalties Kaitlin Lyon

California Resources Corporation

Southwestern Energy Bryan Whiting

Staci Martinez McCracken

Steptoe & Johnson PLLC Paula Rauchfuss

EOG Resources Inc Monita Cebell

PennEnergy Resources LLC Karen Graham Wendy Standardi Carson Tate

CHS McPherson Refinery Inc Carolyn Anguiano Michelle Lafferty

Tammy Hatfield Jocelyn Lyrock Kristyn Weaver

Venable Royalty

Adrianna Stephenson

Coterra Energy Sheryl Kohl

Peyton Royalties, LP Jordan Cockrell PO&G Resources LP Alison De Less Presidio Resources Michelle Sena

Walter Oil & Gas Corporation Lisa Martinez

Hanna Oil and Gas Tammy Freeze

Crescent Energy Megan Bevans Delta Oil and Gas Cayce Malcuit

Independent

Whitley Penn

Zinajda Kadic

Avery Robbins

Independent

XTO Energy

Jacquelyn Melebeck

Diamondback Energy Ashley Hyde

Mitchell Davis Charloma Fotu Kenny Garon

Repsol Oil & Gas USA LLC Michelle Teppo

Ovintiv

Jacquelyn Niklas

EnLink Midstream Jessica Bly

6

N at i onal A ssociation of D i v i s i on O rder A nalys t s

Counterpart

Connection

Sandi Rupprecht Local Association Coordinator

APPALACHIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (ABADOA) Association Based in the Pittsburgh, Pennsylvania Area Serving NY, OH, PA, WV (Inactive)

Lola Strickland, Local Association Reporter

CAPITAL ASSOCIATION OF PROFESSIONAL DIVISION ORDER ANALYSTS (CAPDOA) Association based in the Oklahoma City, OK Area

…………………………………

ARKLATEX ASSOCIATION OF DIVISION ORDER ANALYSTS (ALTDOA) Association based in the Shreveport, LA Area (Inactive) …………………………………

Hello from Oklahoma City and CAPDOA! We are looking forward to our holiday celebration! CAPDOA tries to

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 7

make our last business meeting for the year very festive. We will be donating needed goods to a charity here in Oklahoma called The Children’s Center Rehabilitation Hospital.They are an amazing organization that helps with the rehabilitation of children who are extremely ill or handicapped. Sometimes that is in the form of getting them well again so they can resume their lives as before. For the handicapped they have rooms set up like a school cafeteria, post office and even a mock house where they teach the children how to maneuver in those situations of normal life.We will also have an ugly sweater contest to liven up the business meeting. CAPDOA had four normal business meetings with speakers and a full day Seminar in the summer.We voted on our 2023 board, so we will be meeting to transition those positions with new members.We look forward to seeing everyone at our final business meeting of the year. You do not want to miss it! For more information regarding CAPDOA, please visit our website at www.capdoa.org. ………………………………… Submitted by Eli Murray, President DALWORTH ASSOCIATION OF DIVISION ORDER ANALYSTS (DALWORTH) Association serving the Dallas/Fort Worth, TX Area

Technology is a wonderful but challenging thing. As artificial intelligence has improved in identifying lease provisions and because its use has grown in our market, DALWORTH has seen a significant overlap in membership with DFW-ALTA, which is the local organization affiliated with NALTA. In an effort to manage the evolution of our industry, we are actively engaged in merging the organizations. Many of the positions in our market are changing and a number of companies are using a “Jack of all trades” to handle all of the needs for Land Administration.These Land Analysts are able to facilitate the lease obligations while also understanding and maintaining the division order side of the company. We look forward to becoming one local association to reduce the redundancies in managing the organizations and will also be fulfilling the educational needs for these hybrid professionals. DALWORTH is excited about this next chapter. For information regarding DALWORTH, please visit our website at https://dalworth.wildapricot.org/ …………………………………

Kaitlin LaFlamme, Local Association Reporter

DENVER ASSOCIATION OF DIVISION ORDER ANALYSTS (DADOA) Association based in the Denver, CO Area

DADOA was pleased to partner with DALTA to host a full-day in-person fall seminar in October. Participants heard excellent presentations on Division Order interest calculations, Conflicts between Royalty Payment Acts, Compulsory Pooling and Royalty owner strategies on how to prevent ethical issues related to owners and fraud, capital funds consolidation, and getting owners into pay who are going through the probate process. A huge thank you to our speakers,Taylor Hindes, Bresee Carlson, Paula Rauchfuss, Erica Honeycutt and Daniel Franklin, as well as our seminar sponsors,Total Document Solutions Inc,White River Royalties LLC, Crowheart Energy, Sitio Royalties and Steptoe & Johnson Land Administration Services LLP.

2022 DALWORTH Officers and Directors President – Eli Murray 1st Vice President – Connie Wilcoxson 2nd Vice President – Liz Karlen Recording Secretary – Lindsay Grose Director (Compliance) – Megan McKee Director (House) – Christy Ewert Director (Hospitality) – Somchay Fairbanks Director (Hospitality) – Isabel Zhang Director (Historian) – Brenda Pirozzolo Director (Scholarship) – Lewis Box

DADOA will host their January Luncheon on January 25, 2023, at the 17th Street Plaza Building, 1225 17th Street.

Board Advisor – Kim Bowman NADOA Liaison – Megan McKee

8

N at i onal A ssociation of D i v i s i on O rder A nalys t s

We will welcome a representative from our 2022 Charity, Oilfield Helping Hands, Denver Chapter. An industry speaker will be present with a topic to be determined. Check the DADOA website for updates.We look forward to meeting together in the new year for education and supporting the community where we live and work. Should you have a topic idea for a future luncheon or if you would like to be a speaker at one of our luncheons, please reach out to us.We are planning for 2023. Please let us know if you are interested in serving on a committee. Celebrating our 43rd Anniversary in 2023. For more information regarding DADOA, please visit our website at www.dadoa.org. ………………………………… Submitted by Heather Lister HOUSTON ASSOCIATION OF DIVISION ORDER

that Yoli Bazan, 2016 HADOA president, will be honored with the 2022 NADOA Education award.

Board of Director nominations for the 2023 year are quickly approaching. If you or someone you know is interested in volunteering with HADOA, please email Past President, Heather Lister at HLister@rife.com. Joining the Board of Directors for a local chapter is a great start in understanding the work and effort needed to host our awesome events. It is also a way to reach personal and professional goals. Mark your calendars for the 2023 Wednesday luncheons at the Houston Petroleum Club: February 15, March 8 and May 10. Be sure to follow us on social media (LinkedIn, Instagram, Facebook) for all the latest and greatest that the Board of Directors is hosting! As always, if you have any suggestions for topics, speakers, or co- sponsored events, email us at admin@hadoa.org. 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)

ANALYSTS (HADOA) Association based in the Houston, TX Area

Happy Holidays from Houston! We cannot believe the Holiday season is upon us already! As mentioned in our last article, Board Directors are gearing up for our annual Charity Luncheon. Register to join us on December 9th at the Petroleum Club in Houston Downtown.We will hold a charity raffle where attendees will have a chance to win prizes.You may win items donated by our Board, local Houston companies, and companies throughout the industry.All proceeds from the raffle go directly to the annual charity.This year, our President, Armando Lopez selected Camp Hope, a charity focused on helping military veterans who struggle with PTSD. This organization holds a special place in our heart, and they are excited about working with HADOA. If you are interested in donating, please email Michelle Davila at Michelle_davila@pogresources.com Over the past year, HADOA had the pleasure of collaborating with awesome vendors and sponsors to host wonderful events.We had eight monthly educational luncheons, one full day seminar, community outreach networking events, and we will end 2022 with a wonderful Holiday Luncheon.We are happy to announce

………………………………… Jennifer Beyer, CDOA, Local Association Reporter PERMIAN BASIN ASSOCIATION OF DIVISION ORDER ANALYSTS (PBADOA) Association based in the Midland, TX Area

Happy Fall from PBADOA! After taking a break in the Summer, PBADOA was excited to meet in September to hear

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 9

from Ashley St. Pierre, a Senior Landman at Vencer Energy. She presented on “Allocation Wells: a Landman Perspective”. She discussed what an allocation well is, why they are good, and why they are bad. Ashley also discussed the different processes for a Landman to prepare for the drilling of a well. We are thankful she took the time to present to us. On November 16, we will hear from William Clark on the topic of “Piranha Partners and Posse Energy: Ambiguous Exhibits and Nature of Interest vs. Extent of Interest Catch- All Clauses”. On December 14, we will have our Christmas social. This is a fun time to play games, network, and raise money for a local charity. PBADOA was grateful to be able to award two of our members scholarships to the NADOA Institute in October. Here is what they said about their experience. “Thanks to PBADOA for sponsoring me this year with a scholarship to NADOA. I had an amazing time in San Antonio! The people, the food, the speakers, the golf, and the venue were awesome! I had a blast! I am looking forward to Louisville next year!” - Shirley Smith “Thank you so much PBADOA for sponsoring me this year with a scholarship to attend the NADOA Institute in San Antonio. Networking at its finest with wonderful people at a great location! Speakers did an amazing job! I had a great time, and I am looking forward to Louisville next year!” - Katherine Flores For more information regarding PBADOA, please visit our website at www.pbadoa.org. …………………………………

Submitted by Jamie Donohue SOONER ASSOCIATION OF DIVISION ORDER ANALYSTS (SADOA) Association based in the Tulsa, OK Area

President:............................................Jamie Donohue 1st Vice President:.........................Dixie Folzenlogen 2nd Vice President:.............................Crystal Chapin Secretary:.............................Debbie Wortham, CDOA Treasurer:..................................................Joe Votruba Director:..................................................Holly Brandt Director:..............................................Rachel Dawson Advisor:.........................................Cyndi Bryant-Price Advisor:.....................................Carrie Hughes, CDOA NADOA Liaison:.........................Sonya Turner, CDOA Check it out! SADOA has unveiled a new logo. A shout out goes to the entire board for the many hours of collaboration that went into its making, and to Sonya Turner’s son, Dusty, for his creative genius and patience to turn the board’s ideas into a reality. SADOA’s new logo consists of a droplet, pump jack, and a drill bit. The droplet is broken into two parts. The top of the droplet is a blue natural gas flame, and the bottom is black oil. The SADOA letters appear at the bottom within the drill bit. SADOA’s 2nd Vice President, Crystal Chapin organized a very successful Fall Seminar on October 18 at the Tulsa Country Club. We had 54 attendees and 6 very good speakers and topics: Jason Tackett (Understanding the Energy Transitions), Chace Daley (Oil and Gas M&A Transactions), Donna King (The New Normal - Modern Land Management), Kraettli Epperson (Production Revenue Standards Act (PRSA) – Proposed Revisions under SB1524), Buford Pollett, JD (Rights & Obligations in Realty), and Tom Seng (The Pros & Cons of the Energy Transitions). For more information regarding SADOA, please visit our website at www.oksadoa.org. …………………………………

EX T EX Division Order Services, LLC 4865 Ward 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

10

N at i onal A ssociation of D i v i s i on O rder A nalys t s

Unclaimed

Property

Gary Joseph, DAS Partner

Cory Roberts, DAS Audit Manager

North Dakota: Voluntary Self-Disclosure Program

The North Dakota Department of Trust Lands – Unclaimed Property Division (“State”) has increased its efforts to encourage holder compliance with the North Dakota Revised Uniform Unclaimed Property Act (“RUUPA”) through its Voluntary Self-Disclosure program, otherwise referred to as Voluntary Disclosure Agreement (“VDA”) or Self-Audit. Holders with operations in North Dakota should be on the lookout for VDA invitations from the State notifying them of selection. The State requests a response to the invitation within 60-days, indicating failure to do so may subject holders to a formal examination by one of the State’s third- party auditors. Statutorily, the North Dakota Unclaimed Property Administrator (“Administrator”) evaluates holder compliance with its unclaimed property law for the past 10 reporting periods. The VDA period is no different, however there are several benefits to cooperating with the VDA that are not afforded holders in an involuntary audit: 1. The State provides a two-year window for completion of the VDA. 2. The holder is allowed to perform a self-review of its own records, rather than a formal examination driven by a third-party firm’s information and

documentation requests. 3. The holder may avoid the imposition of interest and/or penalties of which the Administrator is statutorily authorized to assess for unreported obligations and noncompliance. As you may be aware, the lookback period is heavily dependent on the dormancy periods for property types of exposure. The State provides a three-year dormancy period for most property types. Therefore, a holder may need to review 13 years of records or transaction history in its compliance endeavor. As aforementioned, the State provides a two-year window for completion of the VDA. The steps for completion follow: • Phase 1: Define Audit Scope (2 months) • Phase 2: Quantification of Past Due Unclaimed Property (18 months) • Phase 3: Review and Validation of Results (3 months) • Phase 4: Closing Process and Documentation (1 month)

Holders in the oil and gas industry, particularly

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 11

to enter into the VDA Program. The risks of interest and/or penalties and involuntary audit selection, to include multi-state audit by a third-party firm, may be avoided if the holder participates in the program. *** Authors Gary Joseph is a Partner at Discovery Audit Services, LLC (“DAS”). He has more than a decade of unclaimed property experience both as a Senior Consulting Manager assisting holders in attaining and maintain compliance with state unclaimed property laws, as well as assisting in the administration and enforcement of compliance through third-party audit. Cory Roberts is the Audit Manager at DAS. He has nearly two decades of experience assisting states in the administration and enforcement of state unclaimed property laws. As the Audit Manager, he oversees all DAS examinations assigned by the States, and ensures they are executed in a fair, impartial, efficient, and timely manner.

with upstream or other operations in the Williston Basin and Bakken shale plays, should strongly consider participation in the program due to the unclaimed property exposure inherent in normal business operations, acquisitions and/ or exploration. Participation in the program may save the company unforeseen costs and expenses that accompany involuntary audit(s).

To conclude, holders are strongly encouraged to take advantage of any opportunity available to get into compliance for any past-due property, including acceptance of North Dakota’s invitation

Texans with unclaimed money could get checks in the mail without having to file a claim

Texas

Checks for unclaimed cash will be limited to unclaimed properties under $5,000 that the agency reasonably believes it can link to the correct owner. If you think you might have unclaimed property you can still search on ClaimItTexas.org or call 800-321- 2274 (CASH).There is no statute of limitations for unclaimed property the state holds, which means there’s no time limit for owners to file a claim.“I encourage everyone to visit ClaimItTexas.org to see if the state is holding some of their unclaimed property,” Hegar said.

The Texas Comptroller’s office paid out more than $300 million in fiscal year 2022, representing more than 160,000 claims paid to their rightful owners according to Comptroller Glenn Hegar. Texans who have unclaimed money could get checks in the mail without having to file a claim. The Texas Comptroller’s office announced that the process for sending checks was authorized by Texas House Bill 1514 in 2021.

12

N at i onal A ssociation of D i v i s i on O rder A nalys t s

Legal

Updates

Dormant Mineral Act—“Ignorance of a Mineral Owner’s Last Known Location is No Excuse”

Ohio

In Fonzi v. Brown, the Supreme Court of Ohio consolidated and examined two cases to determine whether the surface owners of two adjoining parcels of land satisfied the requirements of Ohio’s Dormant Mineral Act (“DMA”) in seeking to have certain mineral interests deemed abandoned.[1] Specifically, the Court analyzed whether the surface owners exercised “reasonable diligence” in attempting to identify all owners of the allegedly abandoned minerals. For the reasons discussed below, the Court held that the surface owners in both cases did not exercise reasonable diligence in attempting to the identity the mineral interest owners. In both cases, the surface owners had knowledge that the mineral interest holders did not reside within the county where the land was located. Nevertheless, the surface owners failed to search any public records beyond the county where the mineral interests were located. Additionally, the Court held that the DMA provides for only one method of abandonment and that in subsequent actions, the surface owner has the burden of proving whether they exercised reasonable diligence in complying with the DMA’s notification requirements. [2] In both cases, Elizabeth Fonzi acquired the subject parcels located in Monroe County, Ohio, in 1952. Later, she transferred the surface rights to the predecessors- in-interests of the current surface owners (the Millers as to one parcel and the Browns as to the other) and reserved the oil and gas rights in both parcels. Importantly, the deed transferring the surface estate from Elizabeth to the Miller’s predecessors- in-interest expressly stated that Fonzi resided in Finleyville,Washington County, Pennsylvania. [3] Similarly, the deed transferring the property into Fonzi as to the Brown parcel noted that Fonzi resided in Finleyville,Washington, County, Pennsylvania.[4] In other words, both recorded chains of title contained recitals that Elizabeth Fonzi did not reside where the parcels at issue were located.

In Ohio, the DMA provides a mechanism for reuniting abandoned, severed mineral interests with the surface estate. The mechanism is called abandonment and is not available until 20 years pass without the occurrence of a saving event.[5] Even after 20 years have passed, the DMA requires that the surface owner serve personal notice by certified mail to the mineral owner(s). If service by mail cannot be completed, then notice by publication is allowed. The notice procedure to the DMA was added in 2006 by amendment, and its purpose is to give the mineral owner an opportunity to respond and preserve their mineral interest.[6] In both cases, the surface owners sought to have the Fonzi mineral interests deemed abandoned. The surface owners then hired an attorney who failed to uncover any information about Elizabeth Fonzi or locate any potential heirs after searching the Monroe County, Ohio public records and conducting limited internet Monroe County.As a result, no personal notice was served upon any of the Fonzi heirs or assigns. Subsequently, the surface owners published notices of intent to declare the Fonzi mineral interests abandoned in the Monroe County newspaper.[7] In analyzing these cases, the Court first confirmed that the DMA provides for only one method of abandonment and that the 2006 amendment merely made the one method more robust. Thus, the Court rejected the surface owners’ contention that the 2006 amendment created two different methods for abandonment.[8] Next, the Court emphasized the surface owners’ failure to make any attempt to search the records of Washington County, Pennsylvania, despite being aware that it was the last known location of the mineral interest owner, as noted in the chain of title. The Court reasoned that unlike the surface owner in Gerrity v. Chervenak,[9] the surface owners here failed to exercise reasonable diligence because they disregarded last known information about the residence of the mineral owner.[10]

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 13

In a prospective announcement, the Court also concluded that because the DMA states that the surface owner “shall” comply with the statutory notice requirements, it reasons that the surface owner has the burden of proof to show they exercised reasonable diligent in attempting to identify and locate the holders of the mineral interest before resorting to service by publication.[11] These cases reinforce the premise that there is no bright-line rule for what qualifies as “reasonable diligence” in attempting to locate mineral owners under the DMA. What constitutes reasonable diligence depends on the facts of each case.Typically, searching the public records of the county where the property is located is sufficient, but not in every situation as the current cases highlight. To comply with the notice requirements of the DMA, surface owners should also act on any constructive notice or actual knowledge of information regarding other potential locations of the mineral owner before resorting to notice by publication. As a counterpart to the adage “Ignorance of the Law is No Excuse,” in Ohio “Ignorance of a Mineral Owner’s Last Known Location is No Excuse”under the DMA. _________ [1] Fonzi v. Brown, Slip Opinion No. 2022-Ohio-901. [2] Id.

[5] Id. at 13. [6] Id. at 14. [7] Id. at 4. [8] Id. at 20. [9] Gerrity v. Chervenak, 162 Ohio St. 3d 694. [10] Fonzi at 27. [11] Id. at 23.

CONTACT If you have any questions regarding this case law update or suggestions for topics to be covered in future issues, please call our office at 713-229-0360 or contact the author:

Josh Peterson Attorney, Houston jpeterson@oglawyers.com

www.oglawyers.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. © 2022 Oliva Gibbs LLP. All rights reserved. This publication may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Houston (principal office): 815 Walker St., Suite 1140, Houston, Texas 77002, 713- 229-0360 | Columbus: One East Livingston Avenue, Suite B, Columbus, Ohio 43215, 614-349-4525. | Oklahoma City: 9520 N. May Avenue, Suite 219 Oklahoma City, OK 73120, 405-757-8797

[3] Id. at 2. [4] Id. at 2.

It’s Not Who to Pay, It’s When to Pay: “Due” Under Samson Expl., LLC v. Bordages

Texas

discussed below, the Court found that the obligation to pay royalties had been “triggered” under the lease and was therefore not affected by a dispute as to the payee’s identity. 2 Additionally, while the “safe harbor” provisions offered by section 91.402(b) (the “Texas Suspense Statute”) do authorize withholding royalty payments without interest in the event of a bona fide title dispute, the lessors and lessee had expressly contracted around the Texas Suspense Statute in the lease. 3 Lastly, even if the “safe harbor” provision was

In Samson Expl., LLC v. Bordages , the Court of Appeals of Texas, Ninth District, Beaumont, examined when royalties under an oil and gas lease became “due,” and whether royalties were properly suspended without interest. Specifically, it examined lease provisions detailing “ when the payment is required ... rather than who is to be paid,” 1 and whether a claim of “equitable” title as opposed to legal title constituted a “bona fide title dispute” allowing for the suspension of royalty payments without interest. For the reasons _________ 1 Samson Expl., LLC v. Bordages , No. 09-20-00174-CV, 2022 Tex.App. LEXIS 206, 2022 WL 120004 at *18 (Tex.App.— Beaumont Jan. 13, 2022, pet. filed)

_________ 2 Id. at 17-18. 3 Id. at 18-19.

14

N at i onal A ssociation of D i v i s i on O rder A nalys t s

applicable, the Court determined that there was no “bona fide” title dispute regarding the lessors’ mineral interest because the lessee was willing to recognize equitable title as opposed to legal title. 4 The Court’s decision for the Bordages affirmed the trial court’s grant of partial summary judgement; however, we note that a petition for review has been filed with the Texas Supreme Court. In 1999, Samson Lone Star, L.P. (“Samson”) executed an oil and gas lease with landowners Joe A. Bordages, Katherine Bordages Brownlee, Stephanie Bordages Knobel, Joseph A. Bordages III, Joanna M. Pastore, Scott Alan Bordages, and Allison Bordages Koskella, (the “Bordages”) covering 95 acres in Hardin County,Texas. 5 A title opinion later commissioned by Samson in 2001 uncovered (among other issues) the absence of a recorded deed in Hardin County,Texas, vesting J.A. Bordages with the undivided 1/3 interest he purportedly received from Charles G. Hooks, et al . 6 In an attempt to cure the gap in title, Samson sent a letter requesting the missing deed to the Bordages on May 14, 2002. In June of that same year, Samson spoke with Richard Pastore, husband of lessor Joanna Pastore, who informed Samson that a deed conveying the 1/3 interest had never been executed. 7 According to Mr. Pastore, the parties had instead executed a “Certificate of Interest.” 8 After discussing this issue with the attorney who drafted the title opinion, Samson was advised that the ‘“Certificate of Interest vests J.A. Bordages with beneficial or equitable title to the 1/3 interest, but not legal title.”’ 9 Further, the attorney suggested that Samson ‘“may want to secure an affidavit from Chas. G. Hooks & Sons with the aforesaid Certificate of Interest attached and file it of record in Hardin Co.”’ 10 Lastly, the attorney clarified that “this won’t cure the defect [but] will help explain the circumstances and put [third] parties on notice of the claim of the heirs of J.A. Bordages to this 1/3 interest.”’ 11 Unsatisfied, Samson re-sent its previous letter to the Bordages on September 18, 2002. 12 Meanwhile, the Bordages’ lease had been included in two gas units, the Joyce DuJay No. 1 and the Joyce DuJay “A” No. 1, and production had been obtained from the units. 13 Despite the fact that

Samson had the Certificate of Interest in its possession, and that no other parties contested the Bordages’ ownership or claimed an interest in the property, Samson refused to pay the Bordages royalties on production from the Joyce DuJay Units, withholding payments until December of 2007. Samson only began payments after it had received an affidavit from the Hooks family confirming the original 1/3 transfer, and incorporating a copy of the same Certificate of Interest that Samson already had in its possession. 14 In addition to the withheld royalties, Samson also did not pay any interest or late charges on the accrued royalties. 15 The Bordages sued Samson for breach of contract for failure to pay royalties and failure to pay late charges, among other claims. The trial court granted the Bordages’ motion for partial summary judgement awarding them a total of $12,955,919.00 in damages, $8,312,203.00 of which was for accrued and unpaid royalties. 16 On Appeal, Samson argued that royalties on production were not “due” because the Bordages did not provide Samson with ‘“reasonable assurances that they were the proper parties to receive the royalties until October 2007”’ when Samson received the affidavit and attached Certificate of Interest. 17 Samson argued that until that point,“it did not know who to pay, so the royalties were not due,” and consequently, that its December 2007 payments were “timely” and not subject to late charges, 18 essentially arguing the “safe harbor” provisions offered by the Texas Suspense Statute. The Court ultimately rejected Samson’s arguments. To determine when payments are “due” under the lease, the Court looked to the plain language included in the lease, stating that “[h]ere, the lease provision at issue describes when the payment is required, and directly links the first royalty payment to the filing of a completion report or a test well report with the Railroad Commission rather than who is to be paid.” 19 Payments were “triggered” when Samson filed its completion reports with the Railroad Commission on February 7, 2002, for the Joyce DuJay No. 1, and on October 24, 2002, for the Joyce DuJay A-1. 20 “The lease expressly provides that the royalties for the first

_________ 4 Id. at 20. 5 Id. at 2.

_________

_________

17 Id. at 16. 18 Id. 19 Id. at 18. 20 Id. at 17-18. _________

9 Id. at 3-4. 10 Id. at 4.

13 Id. at 2. 14 Id. at 4-5. 15 Id. 16 Id. at 8.

6 Id. at 2-3. 7 Id. at 3-4. 8 Id. at 3.

11 Id. 12 Id.

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 15

production marketed “shall be paid on or before the first day of the calendar month next following the expiration of sixty (60) days from the execution date of the completion report or potential test for the well that is filed with the Railroad Commission[.]”’ 21 The Court also rejected Samson’s argument that it is excused from late charges because of a title dispute. Again, the Court looked to the plain language included in the lease. It determined that Samson was not excused from paying late charges in the event of a title dispute because the parties had made the “safe harbor” provision of the Suspense Statute inapplicable by specifically excluding it in the lease, replacing it with provisions that did not excuse nonpayment of late charges in the event of a title dispute. 22 The lease contained the following provision: “ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, and in lieu of the terms and provisions contained in Sections 91.401 through 91.406 of the Texas Natural Resources Code, the parties hereto specifically agree that the following provisions shall apply to this Lease and all royalty payments made hereunder or other rights as provided in the above listed sections, and that such provisions of the Texas Natural Resources Code shall not be applicable; such parties further, by their signatures below, waive any and all rights which might be claimed or asserted under such Sections 91.401 and 91.406 of the Texas Natural Resources Code…” 23 Although the court rejected Samson’s “safe harbor” argument, it reasoned that even if Samson had not waived the “safe harbor” provision by contracting around it in the lease, the circumstances surrounding the title did not rise to the level of a “bona fide title dispute” required by statute to invoke the “safe harbor” provision. 24 The Court stated that,“[t]here was no evidence that the minerals had not been conveyed to the Bordages.” 25 While Samson was willing to recognize equitable title in the Bordages in 2007 based on the Hooks’ affidavit with the Certificate of Interest attached, Samson knew as early as 2002 that the Bordages had equitable title based on information from the title attorney regarding the “very same Certificate of Interest” Samson later relied on in 2007. 26 Additionally,“[d]espite Samson disavowing knowledge

of who to pay, Samson advised the taxing authorities that the Bordages owned these interests, and the Bordages received corresponding tax statements.” 27 Therefore, the Court affirmed the trial court’s judgement, holding that there was no “bona fide title dispute” to alter when royalties became due under the lease, and that Samson was responsible for late charges on past due royalties. 28 At the end of the day, Samson Expl., LLC v. Bordages is a reminder that an oil and gas lease is a contract and will be interpreted as such by the courts. Parties are free to include, or contract around, provisions as they see fit, and all terms should be chosen and analyzed with care. CONTACT If you have any questions regarding this case law update or suggestions for topics to be covered in future issues, please call our office at 713-229-0360 or contact: _______________________________________________

Emily Sheffield Senior Attorney, Houston esheffield@oglawyers.com

www.oglawyers.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. © 2022 Oliva Gibbs LLP.All rights reserved. This publication may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Houston (principal office): 815 Walker St., Suite 1140, Houston, Texas 77002, 713-229-0360 | Columbus: One East Livingston Avenue, Suite B, Columbus, Ohio 43215, 614-349-4525. _________ 21 Id. at 17. 22 Id. at 19-20. 23 Id. at 16. 24 Id. at 19-20. 25 Id. at 20.

26 Id. 27 Id. 28 Id. at 21.

16

N at i onal A ssociation of D i v i s i on O rder A nalys t s

Under the Ellison Decision, Are Letters of Intent NOW Enforceable Contracts? OR A SECOND LOOK AT Concho Resources, Inc. et al v. Ellison, 627 S.W.3d 226 (Tex. 2021) (“ Ellison” )

CAVEAT:This article examines only one part of the above identified Texas Supreme Court case.The following analysis is not to be construed as a review of all of the issues raised in the case and addressed by the Court. This article was written to alert oil and gas attorneys, landmen, division order analysts and lease/ title analysts – parties who regularly prepare and/or review/execute letters of intent to third parties that, despite any language to the contrary found in any such letter of intent, one or both parties to an otherwise unenforceable letter of intent may find, based on the Texas Supreme Court’s opinion in this case, that the letter of intent is legally enforceable as a contract. There were two significant instruments involved in the Ellison case:The October 16, 2008 Letter (of Intent) and a Boundary Stipulation of Ownership of Mineral Interest. The Ellison Decision article published in the NADOA third quarter 2022 issue focused on the Boundary Stipulation of Ownership of Mineral Interest and whether it was a valid legal conveyance (the court held it was not; the author believes it was). This article will analyze the October 16, 2008 Letter (of Intent) sent to Ellison Operating by Samson. The letter stated that the mineral owners under separate tracts of land (part of which was covered by Ellison Operating’s oil and gas lease) had agreed to a boundary line that was different from that which the parties (mineral owners and their lessees) had recognized since 1927.This letter (of intent) asked Ellison to accept the description of its leasehold estate premised on the agreed to boundary line found in the Boundary Stipulation . Significantly, (i) Ellison was not a party to the Boundary Stipulation and (ii) the letter requested Ellison to give up approximately one-half of his lease acreage and in return he obtained … nothing. No mutuality of consideration, no agreements to be kept and performed by the parties, no consideration whatsoever. Notably, in the Concho counterclaim trial three (3) years after the summary judgment rulings in the case, the jury/trial court found that the October 16,

2008 Letter (of Intent) was an enforceable contract between Ellison and Samson and that Ellison failed to comply with it. Damages were awarded for the supposed breach of the “contract”. No showing in the record was made by Samson that this “contract” was supported by consideration. This document cannot be a valid contract unless there is some evidence in the record which clearly indicates that the contract is supported by adequate consideration. Gaynier v. Ginsberg, 715 S.W.2d 749 (Tex.App.—Dallas 1986, writ ref’d n.r.e.) There apparently is no such evidence available, thus rendering, as a matter of law, the October 16, 2008 Letter (of Intent) NOT a contract by and between Samson and Mr. Ellison. If the October 16, 2008 Letter (of Intent) is NOT a contract between the parties, and lacks any words of grant within its four corners, and as a matter of law it cannot be a deed, then what is it? Before answering the question, it is necessary to review another provision from the October 16, 2008 Letter (of Intent). The October 16, 2008 Letter (of Intent) further contains the following significant language quoted in pertinent part:

“ Upon your acceptance, a more formal and recordable document will be provided .” [emphasis added] The October 16, 2008 Letter (of Intent)

was apparently signed by Mr. Ellison but the second, recordable document was never furnished by Samson. The Supreme Court’s opinion addressed this significant language and held: “…However, we agree with Concho

that this reading is inconsistent with the letter’s text, which requests that Ellison ‘signify your acceptance of the description of the Richey 147 acre tract as set out in the Stipulation (your leasehold’)’ by countersigning the letter . It does not ask Ellison to accept the stipulation by signing

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2022 17

Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35

Made with FlippingBook Digital Proposal Creator