stream energy title and transactional matters. He primarily handles matters involving assets and investments in Okla- homa, New Mexico, North Dakota, and Texas. Prior to moving to Oklahoma City, Lance practiced with a law firm in Midland, Texas. He also has significant litigation experience and while that is no longer his area of focus, he still ad 405.474.5800vises clients regarding oil and gas contract disputes and has an eye for reducing risk in title and transactional matters.
B.A., University of Florida BAR ADMISSIONS
New Mexico North Dakota Oklahoma Texas PRACTICE AREAS General Oil and Gas Advice Indian and Tribal Law Oil, Gas and Mineral Transactions Title Matters
EDUCATION J.D., University of Oklahoma College of Law
Converting a “Fixed” to a “Floating” NPRI: What (If Anything) Does ConocoPhillips v. Hahn Add to the Conversation? By Brian O’Gorman, Oliva Gibbs LLP
Texas
In ConocoPhillips Co. v. Hahn , the Supreme Court of Texas addressed whether a “fixed” nonparticipating royalty interest (“NPRI”) was later converted to a “floating” NPRI. The court weighed two possible means of this conversion: (i) a lease ratification; and (ii) a stipulation of interest. The Hahn court holds that a properly executed stipulation of interest can (and did) convert an NPRI from fixed to floating. As the court’s decision reflects, once an NPRI has been properly created or adjudicated as fixed or floating it will generally retain this characteristic for its life. However, the interested parties may later clarify or alter the NPRI calculation by agreement. Although the takeaway is straightforward, this convoluted case has floated (much like its subject NPRI) through the court system since 2016.
following provision:
SAVE AND EXCEPT [that] there is hereby reserved unto [Hahn], his heirs and assigns, an undivided one-half (1/2) non-participating royalty interest in and to all of the royalty [Kenneth] now owns, (same being an undivided one-half (1/2) of [Hahn’s] one-fourth (1/4) or an undivided one-eighth (1/8) royalty) in and to all of the [oil and gas] royalty. . . [3]
SAVE AND EXCEPT [that] there is hereby reserved unto [Hahn], his heirs and assigns, an undivided one- half (1/2) non-participating royalty interest in and to all of the royalty [Kenneth] now owns, (same being an undivided one-half (1/2) of [Hahn’s] one-fourth (1/4) or an undivided one-eighth (1/8) royalty) in and to all of the [oil and gas] royalty. . .
I. Background & the Gips Deed
Kenneth Hahn (“Hahn”) owned all of the surface interest and an undivided 1/4 mineral interest in 37.07 acres in Dewitt County, Texas. In 2002, Hahn conveyed all of his right, title, and interest in said 37.07 acres to William and Lucille Gips (the “Gipses”) through a warranty deed (the “Gips Deed”). The Gips Deed reserved to Hahn a term NPRI for a period of fifteen (15) years under the
[1] 2024 Tex. LEXIS 1180. [2] A “fixed” or “fractional” NPRI is a free royalty that conveys a fixed share of production and does not change depending on the royalty set forth in an oil and gas lease. A “floating” or “fraction of” royalty will vary depending on the current or future lease royalty. [3] 2024 Tex. LEXIS 1180, at 3.
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G rowth T hrough E ducat i on - J anuary / F ebruary / M arch 2025
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