Nadoa 2017 Ejournal PDF

Topics include:
—Ethics
—Escheat
—Allocation and Production Sharing
Agreement in Texas
—From Millennials to Seniors - How to
Navigate Generational Challenges and Work
with Difficult People\
—Enhanced Recovery and Division Orders in
Texas
—Anatomy of a Title Opinion
—Navigating the RRC Website: How to
Get the Information
—Curative Game Plan: Title Curative Issues
and Game-Winning Solutions
—Organizational Jujitsu: How Effective
Senseis (Teachers) Get White Belts on
Track
—Navigating Louisiana’s Sonris Website
—North Dakota Update on the Law
Including High Water Rulings
44th Annual NADOA Institute E-Journal
Table of Contents
Allocation and Production Sharing Agreement in Texas Page 4

Brian R Sullivan, P.E., McElroy, Sullivan, Miller, Weber & Olmstead
Anatomy of a Title Opinion (revised w/ comments) Page 56

Brent Chicken, Fox Rothschild LLP
Business Writing Page 241

Dr. Santoshia Oggs, University of Phoenix
CDOA Exam, “How to Study” Page 265

Yolanda “Yoli” Bazan, CDOA and CPLTA, Hilcorp
CDOA Section III Review Page 358

Judy Moreland, CDOA and CPLTA, Concho Resources
Curative Game Plan: Title Curative Issues and Game-Winning Solutions Page 481
Tim McKeen and Kacie Bevers, Steptoe & Johnson PLLC
Division Order Calculations Page 482

Course author Eli Murray, CDOA
Presented by Donna King and April Luedecke
Enhanced Recovery and Division Orders in Texas Page 535

William “Bill” Hayenga II, McElroy, Sullivan, Miller, Weber & Olmstead
Escheat and Unclaimed Property Workshop presented by Keane Page 585

Quin Moore, Keane and Lucretia Jones, Newfield Exploration
Ethics In Negotiation – Heads I win, Tails you Lose Page 640

Virginia "Ginni" Hanks, Associate General Counsel for NIKE, Inc
Firestone, Flowlines & More – what Operators Need to Know in Colorado Page 640
David R. Little & Diana S. Prulhiere, Steptoe & Johnson PLLC
44th Annual NADOA Institute E-Journal
Table of Contents - continued
Leadership, “Are Leaders Born or Made” Page 694

Dr. Santoshia Oggs, University of Phoenix
Louisiana SONRIS Website, “How to Navigate” Page 695

Yolanda “Yoli” Bazan, CDOA and CPLTA, Hilcorp
Millennials to Seniors: How to Navigate Generational Challenges Page 729

Dr. Nguyen Tom Griggs, Lead Connect Grow LLC
Navigating the RRC Website: How to Get the Information Page 747
Lorenzo Garza, Texas Railroad Commission
North Dakota Update on the Law Page 780

B.J. Black, Steptoe & Johnson PLLC
Organizational Jujitsu: How Effective Senseis Get the White Belts on Track Page 811
Dr. Nguyen “Tom” Griggs, Lead Connect Grow LLC
Post-Production Costs- “Deduction of Post Production Expense” Page 833

Robert “Eli” Kiefaber, Kiefaber & Oliva LLP
Pretending to Produce: The Origins & Development of Pooling & Unitization in the US
Andy Graham, Steptoe & Johnson PLLC Page 854
Texas Trusts, Wills and Probates Page 924

Andy Graham and Kacie Bevers, Steptoe & Johnson PLLC
White Hats and Black Hats: The Oil and Gas Industry in American Popular Culture
Andy Graham, Steptoe & Johnson PLLC Page 925
Affidavit of Attendance Page 979-980

AAPL America’s Landmen
NARO CMM Certified Mineral Manager
3
Thank you to the Oil & Gas Section
Travis County Bar Association
February 8, 2017
4
5
Commissioners
6
4
http://www.rrc.state.tx.us/
7
MONTHLY OIL AND GAS PRODUCTION BY YEAR TOTAL NATURAL GAS PRODUCTION (MCF, includes Gas Well Gas and Casinghead Gas)
JANUARY 2010 - DECEMBER 2016 MONTH 2010 2011 2012 2013 2014 2015 2016
JANUARY 619,033,596 648,755,409 684,478,850 689,291,871 701,492,277 742,606,600 710,433,882

TOTAL OIL PRODUCTION (Barrels; includes Crude Oil and Condensate)
FEBRUARY 568,687,012 561,169,400 637,944,677 629,520,248 636,010,917 682,497,723 666,715,559
MONTH 2010 2011 2012 2013 2014 2015 2016
JANUARY 34,064,280 39,713,178 53,400,861 70,296,132 87,829,608 105,479,919 102,494,664 MARCH 640,149,483 664,950,131 680,931,315 700,859,670 720,973,306 759,547,724 708,063,491
FEBRUARY 31,394,151 34,368,069 51,331,346 65,253,457 80,948,505 98,484,191 94,641,102 APRIL 610,070,466 644,710,130 667,442,797 682,587,074 712,290,064 738,055,493 679,646,019
MARCH 35,248,328 41,434,278 55,742,194 73,751,833 91,462,693 111,089,782 99,626,228 MAY 640,584,027 677,087,445 688,204,298 712,428,649 743,794,280 755,806,688 697,346,667
APRIL 34,112,695 40,455,785 55,983,106 72,376,354 91,145,552 105,885,346 94,944,226
JUNE 611,496,160 647,710,662 664,748,008 693,317,887 724,009,824 729,743,483 673,036,723
MAY 35,532,472 43,179,396 59,146,480 77,034,062 94,793,342 107,586,961 96,356,637
JULY 633,883,824 670,458,789 697,111,349 716,475,160 746,393,594 755,411,351 684,611,701
JUNE 34,164,039 41,993,770 58,324,092 75,780,848 94,034,168 102,595,022 92,275,298
JULY 35,728,770 44,498,332 61,785,419 79,784,674 99,182,386 105,658,186 93,959,063 AUGUST 639,216,027 672,922,983 702,211,828 716,919,397 752,533,887 750,548,503 677,616,034
AUGUST 36,199,134 46,146,610 63,470,097 80,747,900 100,808,677 104,713,363 93,313,058 SEPTEMBER 623,196,905 660,367,044 681,365,614 693,133,486 721,738,963 727,431,617 639,574,845
SEPTEMBER 35,732,410 46,096,329 62,540,351 79,650,038 97,825,050 101,226,941 88,683,518 OCTOBER 643,769,856 688,834,837 699,675,531 716,914,935 751,878,058 741,774,976 650,630,404
OCTOBER 37,660,809 49,425,570 66,587,078 82,822,934 103,210,362 104,035,339 91,276,151
NOVEMBER 631,584,303 672,877,722 674,768,604 683,123,371 727,961,823 711,592,236 615,470,648
NOVEMBER 37,286,218 49,668,501 66,390,107 80,264,439 102,409,769 100,461,421 86,920,764
DECEMBER 657,188,949 691,812,756 688,931,717 694,271,837 766,915,704 720,113,879 * 566,772,368
DECEMBER 39,621,320 52,277,269 69,036,270 85,729,907 108,720,068 101,792,168 * 83,276,123
ANNUAL 426,744,626 529,257,087 723,737,401 923,492,578 1,152,370,180 1,249,008,639 1,117,766,832 ANNUAL 7,518,860,608 7,901,657,308 8,167,814,588 8,328,843,585 8,705,992,697 8,815,130,273 7,969,918,341
TOTAL TOTAL
8
9
Is my well an oil well or is it a gas well?
• If the fluids produced at the surface are

in the “gas phase” in the reservoir –
Generally – Gas Well.
• If the fluids produced at the surface are

in the “liquid phase” in the reservoir –
Oil Well
10
Why does it matter?
POOLING AND RETAINED ACREAGE PROVISIONS
• Lessee may pool (or retain) 640 acres plus 10 percent tolerance (704 acres) for a gas well and 80
acres for an oil well
ALLOWABLE ISSUES
• Well produced 7,000 mcfd and 700 Barrels of Liquid/Day @ 10,000’
• Oil Well Allowable = 35 BOPD and 344 mcfd
• Gas Well Allowable = 700 Barrels of Condensate/Day and 7,000 mcfd
TAX CREDITS
• Up to one-half the drilling and completion costs
11
1899 1932 1936 1942 2006 2012-present
Criteria:
Liquid N - - -
Statutory GOR - 100,000:1 100,000:1 100,000:1 100,000:1 100,000:1
Distillation Test Yes if GOR >12,500:1 Yes if GOR >12,500:1 Yes if GOR >12,500:1
PVT (dew point) If G-5 inconclusive If G-5 and C7+ inconclusive If G-5 and C7+ inconclusive
C7+ < 11 mol% <12.5 mol% *
Special Field Rules GOR>=3000:1*
First reported form WS-1 adopted

Comments: shut in if no market Panhandle Field"Retrograde Condesate" (today's G-5) Director's Letter Hearing Dockets
* the data continues to suggest

higher thresholds on C7+ and
lower thresholds on GOR
12
13
14
15
16
17
18
19
20
21
A B
C D E
22
A B
5
5%
Non-Joining
C D E
Title on Each Tract
23
24
25
Spraberry (Trend Area)
26
Distance to Lease Line
467’
TP
100’
27
28
29
Spraberry (Trend Area)
If as drilled take points are inside box (solid blue rectangle), as drilled location complies with drilling
permit even if take points are less than 467’ from nearest lease line. Assume 467’ lease line spacing rule
and 50’ box rule
FTP = first take point

LTP = last take point
LTP
SL PP T
FTP 50’
50’
467’
30
660’
#2
#1 #3
31
660’
#1
#3
#2
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
Operator Permits Operator Permits Who Is Drilling PSA Wells
Anadarko 59 Lario Oil & Gas 3
Apache 19 Le Norman 1
BHP 31 Linn 4
Bold Op 10 Marathon Oil 11
BP America Prod 7 Matador Production 5
Burlington 11 MDC Texas Energy 1
Callon 28 Memorial Prod Op 54
Chesapeake 58 Mewbourne 1
Chevron USA 61 Murphy 9
Cimarex 8 Navidad 1
Cinnabar 2 Newfield 3
Classic 6 NFR 4
CML 1 Oxy USA 47
COG 4 Parsley Energy 29
Devon 630 Patriot 10
Diamondback 4 Penn Virginia 6
Discovery 4 Pioneer 31
El Paso E&P 1 QEP 1
Elk Meadows 3 Quicksilver 2
Encana 2 Resolute 19
Energen 99 RKI 6
Enervest 53 Sabalo Expl 1
EOG 30 Sabine O&G 11
Escondido 1 Samson 4
Fidelity 2 Silverback 2
Foreland Op 2 SM Energy 86
Forest 2 Statoil 25
Goodrich 2 Talisman 5
Hat Creek 1 Texakoma 1
High Sky Prtns 10 Texas American Res 4
Highmount Expl 2 Titan 1
As of 01/20/17
Hunt Oil 49 Unit Petro 6
Jilpetco 1 Vantage 96
Laredo Petro 5 WBH 19
53
XTO 8
Grand Total 1725
Operator Permits Operator Permits Operator Permits
Ajax
American Energy PB
1
13
Halcon 41 RKI Expl Prod 7 Who Is Drilling
Hat Creek 1
Ameredev LLC
Apache
3
14
Henry Resources 1
RP Operating 8
Allocation Wells
RSP 59
Approach Op 8 Hughes, Dan A. 2
Sabalo Expl 4
Athlon 73 JPM 3
BHP BILLITON 20 KJ Energy 1 Sabalo Operating 2
Blackbrush 2 Laredo Petro 221 Sabine O&G 5
Bold Op LLC 8 Laredo Petro - Dallas 18 Samson 12
BP America Prod 12
Lario 4 Sea Eagle Ford 3
Breittburn Op LP 36
Burlington 2 Legacy 30 Shell Western 6
Cabot 44 Le Norman 1 Sheridan 7
Carrizo 14 Lewis Petro 25
Silver Creek 2
Callon Petro 14 Manti Tarka 2
Chesapeake 4 Silverback 2
Marathon 4
Chevron 12 SM Energy 12
Matador 10
Cimarex 10 Statoil Texas 6
McCutchin Petro 1
Classic 5
MD America 76 Summit 23
COG 43
Crimson 4 Mewborne 1 Swift Energy 34
Crownquest 19 Murphy 6 Tanos 27
DE Operating 4 New Gulf 2 Tecolote Energy 2
Devon 129 Newark E&P 4
Diamondback 75 Texas Petro Inv 3
Occidental 13
Discovery 11 Three Rivers Op 7
Eagle Ridge 1 Oxy USA 29
Trail Ridge 7
El Paso E&P 1 Oxy USA WTP 10
Pacesetter 2 Unit Petroleum 6
Elk Meadows Res 1
Encana 180 Paloma 12 Valence Operating 2
Endeavor 8 Parsley 137 Verado 1
Energen 105
Patriot 3 W & T Offshore 1
Energy & Expl. Ptnrs 2
Pcore 1 Wildhorse 1
Enervest 25
EOG 31 Permian 3 XTO 142
EP Energy 1 Petroquest 1
Grand Total 2530 As of 01/20/17
Escondido 8 Pioneer 405
Exco 23 PMO 4
EXL 6 QEP Energy 24
Forest 31
Reliance 1
Forge 19
GMX 11 Remnant Energy 1
Ring 5 54
Goodrich 1
1225 17th Street, Suite 2200
Denver, CO 80202
Tel 303.292.1200 Fax 303.292.1300
www.foxrothschild.com
BRENT D. CHICKEN
Direct Dial: 303-446-3844
Email Address: bchickenr@foxrothschild.com
August 9, 2014
UPDATED DRILLING AND DIVISION ORDER TITLE OPINION

(Effective April 19, 2014)
Re: Elk Hills Well

Sections 2 & 11, Township 180 North, Range 104 West, 5th P.M.
Black Gold County, North Dakota
Our File No. 1566
Company A Corporation
Attn: Mr. Landman
Land Manager
11 Sherman Ave.
Denver, CO 80291
Dear Mr. Landman:
In accordance with Company A Corporation’s (“Company A”) request, we have

examined the materials below, and based thereon, submit this Updated Drilling and Division
Order Title Opinion (“Opinion”) for the Elk Hills Well (“Subject Well”), covering the following
described lands in Black Gold County, North Dakota1 (“Subject Lands”):
Township 180 North, Range 104 West, 5th P.M. Commented [BC1]: The main legal description of the lands
covered by the title opinion should accurately describe the lands and
Section 2: All acreage, along with any apparent depth limitations. Include
Section 11: All lot/block specifics if possible.
Limited to those depths lying between the

surface of the earth to the bottom of the Three
1
All recording references pertain to the records maintained by the Recorder of Black Gold County, North Dakota.
August 9, 2014
Page 2
Forks Formation and excluding the Madison

Formation
Containing 1274.122 acres, more or less
MATERIALS EXAMINED Commented [BC2]: The materials examined should set the outer
boundaries of liability for the law firm preparing the title opinion,
and provide a complete list of all documents and information the
1. Drilling and Division Order Title Opinion dated March 20, 2013, prepared by preparing attorney relied upon in drafting the title opinion.
Document descriptions should be fairly exacting.
Fox Rothschild LLP, covering the Subject Lands and certified from inception of records to
August 17, 2012 at 12:00 AM MST (“March 2013 Prior Opinion”), based upon the materials
identified in the attached Exhibit A.
2. Supplemental Abstracts of Title compiled by Abstract Title Company (“ATC”)

and provided by Company A (“Supplemental Abstracts”), including:
(a) Supplemental Abstract of Title based upon the records of the Recorder of
Black Gold County, North Dakota, affecting Section 2 from August 17, 2012 at 12:00 AM MST,
to April 19, 2014 at 12:00 AM MST, consisting of one (1) volume;
(b) Supplemental Abstract of Title, based upon the records of the Recorder of
Black Gold County, North Dakota, affecting Section 11 from August 29, 2012 at 12:00 AM
MST, to May 1, 2014 at 12:00 AM MST, consisting of one (1) volume;
(c) Supplemental Abstract of Title, based upon records filed in the Billings,
Montana State Office of the United States Bureau of Land Management (“BLM”), affecting
Federal Oil and Gas Lease Serial Number NDM-99000, covering S/2SE/4 of Section 2 and
SE/4NW/4 of Section 11, Township 180 North, Range 104 West, 5th P.M. (a portion of Tract
Nos. 6 and 8), consisting of one (1) volume containing:
(i) Copy of the file for Federal Oil and Gas Lease Serial Number
NDM-99000, as received from the BLM, covering the time period from August 1, 2012 through
May 13, 2014;
(ii) BLM Oil and Gas and Survey Plats for Township 180 North,
Range 104 West, 5 th P.M.;
(iii) BLM Historical Index for Township 180 North, Range 104 West,
5th P.M.; and
(iv) BLM Historical Index – Acquired Lands for Township 180 North,
Range 104 West, 5 th P.M.;
2
See Comment and Requirement Nos. 27-29 relating to assumptions made regarding the acreage of the Subject
Lands based upon the acreage of the navigable waterways found upon the Subject Lands.
August 9, 2014
Page 3
(d) Supplemental Abstract of Title, based upon records filed in the Billings,
Montana State Office of the Bureau of Land Management, affecting Federal Lease Serial
Number NDM-95000, covering E/2 of Section 11, Township 180 North, Range 104 West, 5th
P.M., being Tract No. 9, consisting of one (1) volume containing copy of the Case File for
NDM-95000, as received from the BLM, covering the time period from August 1, 2012 through
May 13, 2014;
(e) Supplemental Abstract of Title, based upon records filed found in the
Minerals Management Department of the North Dakota State Land Department in Bismarck,
North Dakota, affecting a portion of State Lease Serial Number OG-80-08525,3 covering the
Missouri River located in NW/4 of Section 2, Township 180 North, Range 104 West, 5th P.M.,
being a portion of Tract No. 7, consisting of one (1) volume, covering the time period from
August 30, 2012 through April 16, 2014;
(f) Supplemental Abstract of Title, based upon records filed in the Minerals
Management Department of the North Dakota State Land Department in Bismarck, North
Dakota, affecting a portion of State Lease Serial Number OG-80-08525,4 covering the Missouri
River located in SW/4 of Section 2, Township 180 North, Range 104 West, 5th P.M., being a
portion of Tract No. 7, consisting of one (1) volume, covering the time period from August 30,
2012 through April 16, 2014; and
(g) Supplemental Abstract of Title, based upon records filed in the Minerals
Management Department of the North Dakota State Land Department in Bismarck, North
Dakota, affecting State Lease Serial Number OG-13-08452, covering the Missouri River located
in NW/4 of Section 11, Township 180 North, Range 104 West, 5th P.M., being Tract No. 10,
consisting of one (1) volume, covering the time period from August 30, 2012 through April 16,
2014.
The Supplemental Abstracts include:
(i) An Abstract Report, containing a listing of book, page and/or Reception

number, instrument type, instrument date, record date, grantor, grantee, land description, and
remarks concerning documents maintained by the Recorder of Black Gold County, North Dakota
affecting the Subject Lands (“Index”);
(ii) Photocopies of document indices maintained by the Recorder of Black
Gold County, North Dakota covering the Subject Lands, and accompanying photocopies of the
documents identified therein, as prepared by ATC;
(iii) Summaries of computer research conducted by ATC covering the Subject
Lands, from an unknown date through April 29, 2014, based upon a search of the records of
Black Gold County, North Dakota regarding all liens and judgments of record (“Liens and
Judgments Report”), UCC filings, probate files, documents located in Miscellaneous Records,
3
However, the referenced Supplemental Abstract does not contain a copy of the referenced oil and gas lease.
4
However, the referenced Supplemental Abstract does not contain a copy of the referenced oil and gas lease.
August 9, 2014
Page 4
and well file information as indexed against parties purportedly appearing in the record chain of
title to the Subject Lands;
(iv) A summary of computer research conducted by ATC on an unknown date

and covering an unknown time period, based upon the records of the Black Gold County, North
Dakota Assessor’s Office regarding taxes due with respect to the Subject Lands (“Real Property
Tax Search”); and
(v) 2013 Tax Statements covering the Subject Lands, as issued by the Black
Gold County Treasurer.
3. United States Department of the Interior, Bureau of Land Management (“BLM”)

Master Title Plat, Oil and Gas Plat and land patent records, available
at: http://www.glorecords.blm.gov/, insofar as the same cover the Subject Lands, as obtained on
July 25, 2014.
4. Online records of the North Dakota Industrial Commission, Department of

Mineral Resources, Oil and Gas Division (“NDIC”), available at: http://www.dmr.nd.gov/oilgas/,
insofar as the same relate to drilling and spacing units, orders, hydrocarbon production and wells
concerning the Subject Lands and the rules and regulations of the NDIC, as obtained on
July 25, 2014.
5. Online Name Change and Merger Index maintained by the BLM, available
at: http://www.blm.gov/wy/st/en/resources/public_room/corporate_list.html, insofar as the same
relates to name changes and corporate mergers concerning parties in the record chain of title to
the Subject Lands, as reviewed on July 25, 2014.
6. The North Dakota Department of Trust Lands website, available

at: http://www.land.nd.gov/minerals/, as reviewed on July 25, 2014.
TRACTS Commented [BC3]: Tracts should be designated when necessary

for ease of land identification and ownership tabulation, and are
generally based on common mineral ownership. However, tracts
For purposes of this Opinion, we have divided the Subject Lands5 into the following may also be based on common leasehold ownership where interests
in production, such as overriding royalties, disproportionately
tracts: burden the lands covered by the various oil and gas leases. For
example, a lease covering the N/2, but an ORRI affecting the NE/4
only . . .
Tract No. 1:
Township 180 North, Range 104 West 5th P.M.
Section 2: Lots 1 (39.90) and 2 (39.70)
5
For purposes of this Opinion, all references to “Section 2” refer to Section 2 of Township 180 North, Range 104
West, 5th P.M.; and all references to “Section 11” refer to Section 11 of Township 180 North, Range 104 West, 5th
P.M.
August 9, 2014
Page 5
Tract No. 2:
Section 2: S/2NE/4
Tract No. 3:
Section 2: Lot 3, and all accretions
thereto
Tract No. 4:
Section 2: Lot 4, and all accretions
thereto
Tract No. 5:
Section 2: Lot 5 (17.00), and all
accretions thereto,
NE/4SW/4, N/2SE/4
Tract No. 6:
accretions thereto, SE/4SW/4
accretions thereto,
NE/4NW/4
Tract No. 7:
Section 2: Riverbed of the Missouri
River

August 9, 2014
Page 6
Tract No. 8:
Section 2: S/2SE/4
Section 11: SE/4NW/4
Tract No. 9:
Section 11: E/2
Tract No. 10:

Section 11: Riverbed of the Missouri
River
Tract No. 11:

Section 11: Lot 2 (39.70), SW/4
OWNERSHIP
Based upon the Materials Examined, and subject to the Comments, Requirements,
Exceptions and Limitations set forth herein, we find title to the Subject Lands, as of
April 19, 2014 at 12:00 AM MST (“Certification Date”),6 to be owned as follows: Commented [BC4]: The certification date should set forth the
effective date of the title opinion, and is typically discerned from
either the abstractor’s cover letter or in some cases, the last
instrument contained in the abstract of title. Note the footnote below
indicating the method employed for arriving at the stated
Tract No. 1 (Lots 1 and 2, Section 2, Township 180 North, Range 104 West, 5th P.M., certification date when multiple supplemental abstracts of title have
containing 79.60 acres, more or less): been relied upon in preparation of the title opinion.
Surface Ownership
Percentage
6
We note that the Supplemental Abstracts covering Section 11 are certified through May 1, 2014 at 12:00 AM
MST; nevertheless, we have indicated the Certification Date as April 19, 2014 at 12:00 AM MST for the entirety of
the Subject Lands.
August 9, 2014
Page 7
Owner Interest
Angela Granovsky, as Trustee of the Robert 50.000000%

and Tracie Granovsky Trust
Angela Granovsky, as Trustee of the Tracie 50.000000%

Granovsky Trust
___________
TOTAL: 100.000000%
Mineral Ownership
Percentage Lease Net Mineral

Owner Interest No. Acres
Angela Granovsky, as Trustee of the 30.000000% 11 23.88000000 Commented [BC5]: Mineral ownership should be provided to a
minimum of six (6) decimal places for percentages or eight (8)
Robert and Tracie decimal places for numerical representation.
Granovsky Trust
Angela Granovsky, as Trustee of the 30.000000% 12 23.88000000 Commented [BC6]: Whether the listed mineral owner is leased
or unleased, and the assigned number of the oil and gas lease in the
Tracie Granovsky Trust case of the latter, should be clearly provided, and is useful for quick
cross-referencing.
Matt P. Frayser and Rosie Flora 10.000000% 8 7.96000000
Frayser, as joint tenants
Agnes M. Granovsky, as Trustee of 10.000000% 9 7.96000000 Commented [BC8]: The net mineral acres attributable to each
mineral owner should be provided, with accuracy of at least six (6)
the Agnes M. Granovsky decimal places, preferably eight (8) decimal places.
Trust Agreement, dated
August 9, 1984 and
Amendment dated July 1,
1990 Commented [BC7]: Mineral interests held in trust, if possible,
should describe the trustee(s), trust name, and trust date. Ministerial
alterations of these items from those set forth in the materials
Geraldine Granovsky, for life, with 10.000000% 10 7.96000000 examined are generally acceptable.
remainder to: Lucia F.
Granovsky and Christy A.
Klein
Christina Becker 2.500000% 13 1.99000000
Kevin T. Morris 2.500000% 14 1.99000000
Billy E. Morris 2.500000% 15 1.99000000
Elvira R. Parks 2.500000% 16 1.99000000

___________ __________
August 9, 2014
Page 8
TOTAL: 100.000000% 79.60000000 Commented [BC9]: The sum of all mineral interest in a tract
must always equal 100% or 1.0.
Commented [BC10]: Similarly, the sum of all net mineral acres
Oil and Gas Leasehold Ownership should always equal the sum of all acres in the tract.
Percentage Percentage
Working Net Revenue Interest Lease
Owner Interest Interest Type No.
Company A Corporation 98.000000% 79.380000% WI 8-16 Commented [BC11]: As with mineral interests, leasehold
WI: working interest and net revenue interest ownership should always
be provided to a minimum of six (6) decimal places for percentages
98.00% WI OGL8-16 x 100.00% MI OGL8-16 or eight (8) decimal places for numerical representation.
NRI:
98.00% WI -
(98.00% WI OGL8-10,13-16 x 40.00% MI OGL8-
10,13-16 x 20.00% RI OGL8-10,13-16) - (98.00% WI
OGL11-12 x 60.00% MI OGL11-12 x 17.50% RI
OGL11-12) - (0.50% ORRI OGL8-16 x 98.00% WI
OGL8-16 x 100.00% MI OGL8-16)
Sub-Zero Natural Resources, LLC 2.000000% 1.650000% WI 8-16 Commented [BC12]: The specific type of leasehold ownership
WI: should always be indicated, whether working, royalty, overriding
royalty, non-participating royalty interest, net profits interest or
2.00% WI OGL8-16 x 100.00% MI OGL8-16 production payment.
NRI:
2.00% WI -
(2.00% WI OGL8-16 x 100.00% MI OGL8-16 x
17.50% RI OGL8-16)
Angela Granovsky, as Trustee of the Robert 3.150000% RI 11 Commented [BC13]: Again, the specific oil and gas leases
associated with each leasehold interest owner should be set forth.
NRI:
(30.00% MI OGL11 x 17.50% RI OGL11) – (2 x
20.00% NPRI OGL11 x 30.00% MI OGL11 x 17.50%
RI OGL11)
Angela Granovsky, as Trustee of the Tracie 3.150000% RI 12

Granovsky Trust
NRI:
(30.00% MI OGL12 x 17.50% RI OGL12) – (2 x
20.00% NPRI OGL12 x 30.00% MI OGL12 x 17.50%
RI OGL12)
Matt P. Frayser and Rosie Flora Frayser, as 1.995000% RI 8

joint tenants
NRI:
(10.00% MI OGL8 x 98.00% WI OGL8 x 20.00% RI
OGL8) + (10.00% MI OGL8 x 2.00% WI OGL8 x
17.50% RI OGL8)
August 9, 2014
Page 9
Agnes M. Granovsky, as Trustee of the Agnes 1.995000% RI 9

M. Granovsky Trust Agreement, dated
August 9, 1984 and Amendment dated
July 1, 1990
NRI:
(10.00% MI OGL9 x 98.00% OGL9 x 20.00% RI
17.50% RI OGL9)
Geraldine Granovsky, for life, 1.995000% RI 10

with remainder to:
Lucia F. Granovsky and
Christy A. Klein
NRI:
(10.00% MI OGL10 x 98.00% OGL10 x 20.00% RI
17.50% RI OGL10)
Christina Becker 0.498750% RI 13

NRI:
(2.50% MI OGL13 x 98.00% WI OGL13 x 20.00% RI
17.50% RI OGL13)
Kevin T. Morris 0.498750% RI 14

NRI:
(2.50% MI OGL14 x 98.00% WI OGL14 x 20.00% RI
17.50% RI OGL14)
Billy E. Morris 0.498750% RI 15

NRI:
(2.50% MI OGL15 x 98.00% WI OGL15 x 20.00% RI
17.50% RI OGL15)
Elvira R. Parks 0.498750% RI 16

NRI:
(2.50% MI OGL16 x 98.00% WI OGL16 x 20.00% RI
17.50% RI OGL16)
Tracey Rosa Granovsky 2.100000% NPRI 11-12

NRI:
20.00% NPRI OGL11,12 x 60.00% MI OGL11,12 x
17.50% RI OGL11,12
Leslie Granovsky 2.100000% NPRI 11-12

NRI:
20.00% NPRI OGL11,12 x 60.00% MI OGL11,12 x
August 9, 2014
Page 10
17.50% RI OGL11,12
Robot Royalty Company 0.490000% ORRI 8-16

NRI:
0.50% ORRI OGL8-16 x 98.00% WI OGL8-16 x
100.00% MI OGL8-16
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 2 (S/2NE/4, Section 2, Township 180 North, Range 104 West, 5th P.M., containing
80.00 acres, more or less):
Surface Ownership
Percentage
Owner Interest
Johanna L. Howell and Belinda I. Howell 100.000000%
Mineral Ownership

Johanna L. Howell and Belinda 25.000000% 22 20.00000000

Howell as Trustees of the
Johanna L. and Belinda
Howell Mineral Trust dated
March 28, 1991
Mona M. Watson 10.714286% 23 8.57142900
Virgil D. Watson 10.714286% 23 8.57142800
Kelley A. Crane 10.714286% 23 8.57142900
Louanne I. Deal 10.714286% 23 8.57142800
Melodi J. Calvin 10.714286% 23 8.57142900
Caroline L. McKenzie 10.714285% 23 8.57142900
Kendra R. Quinn 10.714285% 23 8.57142800

___________ __________
TOTAL: 100.000000% 80.00000000
August 9, 2014
Page 11
Oil and Gas Leasehold Ownership
Blacktech Energy Company 50.000000% 39.666666% WI 22-23

WI:
50.00% WI OGL22-23 x 100.00% MI OGL22-23 Commented [BC14]: The calculations employed by the title
examiner in arriving at the working interest of each leasehold
NRI: interest owner should clearly identify each constituent component.
For example, here we can discern that Lease Nos. 22 and 23 cover
50.00% WI - 100.0% of the mineral interest in the tract, and that the identified
(50.00% WI OGL22-23 x 100.00% MI OGL22-23 x leasehold interest owner owns or controls 50.0% of the working
16.666667% RI OGL22-23) - (3.00% ORRI OGL22- interests in Lease Nos. 22 and 23.
23 x 50.00% WI OGL22-23 x 100.00% MI OGL22-
23) - (0.50% ORRI OGL22-23 x 50.00% WI OGL22-
23 x 100.00% MI OGL22-23) - (0.50% ORRI
OGL22-23 x 50.00% WI OGL22-23 x 100.00% MI
OGL22-23)
City Energy, LLC 22.500000% 17.662500% WI 22-23

WI:
22.50% WI OGL22-23 x 100.00% MI OGL22-23
NRI:
22.50% WI OGL 22-23 -
(22.50% WI OGL22-23 x 100.00% MI OGL22-23 x
16.666667% RI OGL22-23) - (3.00% ORRI OGL22-
23 x 22.50% WI OGL22-23 x 100.00% MI OGL22-
23) - (0.916666% ORRI OGL22-23 x 22.50% WI
OGL22-23 x 100.00% MI OGL22-23) - (0.916666%
ORRI OGL22-23 x 22.50% WI OGL22-23 x 100.00%
MI OGL22-23) Commented [BC15]: The calculations employed by the title
examiner in arriving at each leasehold owner’s net revenue interest
in the tract should follow the same construct as that applied to the
Hays Holding Company 20.6250000% 16.568750% WI 23 calculation of working interests, with each constituent component of
WI: the calculation being clearly identified.
27.50% WI OGL23 x 75.00% MI OGL23
NRI:
20.625% WI -
(27.50% WI OGL23 x 75.00% MI OGL23 x
16.666667% RI OGL23) - (3.00% ORRI OGL23 x
27.50% WI OGL23 x 75.00% MI OGL23)
Turning Energy Fund A, LP 3.349625% 2.690866% WI 22

WI:
13.398501% WI OGL22 x 25.00% MI OGL22
NRI:
3.349625% WI -
August 9, 2014
Page 12
(13.398501% WI OGL22 x 25.00% MI OGL22 x

16.666667% RI OGL22) - (3.00% ORRI OGL22 x
13.398501% WI OGL22 x 25.00% MI OGL22)
Turning Energy Fund C, LP 3.111821% 2.499829% WI 22

WI:
12.447284% WI OGL22 x 25.00% MI OGL22
NRI:
3.111821% WI -
(12.447284% WI OGL22 x 25.00% MI OGL22 x
16.666667% RI OGL22) - (3.00% ORRI OGL22 x
12.447284% WI OGL22 x 25.00% MI OGL22)
Turning Energy Fund B, LP 0.413554% 0.332222% WI 22

WI:
1.654215% WI OGL22 x 25.00% MI OGL22
NRI:
0.413554% WI -
(1.654215% WI OGL22 x 25.00% MI OGL22 x
16.666667% RI OGL22) - (3.00% ORRI OGL22 x
1.654215% WI OGL22 x 25.00% MI OGL22)
Johanna L. Howell and Belinda Howell, 4.166667% RI 22

Trustees of the Johanna L. and
Belinda I. Howell Mineral Trust
dated March 28, 1991
NRI:
25.00% MI OGL22 x 16.666667% RI OGL22
Mona M. Watson 1.785714% RI 23

NRI:
10.714286% MI OGL23 x 16.666667% RI OGL23
Virgil D. Watson 1.785715% RI 23

NRI:
10.714286% MI OGL23 x 16.666667% RI OGL23
Kelley A. Crane 1.785714% RI 23

NRI:
10.714286% MI OGL23 x 16.666667% RI OGL23
Louanne I. Deal 1.785715% RI 23

NRI:
10.714286% MI OGL23 x 16.666667% RI OGL23
Melodi J. Calvin 1.785714% RI 23

NRI:
10.714286% MI OGL23 x 16.666667% RI OGL23
August 9, 2014
Page 13
Caroline L. McKenzie 1.785714% RI 23

NRI:
10.714285% MI OGL23 x 16.666667% RI OGL23
Kendra R. Quinn 1.785714% RI 23

NRI:
10.714285% MI OGL23 x 16.666667% RI OGL23
Boogie Holdings, Inc. 3.000000% ORRI 22-23

NRI:
3.00% ORRI OGL22-23 x 100.00% WI OGL22-23 x
100.00% MI OGL22-23
Joshua L. Hawkins 0.250000% ORRI 22-23

NRI:
0.50% ORRI OGL22-23 x 50.00% WI OGL22-23 x
100.00% MI OGL22-23
Lucid, LLC 0.250000% ORRI 22-23

NRI:
0.50% ORRI OGL22-23 x 50.00% WI OGL22-23 x
100.00% MI OGL22-23
Magic Energy, LLC 0.206250% ORRI 22-23

NRI:
0.916667% ORRI OGL22-23 x 22.50% WI OGL22-
23 x 100.00% MI OGL22-23
Colosses Acquisition LLLP 0.206250% ORRI 22-23

NRI:
0.916667% ORRI OGL22-23 x 22.50% WI OGL22-
23 x 100.00% MI OGL22-23
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 3 (Lot 3 and all accretions thereto, Section 2, Township 180 North, Range 104
West, 5th P.M., containing 30.62 acres, more or less):
Surface Ownership
Percentage
Owner Interest
Angela Granovsky, as Trustee of the Robert 50.000000%

August 9, 2014
Page 14
Angela Granovsky, as Trustee of the Tracie 50.000000%

Granovsky Trust
___________
TOTAL: 100.000000%
Mineral Ownership

Angela Granovsky, as Trustee of the 25.000000% 11 7.65500000

Robert and Tracie Granovsky
Trust
Angela Granovsky, as Trustee of the 25.000000% 12 7.65500000

Tracie Granovsky Trust
Alicia C. Meacham 16.666667% 18 5.10333333
Arden Durand 16.666667% 19 5.10333334
B. LaVerne Lopez, for life, 16.666666% 20 5.10333333

with remainder to:
Kevin Lopez
Douglas Paul Broyles
Cheryl L. Van Brand
Rita Michelle Agnew
Varyl Wayne Broyles
___________ __________
TOTAL: 100.000000% 30.62000000
Doubledrill, Inc. 50.000000% 40.625000% WI 18-20

WI:
100.00% WI OGL18-20 x 50.00% MI OGL18-20
NRI:
50.00% WI -
(100.00% WI OGL18-20 x 50.00% MI OGL18-20 x Commented [BC16]: The calculation of ownership of leasehold
18.75% RI OGL18-20) interests on a tract basis should contain the majority of the
mathematical “heavy lifting,” allowing each tract to function as a
stand-alone ownership description, able to be applied to any number
of potential spacing unit and/or depth limitation scenarios.
August 9, 2014
Page 15
Company A Corporation 49.000000% 40.180000% WI 11-12

WI:
98.00% WI OGL11-12 x 50.00% MI OGL11-12
NRI:
49.00% WI -
(98.00% WI OGL11-12 x 50.00% MI OGL11-12 x
17.50% RI OGL11-12) - (0.50% ORRI OGL11-12 x
98.00% WI OGL11-12 x 50.00% MI OGL11-12)
Sub-Zero Natural Resources, LLC 1.000000% 0.825000% WI 11-12

WI:
2.00% WI OGL11-12 x 50.00% MI OGL11-12
NRI:
2.00% WI -
(2.00% WI OGL11-12 x 50.00% MI OGL11-12 x
17.50% RI OGL11-12)
Angela Granovsky, as Trustee of the Robert 2.625000% RI 11

NRI:
(25.00% MI OGL11 x 17.50% RI OGL11) – (2 x
20.00% NPRI OGL11 x 25.00% MI OGL11 x 17.50%
RI OGL11)
Angela Granovsky, as Trustee of the Tracie 2.625000% RI 12

Granovsky Trust
NRI:
(25.00% MI OGL12 x 17.50% RI OGL12) – (2 x
20.00% NPRI OGL12 x 25.00% MI OGL12 x 17.50%
RI OGL12) Commented [BC17]: Leasehold interest ownership calculations
should identify the method in which an NPRI burdens a given
mineral interest through its lessors.
Alicia C. Meacham 3.125000% RI 18
NRI:
16.666667% MI OGL18 x 18.75% RI OGL18
B. LaVerne Lopez, for life, 3.125000% RI 20

with remainder to:
Kevin Lopez
Douglas Paul Broyles
Cheryl L. Van Brand
Rita Michelle Agnew
Varyl Wayne Broyles Commented [BC18]: All life tenant and remainderman mineral
NRI: and leasehold owners should be properly identified.
16.666666% MI OGL20 x 18.75% RI OGL20
Arden Durand 3.125000% RI 19

NRI:
16.666667% MI OGL19 x 18.75% RI OGL19
August 9, 2014
Page 16
Tracey Rosa Granovsky 1.750000% NPRI 11-12

NRI:
20.00% NPRI OGL11-12 x 50.00% MI OGL11-12 x
17.50% RI OGL11-12
Leslie Granovsky 1.750000% NPRI 11-12

NRI:
20.00% NPRI OGL11-12 x 50.00% MI OGL11-12 x
17.50% RI OGL11-12

NRI:
0.50% ORRI OGL11-12 x 98.00% WI OGL11-12 x
50.00% MI OGL11-12
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 4 (Lot 4 and all accretions thereto, Section 2, Township 180 North, Range 104
Surface Ownership
Percentage
Owner Interest
Mineral Ownership
Net
Percentage Lease Mineral
Johanna L. Howell and Belinda I. 25.000000% 2 8.77500000

Howell, as Trustees of the
Johanna L. and Belinda I.
March 28, 1991
Mona M. Watson 10.714286% 7 3.76071429
Virgil D. Watson 10.714286% 7 3.76071429
Kelley A. Crane 10.714286% 7 3.76071429

August 9, 2014
Page 17
Louanne I. Deal 10.714286% 7 3.76071429
Melodi J. Calvin 10.714286% 7 3.76071428
Kendra R. Quinn 10.714285% 7 3.76071428

___________ __________
TOTAL: 100.000000% 35.10000000
Company A Corporation 98.000000% 79.563750% WI 2, 7

WI:
98.00% WI OGL2,7 x 100.00% MI OGL2,7
NRI:
98.00% WI -
(98.00% WI OGL2 x 25.00% MI OGL2 x 18.75% RI
OGL2) - (98.00% WI OGL7 x 75.00% MI OGL7 x
16.666667% RI OGL7) - (2.00% ORRI OGL7 x
98.00% WI OGL7 x 75.00% MI OGL7) - (0.50% Commented [BC19]: Leasehold interest ownership calculations
ORRI OGL2 x 98.00% WI OGL2 x 25.00% MI should also identify the method in which an ORRI burdens a given
OGL2) working interest.
Sub-Zero Natural Resources, LLC 2.000000% 1.656250% WI 2, 7

WI:
2.00% WI OGL2,7 x 100.00% MI OGL2,7
NRI:
2.00% WI -
(2.00% WI OGL2 x 25.00% MI OGL2 x 18.75% RI
OGL2) - (2.00% WI OGL7 x 75.00% MI OGL7 x
16.666667% RI OGL7)
Johanna L. Howell and Belinda I. Howell, 4.687500% RI 2

NRI:
25.00% MI OGL2 x 18.75% RI OGL2

NRI:
10.714286% MI OGL7 x 16.666667% RI OGL7
August 9, 2014
Page 18

NRI:
10.714286% MI OGL7 x 16.666667% RI OGL7

NRI:
10.714286% MI OGL7 x 16.666667% RI OGL7

NRI:
10.714286% MI OGL7 x 16.666667% RI OGL7

NRI:
10.714286% MI OGL7 x 16.666667% RI OGL7

NRI:
10.714285% MI OGL7 x 16.666667% RI OGL7

NRI:
10.714285% MI OGL7 x 16.666667% RI OGL7
Robot Royalty Company 1.592500% ORRI 2, 7

NRI:
(2.00% ORRI OGL7 x 98.00% WI OGL7 x 75.00%
MI OGL7) + (0.50% ORRI OGL2 x 98.00% WI
OGL2 x 25.00% MI OGL2)
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 5 (Lot 5 and all accretions thereto, NE/4SW/4, and N/2SE/4, Section 2, Township
180 North, Range 104 West, 5th P.M., containing 137.00 acres, more or less):
Surface Ownership
Percentage
Owner Interest
Mineral Ownership

August 9, 2014
Page 19
Danyell Blanton 100.000000% 21 137.00000000
Company A Corporation 98.000000% 79.706667% WI 21

WI:
98.00% WI OGL21 x 100.00% MI OGL21
NRI:
98.00% WI -
(98.00% WI OGL21 x 100.00% MI OGL21 x
16.666667% RI OGL21) – (2.00% ORRI OGL21 x
98.00% WI OGL21 x 100.00% MI OGL21)
Sub-Zero Natural Resources, LLC 2.000000% 1.666666% WI 21

WI:
2.00% WI OGL21 x 100.00% MI OGL21
NRI:
2.00% WI -
(2.00% WI OGL21 x 100.00% MI OGL21 x
16.666667% RI OGL21)
Danyell Blanton 16.666667% RI 21

NRI:
100.00% MI OGL21 x 16.666667% RI OGL21
Robot Royalty Company 1.960000% ORRI 21

NRI:
2.00% ORRI OGL21 x 98.00% WI OGL21 x 100.00%
MI OGL21
___________ ___________
TOTAL: 100.000000% 100.000000%
August 9, 2014
Page 20
Tract No. 6 (Lot 6 and all accretions thereto, and SE/4SW/4, Section 2, and Lot 1 and all
accretions thereto, and the NE/4NW/4, Section 11, Township 180 North, Range 104 West,
5th P.M., containing 132.00 acres, more or less):
Surface Ownership
Surface Tract No. 6(A):7 Commented [BC20]: The presence and legal description of
severed surface tracts should be clearly identified.
Percentage
Owner Interest
Shawn Howell 100.000000%
Surface Tract No. 6(B):8
Percentage
Owner Interest
Surface Tract No. 6(C): Lot 1 (30.60) and NE/4NW/4 of Section 11
Percentage
Owner Interest
Johanna L. Howell 50.000000%
Belinda I. Howell 50.000000%

___________
TOTAL: 100.000000%
7
Two (2) parcels of land lying in the SW/4, Section Two (2), more particularly described as follows:
Parcel #1: Commencing at the S1/4 corner of Section 2, thence West on the South line of Section 2, on an assumed
azimuth of 270°00’00”, 773.87 feet, thence 0°00’00”, 640.50 feet to the true point of beginning, thence 283°14’31”,
255.19 feet; thence 52°39’19”, 222.68 feet; thence 92°04’41”, 190.33 feet; thence 212°29’12”, 221.95 feet, to the
point of beginning, containing 0.9 acres, more or less.
Parcel #2: A strip of land 20.0 feet wide, lying 10.0 feet wide on each side of the following described centerline, is
to be used as an easement for ingress and egress to Parcel #1: Commencing at a point on the Westerly right-of-way
line of County Route #1, said point being 198.0 feet West and 107.0 feet North of Said S1/4 corner of Section 2,
thence on an assumed azimuth of 324°15’27”, 438.15 feet; thence 284°25’41”, 418.65 feet to a point on the East line
of said Parcel #1, the sidelines of parcel #2 are to be extended or shortened as necessary as to intersect the right-of-
way line, the property line, and each other at the angle point.
8
All of the SE/4SW/4 of Section 2, except the parcels described above being owned by Shawn Howell, and all of
and Lot 6 of Section 2.
August 9, 2014
Page 21
Mineral Ownership

Danyell Blanton 66.666667% 6, 219 88.00000000

Howell as Trustees of the
Johanna L. and Belinda I.
March 28, 1991
Mona M. Watson 3.571429% 7 4.71428572
Virgil D. Watson 3.571429% 7 4.71428572
Kelley A. Crane 3.571429% 7 4.71428572
Louanne I. Deal 3.571429% 7 4.71428571
Melodi J. Calvin 3.571428% 7 4.71428571
Kendra R. Quinn 3.571428% 7 4.71428571

___________ ___________
TOTAL: 100.000000% 132.00000000
Company A Corporation 98.000000% 79.659028% WI 2, 6,

WI: 7, 21
98.00% WI OGL2,6,7,21 x 100.00% MI OGL2,6,7,21
NRI:
98.00% WI -
(98.00% WI OGL2 x 8.333333% MI OGL2 x 18.75%
RI OGL2) - (98.00% WI OGL6,7,21 x 91.666667%
MI OGL6,7,21 x 16.666667% RI OGL6,7,21) –
9
We note that Lease No. 6 covers Lois Iszley Clayton’s mineral interest in Lot 1 and the NE/4NW/4 of Section 11,
while Lease No. 21 covers Lois Iszley Clayton’s mineral interest in Lot 6 and the SE/4SW/4 of Section 2.
August 9, 2014
Page 22
(2.00% ORRI OGL6,7,21 x 98.00% WI OGL6,7,21 x

91.666667% MI OGL6,7,21) – (0.50% ORRI OGL2 x
98.00% WI OGL2 x 8.333333% MI OGL2)
Sub-Zero Natural Resources, LLC 2.000000% 1.663194% WI 2, 6,

WI: 7, 21
2.00% WI OGL2,6,7,21 x 100.00% MI OGL2,6,7,21
NRI:
2.00% WI -
(2.00% WI OGL2 x 8.333333% MI OGL2 x 18.75%
RI OGL2) - (2.00% WI OGL6,7,21 x 91.666667% MI
OGL6,7,21 x 16.666667% RI OGL6,7,21)
Danyell Blanton 11.111111% RI 6, 21

NRI:
66.666667% MI OGL6,21 x 16.666667% RI
OGL6,21
Johanna L. Howell and Belinda I. Howell, 1.562500% RI 2

NRI:
8.333333% MI OGL2 x 18.75% RI OGL2

NRI:
3.571429% MI OGL7 x 16.666667% RI OGL7

NRI:
3.571429% MI OGL7 x 16.666667% RI OGL7

NRI:
3.571429% MI OGL7 x 16.666667% RI OGL7

NRI:
3.571429% MI OGL7 x 16.666667% RI OGL7

NRI:
3.571428% MI OGL7 x 16.666667% RI OGL7

NRI:
3.571428% MI OGL7 x 16.666667% RI OGL7
August 9, 2014
Page 23

NRI:
3.571428% MI OGL7 x 16.666667% RI OGL7
Robot Royalty Company 1.837500% ORRI 2, 6,

NRI: 7, 21
(2.00% ORRI OGL6,7,21 x 98.00% WI OGL6,7,21 x
91.666667% MI OGL6,7,21) + (0.50% ORRI OGL2 x
98.00% WI OGL2 x 8.333333% MI OGL2)
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 7 (Riverbed of the Missouri River, Section 2, Township 180 North, Range 104
Surface Ownership
Percentage
Owner Interest
State of North Dakota 100.000000%
Mineral Ownership

State of North Dakota 100.000000% 17 126.50000000
Redoil, L.L.C. 100.000000% 83.333333% WI 17

WI:
100.00% WI OGL17 x 100.00% MI OGL17
NRI:
100.00% WI -
(100.00% WI OGL17 x 100.00% MI OGL17 x
16.666667% RI OGL17)
State of North Dakota 16.666667% RI 17

NRI:
100.00% MI OGL17 x 16.666667% RI OGL17
August 9, 2014
Page 24
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 8 (S/2SE/4, Section 2, and SE/4NW/4, Section 11, Township 180 North, Range
104 West, 5th P.M., containing 120.00 acres, more or less):
Surface Ownership
Surface Tract No. 8(A): S/2SE/4 of Section 2
Percentage
Owner Interest
Surface Tract No. 8(B): SE/4NW/4 of Section 11
Percentage
Owner Interest
Mineral Ownership

United States of America 100.000000% 1 120.00000000
Hexity Company, LLC 57.605000% 47.524125% WI 1

WI:
57.605% WI OGL1 x 100.00% MI OGL1
NRI:
57.605000% WI -
(57.605% WI OGL1 x 100.00% MI OGL1 x 12.50%
RI OGL1) - (5.00% ORRI OGL1 x 57.605% WI OGL1
x 100.00% MI OGL1)
August 9, 2014
Page 25
Company A Corporation 42.395000% 33.916000% WI 1

WI:
42.395% WI OGL1 x 100.00% MI OGL1
NRI:
42.395000% WI -
(42.395% WI OGL1 x 100.00% MI OGL1 x 12.50%
RI OGL1) - (5.00% ORRI OGL1 x 42.395% WI OGL1
x 100.00% MI OGL1) - (2.50% ORRI OGL1 x
42.395% WI OGL1 x 100.00% MI OGL1)
United States of America 12.500000% RI 1

NRI:
100.00% MI OGL1 x 12.50% RI OGL1
Stat Oil Company 2.500000% ORRI 1

NRI:
2.50% ORRI OGL1 x 100.00% WI OGL1 x 100.00%
MI OGL1
Hidden Bench Oil LLC 1.059875% ORRI 1

NRI:
2.50% ORRI OGL1 x 42.395% WI OGL1 x 100.00%
MI OGL1
Porter G. Iverson 1.000000% ORRI 1

NRI:
1.00% ORRI OGL1 x 100.00% WI OGL1 x 100.00%
MI OGL1
Krysta L. Shields 0.500000% ORRI 1

NRI:
1.00% ORRI OGL1 x 50.00% WI OGL1 x 100.00%
MI OGL1
Chance N. Neel 0.450000% ORRI 1

NRI:
1.00% ORRI OGL1 x 45.00% WI OGL1 x 100.00%
MI OGL1
Jacob L. Mott 0.100000% ORRI 1

NRI:
1.00% ORRI OGL1 x 10.00% WI OGL1 x 100.00%
MI OGL1
Mike Neel 0.090000% ORRI 1

NRI:
1.00% ORRI OGL1 x 45.00% WI OGL1 x 100.00%
MI OGL1 x 20.00%
August 9, 2014
Page 26
Joleen Busby, Trustee of the Grant M. and 0.090000% ORRI 1

Joleen Busby Revocable Living Trust
Survivor’s Trust
NRI:
1.00% ORRI OGL1 x 45.00% WI OGL1 x 100.00%
MI OGL1 x 20.00%
WSC, LP 0.074970% ORRI 1

NRI:
1.00% ORRI OGL1 x 9.00% WI OGL1 x 100.00% MI
OGL1 x 83.3%
Savanna Z. Neel 0.060000% ORRI 1

NRI:
1.00% ORRI OGL1 x 45.00% WI OGL1 x 100.00%
MI OGL1 x 13.333333%
Wally Neel 0.060000% ORRI 1

NRI:
1.00% ORRI OGL1 x 45.00% WI OGL1 x 100.00%
MI OGL1 x 13.333333%
Mineral Hitch, LLC 0.028500% ORRI 1

NRI:
1.00% ORRI OGL1 x 45.00% WI OGL1 x 100.00%
MI OGL1 x 47.5% x 13.333333%
ROCK Resources, LLC 0.028500% ORRI 1

NRI:
1.00% ORRI OGL1 x 45.00% WI OGL1 x 100.00%
MI OGL1 x 47.5% x 13.333333%
Lime Co. 0.015030% ORRI 1

NRI:
1.00% ORRI OGL1 x 9.00% WI OGL1 x 100.00% MI
OGL1 x 16.70%
Tom O. Wing and Marnie M. Wing, as joint 0.003000% ORRI 1

tenants
NRI:
1.00% ORRI OGL1 x 45.00% WI OGL1 x 100.00%
MI OGL1 x 5.00% x 13.333333%
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 9 (E/2, Section 11, Township 180 North, Range 104 West, 5th P.M., containing
320.00 acres, more or less):
August 9, 2014
Page 27
Surface Ownership
Surface Tract No. 9(A): NE/4 of Section 11
Percentage
Owner Interest
Johanna L. Howell 50.000000%

___________
TOTAL: 100.000000%
Surface Tract No. 9(B): SE/4 of Section 11
Percentage
Owner Interest
Mineral Ownership

United States of America 100.000000% 24 320.00000000
Inlane Production Company 100.000000% 82.500000% WI 24

WI:
100.00% WI OGL24 x 100.00% MI OGL24
NRI:
100.00% WI -
(100.00% WI OGL24 x 100.00% MI OGL24 x 12.50%
RI OGL24) - (5.00% ORRI OGL24 x 100.00% WI
OGL24 x 100.00% MI OGL24)
United States of America 12.500000% RI 24

NRI:
100.00% MI OGL24 x 12.50% RI OGL24
August 9, 2014
Page 28
Stat Oil Company 2.500000% ORRI 24

NRI:
2.50% ORRI OGL24 x 100.00% WI OGL24 x
100.00% MI OGL24
Porter G. Iverson 1.000000% ORRI 24

NRI:
1.00% ORRI OGL24 x 100.00% WI OGL24 x
100.00% MI OGL24
Krysta L. Shields 0.500000% ORRI 24

NRI:
1.00% ORRI OGL24 x 50.00% WI OGL24 x 100.00%
MI OGL24
Chance N. Neel 0.450000% ORRI 24

NRI:
1.00% ORRI OGL24 x 45.00% WI OGL24 x 100.00%
MI OGL24
Jacob L. Mott 0.100000% ORRI 24

NRI:
1.00% ORRI OGL24 x 10.00% WI OGL24 x 100.00%
MI OGL24
Mike Neel 0.090000% ORRI 24

NRI:
1.00% ORRI OGL24 x 45.00% WI OGL24 x 100.00%
MI OGL24 x 20.00%
Joleen Busby, Trustee of the Grant M. and 0.090000% ORRI 24

Survivor’s Trust
NRI:
1.00% ORRI OGL24 x 45.00% WI OGL24 x 100.00%
MI OGL24 x 20.00%
WSC, LP 0.074970% ORRI 24

NRI:
1.00% ORRI OGL24 x 9.00% WI OGL24 x 100.00%
MI OGL24 x 83.3%
Savanna Z. Neel 0.060000% ORRI 24

NRI:
1.00% ORRI OGL24 x 45.00% WI OGL24 x 100.00%
MI OGL24 x 13.333333%
Wally Neel 0.060000% ORRI 24

NRI:
August 9, 2014
Page 29
1.00% ORRI OGL24 x 45.00% WI OGL24 x 100.00%

MI OGL24 x 13.333333%
Mineral Hitch, LLC 0.028500% ORRI 24

NRI:
1.00% ORRI OGL24 x 45.00% WI OGL24 x 100.00%
MI OGL24 x 47.5% x 13.333333%
ROCK Resources, LLC 0.028500% ORRI 24

NRI:
1.00% ORRI OGL24 x 45.00% WI OGL24 x 100.00%
MI OGL24 x 47.5% x 13.333333%
Lime Co. 0.015030% ORRI 24

NRI:
1.00% ORRI OGL24 x 9.00% WI OGL24 x 100.00%
MI OGL24 x 16.70%
Tom O. Wing and Marnie M. Wing, as joint 0.003000% ORRI 24

tenants
NRI:
1.00% ORRI OGL24 x 45.00% WI OGL24 x 100.00%
MI OGL24 x 5.00% x 13.333333%
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 10 (The Riverbed of the Missouri River, Section 11, Township 180 North, Range
104 West, 5th P.M., containing 13.60 acres, more or less):
Surface Ownership
Percentage
Owner Interest
State of North Dakota 100.000000%
Mineral Ownership

State of North Dakota 100.000000% 25 13.60000000
August 9, 2014
Page 30

Bakken Tornado, LLC 100.000000% 81.250000% WI 25

WI:
100.00% WI OGL25 x 100.00% MI OGL25
NRI:
100.00% WI –
(100.00% WI OGL25 x 100.00 MI OGL25 x 18.75%
RI OGL25)
State of North Dakota 18.750000% RI 25

NRI:
100.00% MI OGL25 x 18.75% RI OGL25
___________ ___________
TOTAL: 100.000000% 100.000000%
Tract No. 11 (Lot 2 and SW/4, Section 11, Township 180 North, Range 104 West, 5th P.M.,
containing 199.70 acres, more or less):
Surface Ownership
Percentage
Owner Interest
Luke Howell 100.000000%
Mineral Ownership


Howell, as joint tenants
Steven R. Lutz 25.000000% 3 49.92500000
Mary I. Kellogg, for life, with 25.000000% 4 49.92500000

remainder to:
Irene Lee,
Tammy L. Green,
and Christina Taylor
August 9, 2014
Page 31
Linda Wildman, Trustee of the Dixie 25.000000% 5 49.92500000

Washington Trust
___________ ___________
TOTAL: 100.000000% 199.70000000
Company A Corporation 98.000000% 79.125000% WI 2-5

WI:
98.00% WI OGL2-5 x 100.00% MI OGL2-5
NRI:
98.00% WI -
(98.00% WI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5) - (0.50% ORRI OGL2-5 x
98.00% WI OGL2-5 x 100.00% MI OGL2-5)
Sub-Zero Natural Resources, LLC 2.000000% 1.625000% WI 2-5

WI:
2.00% WI OGL2-5 x 100.00% MI OGL2-5
NRI:
2.00% WI -
(2.00% WI OGL2-5 x 100.00% MI OGL2-5 x 18.75%
RI OGL2-5)
Johanna L. Howell and Belinda I. Howell, as 2.343750% RI 2

joint tenants
NRI:
(25.00% MI OGL2 x 18.75% RI OGL2) - (50.00%
NPRI OGL2 x 25.00% MI OGL2 x 18.75% RI OGL2)
Steven R. Lutz 2.343750% RI 3

NRI:
(25.00% MI OGL3 x 18.75% RI OGL3) - (50.00%
Mary I. Kellogg, for life, with remainder to: 2.343750% RI 4

Irene Lee, Tammy L. Green, and
Christina Taylor
NRI:
(25.00% MI OGL4 x 18.75% RI OGL4) - (50.00%
August 9, 2014
Page 32
Linda Wildman, Trustee of the Dixie 2.343750% RI 5

Washington Trust
NRI:
(25.00% MI OGL5 x 18.75% RI OGL5) - (50.00%
Johanna L. Howell and Belinda I. Howell, as 2.343750% NPRI 2-5

joint tenants
NRI:
12.50% NPRI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5
Steven R. Lutz 2.343750% NPRI 2-5

NRI:
12.50% NPRI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5
Mary I. Kellogg, for life, with remainder to: 2.343750% NPRI 2-5
Irene Lee, Tammy L. Green, and
Christina Taylor
NRI:
12.50% NPRI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5
Linda Wildman, Trustee of the Dixie 2.343750% NPRI 2-5

Washington Trust
NRI:
12.50% NPRI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5

NRI:
0.50% ORRI OGL2-5 x 98.00% WI OGL2-5 x
100.00% MI OGL2-5
___________ ___________
TOTAL: 100.000000% 100.000000%
August 9, 2014
Page 33
DIVISION OF INTEREST AND DISTRIBUTION OF PRODUCTION PROCEEDS 10
The tract participation percentages for the Division of Interest and Distribution of
Production Proceeds are as follows: Commented [BC21]: The calculation of tract participation
factors, based on the proportion each tract bears to the entire drilling
unit, is the first step in calculating a drilling unit division of interest.
TRACT TOTAL TRACT
TRACT NO.: ACREAGE: ACREAGE: PARTICIPATION:
1 79.60 1274.12 6.247449%
2 80.00 1274.12 6.278844%
3 30.62 1274.12 2.403227%
4 35.10 1274.12 2.754843%
5 137.00 1274.12 10.752519%
6 132.00 1274.12 10.360092%
7 126.50 1274.12 9.928421%
8 120.00 1274.12 9.418265%
9 320.00 1274.12 25.115374%
10 13.60 1274.12 1.067403%
11 199.70 1274.12 15.673563%

______ ___________
1274.12 100.000000%
10
See Comment and Requirement No. 3.
August 9, 2014
Page 34
Ownership of oil and gas, and the proceeds of production therefrom, for a 1274.12-acre
Spacing Unit for the Bakken Pool, comprised of the Subject Lands, as of the Certification
Date:
Limited to those depths lying between the surface of the earth to the bottom of the Three Forks
Formation and excluding the Madison Formation Commented [BC22]: Each division of interest should identify
both the lands and the subsurface formation covered, as well as any
depth limitations that may be applicable, either in the division of
Decimal Decimal interest itself or in a related comment and requirement.
Owner11 Interest Interest Type No.
Company A Corporation 0.50043151 0.40535928 WI 1-16, Commented [BC23]: Divisions of interest should be calculated
to eight (8) decimal places in order to ensure accuracy.
11 Sherman Ave. 21
Denver, CO 80291
WI:
{[(98.00% WI OGL8 x 10.00% MI OGL8) +
(98.00% WI OGL9 x 10.00% MI OGL9) +
(98.00% WI OGL10 x 10.00% MI OGL10) +
(98.00% WI OGL11 x 30.00% MI OGL11) +
(98.00% WI OGL12 x 30.00% MI OGL12) +
(98.00% WI OGL13 x 2.50% MI OGL13) +
(98.00% WI OGL14 x 2.50% MI OGL14) +
(98.00% WI OGL15 x 2.50% MI OGL15) +
(98.00% WI OGL16 x 2.50% MI OGL16)] x
6.247449% TP1}
+
{[(98.00% WI OGL11 x 25.00% MI OGL11) +
(98.00% WI OGL12 x 25.00% MI OGL12)] x
2.403227% TP3}
+
{[(98.00% WI OGL2 x 25.00% MI OGL2) +
(98.00% WI OGL7 x 75.00% MI OGL7)] x
2.754843% TP4}
+
(98.00% WI OGL21 x 100.00% MI OGL21 x
10.752519% TP5)
+
{[(98.00% WI OGL2 x 8.333333% MI OGL2) +
(98.00% WI OGL6,21 x 66.666667% MI
OGL6,21) + (98.00% WI OGL7 x 25.00% MI
OGL7)] x 10.360092% TP6}
+
(42.395% WI OGL1 x 100.00% MI OGL1 x
9.418265% TP8)
+
{[(98.00% WI OGL2 x 25.00% MI OGL2) +
11
The addresses provided herein were obtained from documents recorded against the Subject Lands and Prior
DDOTO 1-6 and we cannot opine on the accuracy thereof. These addresses are provided for Company A’s
convenience only.
August 9, 2014
Page 35
(98.00% WI OGL3 x 25.00% MI OGL3) +

(98.00% WI OGL4 x 25.00% MI OGL4) +
(98.00% WI OGL5 x 25.00% MI OGL5)] x
15.673563% TP11}
NRI:
50.043151% WI –
({[(98.00% WI OGL8-10,13-16 x 40.00% MI
OGL8-10,13-16 x 20.00% RI OGL8-10,13-16) +
(98.00% WI OGL11-12 x 60.00% MI OGL11-12
x 17.50% RI OGL11-12) + (0.50% ORRI OGL8-
16 x 98.00% WI OGL8-16 x 100.00% MI OGL8-
16)] x 6.247449% TP1}
+
{[(98.00% WI OGL11 x 25.00% MI OGL11 x
17.50% RI OGL11) + (98.0% WI OGL12 x
25.00% MI OGL12 x 17.50% RI OGL12) +
(0.50% ORRI OGL11-12 x 98.00% WI OGL11-
12 x 50.00% MI OGL11-12)] x 2.403227% TP3}
+
{[(98.00% WI OGL2 x 25.00% MI OGL2 x
18.75% RI OGL2) + (98.00% WI OGL7 x
75.00% MI OGL7 x 16.666667% RI OGL7) +
(2.00% ORRI OGL7 x 98.00% WI OGL7 x
75.00% MI OGL7) + (0.50% ORRI OGL2 x
98.00% WI OGL2 x 25.00% MI OGL2)] x
2.754843% TP4}
+
{[(98.00% WI OGL21 x 100.00% MI OGL21 x
16.666667% RI OGL21) + (2.00% ORRI OGL21
x 98.00% WI OGL21 x 100.00% MI OGL21)] x
10.752519% TP5}
+
{[(98.00% WI OGL2 x 8.333333% MI OGL2 x
18.75% RI OGL2) + (98.00% WI OGL6,21 x
66.666667% MI OGL6,21 x 16.666667% RI
OGL6,21) + (98.00% WI OGL7 x 25.00% MI
OGL7 x 16.666667% RI OGL7) + (2.00% ORRI
OGL6,7,21 x 98.00% WI OGL6,7,21 x
91.666667% MI OGL6,7,21) + (0.50% ORRI
OGL2 x 98.00% WI OGL2 x 8.333333% MI
OGL2)] x 10.360092% TP6}
+
{[(42.395% WI OGL1 x 100.00% MI OGL1 x
12.50% RI OGL1) + (2.50% ORRI OGL1 x
42.395% WI OGL1 x 100.00% MI OGL1) +
(5.00% ORRI OGL1 x 42.395% WI OGL1 x
100.00% MI OGL1)] x 9.418265% TP8}
+
{[(98.0% WI OGL2 x 25.00% MI OGL2 x
18.75% RI OGL2) + (98.00% WI OGL3 x
25.00% MI OGL3 x 18.75% RI OGL3) +
(98.00% WI OGL4 x 25.00% MI OGL4 x
18.75% RI OGL4) + (98.00% WI OGL5 x
August 9, 2014
Page 36
25.00% MI OGL5 x 18.75% RI OGL5) + (0.50%

ORRI OGL2-5 x 98.00% WI OGL2-5 x 100.00%
MI OGL2-5)] x 15.673563% TP11})
Inlane Production Company 0.25115374 0.20720183 WI 24

PO Box 701
Tulsa, OK 74170 Commented [BC24]: Last known mailing addresses, as taken
WI: from the last recorded document involving the interest owner, should
be provided for convenience, although the addresses should be
100.00% WI OGL24 x 100.00% MI OGL24 x confirmed for accuracy.
25.115374% TP9
NRI:
25.115374% WI -
{[(100.00% WI OGL24 x 100.00% MI OGL24 x
12.50% RI OGL24) + (5.00% ORRI OGL24 x
100.00% WI OGL24 x 100.00% MI OGL24)] x
25.115374% TP9}
Redoil, L.L.C. 0.09928421 0.08273684 WI 17

[Address]
WI:
100.00% WI OGL17 x 100.00% MI OGL17 x
9.928421% TP7
NRI:
9.928421% WI -
(100.00% WI OGL17 x 100.00% MI OGL17 x
16.666667% RI OGL17 x 9.928421% TP7)
Hexity Company, LLC 0.05425392 0.04475948 WI 1

[Address]
WI:
57.605% WI OGL1 x 100.00% MI OGL1 x
9.418265% TP8
NRI:
5.425392% WI -
{[(57.605% WI OGL1 x 100.00% MI OGL1 x
12.50% RI OGL1) + (5.00% ORRI OGL1 x
57.605% WI OGL1 x 100.00% MI OGL1)] x
9.418265% TP8} Commented [BC25]: Although the division of interest working
and net revenue interest calculations shown here represent all
calculations, a title opinion may, in the alternative, also merely
multiply each owners’ working and/or net revenue interests by their
respective tract participation factors.
August 9, 2014
Page 37
Blacktech Energy Company 0.03139422 0.02490608 WI 22, 23

[Address]
WI:
{[(50.00% WI OGL22 x 25.00% MI OGL22) +
(50.00% WI OGL23 x 75.00% MI OGL23)] x
6.278844% TP2}
NRI:
3.139422% WI -
{[(50.00% WI OGL22 x 25.00% MI OGL22 x
16.666667% RI OGL22) + (50.00% WI OGL23 x
75.00% MI OGL23 x 16.666667% RI OGL23) +
(3.00% ORRI OGL22-23 x 50.00% WI OGL22-
23 x 100.00% MI OGL22-23) + (0.50% ORRI
OGL22-23 x 50.00% WI OGL22-23 x 100.00%
MI OGL22-23) + (0.50% ORRI OGL22-23 x
50.00% WI OGL22-23 x 100.00% MI OGL22-
23)] x 6.278844% TP2}
City Energy, LLC 0.01412740 0.01109001 WI 22, 23

[Address]
WI:
{[(22.50% WI OGL22 x 22.50% MI OGL22) +
(22.50% WI OGL23 x 22.50% MI OGL23)] x
6.278844% TP2}
NRI:
1.412740% WI -
{[(22.50% WI OGL22 x 25.00% MI OGL22 x
16.666667% RI OGL22) + (22.50% WI OGL23 x
75.00% MI OGL23 x 16.666667% RI OGL23) +
(3.00% ORRI OGL22-23 x 22.50% WI OGL22-
23 x 100.00% MI OGL22-23) + (0.916667%
ORRI OGL22-23 x 22.50% WI OGL22-23 x
100.00% MI OGL22-23) + (0.916667% ORRI
OGL22-23 x 22.50% WI OGL22-23 x 100.00%
MI OGL22-23)] x 6.278844% TP2}
Hays Holding Company 0.01295011 0.01040326 WI 23

[Address]
WI:
27.50% WI OGL23 x 75.00% MI OGL23 x
6.278844% TP2
NRI:
1.295011% WI -
{[(27.50% WI OGL23 x 75.00% MI OGL23 x
16.666667% RI OGL23) + (3.00% ORRI OGL23
x 27.50% WI OGL23 x 100.00% MI OGL23)] x
6.278844% TP2}
Doubledrill, Inc. 0.01201614 0.00976311 WI 18-20

August 9, 2014
Page 38
[Address]
WI:
{[(100.00% WI OGL18 x 16.666667% MI
OGL18) + (100.00% WI OGL19 x 16.666667%
MI OGL19) + (100.00% WI OGL20 x
16.666667% MI OGL20)] x 2.403227% TP3}
NRI:
1.201614% WI –
{[(100.00% WI OGL18 x 16.666667% MI
OGL18 x 18.75% RI OGL18) + (100.00% WI
OGL19 x 16.666667% MI OGL19 x 18.75% RI
OGL19) + (100.00% WI OGL20 x 16.666667%
MI OGL20 x 18.75% RI OGL20)] x 2.403227%
TP3}
Bakken Tornado, LLC 0.01067403 0.00867266 WI 25

[Address]
WI:
100.00% WI OGL25 x 100.00% MI OGL25 x
1.067403% TP10
NRI:
1.067403% WI -
(100.00% WI OGL25 x 100.00% MI OGL25 x
18.75% RI OGL25 x 1.067403% TP10)
Sub-Zero Natural Resources, LLC 0.00939802 0.00774749 WI 2-16,

[Address] 21
WI:
(2.00% WI OGL8-16 x 100.00% MI OGL8-16 x
6.247449% TP1)
+
{[(2.00% WI OGL11 x 25.00% MI OGL11) +
(2.00% WI OGL12 x 25.00% MI OGL12)] x
2.403227% TP3}
+
{[(2.00% WI OGL2 x 25.00% MI OGL2) +
(2.00% WI OGL7 x 75.00% MI OGL7)] x
2.754843% TP4}
+
(2.00% WI OGL21 x 100.00% MI OGL21 x
10.752519% TP5)
+
{[(2.00% WI OGL2 x 8.333333% MI OGL2) +
(2.00% WI OGL6,21 x 66.666667% MI
OGL6,21) + (2.00% WI OGL7 x 25.00% MI
OGL7)] x 10.360092% TP6}
+
{[(2.00% WI OGL2 x 25.00% MI OGL2) +
(2.00% WI OGL3 x 25.00% MI OGL3) + (2.00%
WI OGL4 x 25.00% MI OGL4) + (2.00% WI
OGL5 x 25.00% MI OGL5)] x 15.673563%
August 9, 2014
Page 39
TP11}
NRI:
0.939802% WI -
({[(2.00% WI OGL8 x 10.00% MI OGL8 x
17.50% RI OGL8) + (2.00% WI OGL9 x 10.00%
MI OGL9 x 17.50% RI OGL9) + (2.00% WI
OGL10 x 10.00% MI OGL10 x 17.50% RI
OGL10) + (2.00% WI OGL11 x 30.00% MI
OGL11 x 17.50% RI OGL11) + (2.00% WI
OGL12 x 30.00% MI OGL12 x 17.50% RI
OGL12) + (2.00% WI OGL13 x 2.50% MI
OGL13 x 17.50% RI OGL13) + (2.00% WI
OGL14 x 2.50% MI OGL14 x 17.50% RI
OGL14) + (2.00% WI OGL15 x 2.50% MI
OGL15 x 17.50% RI OGL15) + (2.00% WI
OGL16 x 2.50% MI OGL16 x 17.50% RI
OGL16)] x 6.247449% TP1}
+
{[(2.00% WI OGL11 x 25.00% MI OGL11 x
17.50% RI OGL11) + (2.00% WI OGL12 x
25.00% MI OGL12 x 17.50% RI OGL12)] x
2.403227% TP3}
+
{[(2.00% WI OGL2 x 25.00% MI OGL2 x
18.75% RI OGL2) + (2.00% WI OGL7 x 75.00%
MI OGL7 x 16.666667% RI OGL7)] x
2.754843% TP4}
+
(2.00% WI OGL21 x 100.00% MI OGL21 x
16.666667% RI OGL21 x 10.752519% TP5)
+
{[(2.00% WI OGL2 x 8.333333% MI OGL2 x
18.75% RI OGL2) + (2.00% WI OGL6,21 x
66.666667% MI OGL6,21 x 16.666667% RI
OGL6,21) + (2.00% WI OGL7 x 25.00% MI
OGL7 x 16.666667% RI OGL7)] x 10.360092%
TP6}
+
{[(2.00% WI OGL2 x 25.00% MI OGL2 x
18.75% RI OGL2) + (2.00% WI OGL3 x 25.00%
MI OGL3 x 18.75% RI OGL3) + (2.00% WI
OGL4 x 25.00% MI OGL4 x 18.75% RI OGL4)
+ (2.00% WI OGL5 x 25.00% MI OGL5 x
18.75% RI OGL5)] x 15.673563% TP11})
Turning Energy Fund A, LP 0.00210318 0.00168955 WI 22

[Address]
WI:
13.72182% WI OGL22 x 25.00% MI OGL22 x
6.278844% TP2
NRI:
August 9, 2014
Page 40
0.210318% WI -
{[(13.398501% WI OGL22 x 25.00% MI OGL22
x 16.666667% RI OGL22) + (3.00% ORRI
OGL22 x 13.398501% WI OGL22 x 25.00% MI
OGL22)] x 6.278844% TP2}
Turning Energy Fund C, LP 0.00195386 0.00156960 WI 22

[Address]
WI:
12.447284% WI OGL22 x 25.00% MI OGL22 x
6.278844% TP2
NRI:
0.195386% WI -
{[(12.447284% WI OGL22 x 25.00% MI OGL22
x 16.666667% RI OGL22) + (3.00% ORRI
OGL22 x 12.447284% WI OGL22 x 25.00% MI
OGL22)] x 6.278844% TP2}
Turning Energy Fund B, LP 0.00025966 0.00020859 WI 22

[Address]
WI:
1.654215% WI OGL22 x 25.00% MI OGL22) x
6.278844% TP2
NRI:
0.025966% WI -
{[(1.654215% WI OGL22 x 25.00% MI OGL22
x 16.666667% RI OGL22) + (3.00% ORRI
OGL22 x 1.654215% WI OGL22 x 25.00% MI
OGL22)] x 6.278844% TP2}
United States of America 0.04316705 RI 1, 24

Office of Natural Resources
Revenue
PO Box 25627
Denver, CO 80225-0627
NRI:
(100.00% MI OGL1 x 12.50% RI OGL1 x
9.418265% TP8) +
(100.00% MI OGL24 x 12.50% RI OGL24 x
25.115374% TP9)
Danyell Blanton 0.02943208 RI 6, 21

[Address]
NRI:
(100.00% MI OGL21 x 16.666667% RI OGL21
x 10.752519% TP5) +
(66.666667% MI OGL6,21 x 16.666667% RI
OGL6,21 x 10.360092% TP6)
August 9, 2014
Page 41
State of North Dakota 0.01854875 RI 17, 25

Commissioner of University and
School Lands
State Land Department
1707 North 9th Street
PO Box 5523
Bismarck, ND 58506-5523
NRI:
(100.00% MI OGL17 x 16.666667% RI OGL17
x 9.928421% TP7) +
(100.00% MI OGL25 x 18.75% RI OGL25 x
1.067403% TP10)
Johanna L. Howell and Belinda I. 0.00552628 RI 2, 22
Howell, Trustees of the Johanna
L. and Belinda I. Howell Mineral
Trust dated March 28, 1991
[Address]
NRI:
(25.00% MI OGL22 x 16.666667% RI OGL22 x
6.278843% TP2) +
(25.00% MI OGL2 x 18.75% RI OGL2 x
2.754843% TP4) +
(8.333333% MI OGL2 x 18.75% RI OGL2 x
10.360092% TP6)
Johanna L. Howell and Belinda I. 0.00367349 RI 2

[Address]
NRI:
{[(25.00% MI OGL2 x 18.75% RI OGL2) -
(50.00% NPRI OGL2 x 25.00% MI OGL2 x
18.75% RI OGL2)] x 15.673563% TP11}
Steven R. Lutz 0.00367349 RI 3

[Address]
NRI:
{[(25.00% MI OGL3 x 18.75% RI OGL3) -
(50.00% NPRI OGL3 x 25.00% MI OGL3 x
18.75% RI OGL3)] x 15.673563% TP11}
Mary I. Kellogg, for life, with remainder 0.00367349 RI 4

to: Irene Lee,12 Tammy L.
Green,13 and Christina Taylor14
[Address]
12
[Address]
13
[Address]
14
[Address]
August 9, 2014
Page 42
NRI:
{[(25.00% MI OGL4 x 18.75% RI OGL4) -
(50.00% NPRI OGL4 x 25.00% MI OGL4 x
18.75% RI OGL4)] x 15.673563% TP11}
Linda Wildman, Trustee of the Dixie 0.00367349 RI 5

Washington Trust
[Address]
NRI:
{[(25.00% MI OGL5 x 18.75% RI OGL5) -
(50.00% NPRI OGL5 x 25.00% MI OGL5 x
18.75% RI OGL5)] x 15.673563% TP11}
Angela Granovsky, as Trustee of the 0.00259880 RI 11

Robert and Tracie Granovsky
Trust
[Address]
NRI:
{[(30.00% MI OGL11 x 17.50% RI OGL11) – (2
x 20.00% NPRI OGL11 x 30.00% MI OGL11 x
17.50% RI OGL11)] x 6.247449% TP1} +
{[(25.00% MI OGL11 x 17.50% RI OGL11) - (2
17.50% RI OGL11)] x 2.403227% TP3}
Angela Granovsky, as Trustee of the 0.00259879 RI 12

Tracie Granovsky Trust
[Address]
NRI:
{[(30.00% MI OGL12 x 17.50% RI OGL12) – (2
17.50% RI OGL12)] x 6.247449% TP1} +
{[(25.00% MI OGL12 x 17.50% RI OGL12) - (2
17.50% RI OGL12)] x 2.403227% TP3}
Mona M. Watson 0.00222983 RI 7, 23

[Address]
NRI:
(10.714286% MI OGL23 x 16.666667% RI
OGL23 x 6.278843% TP2) +
(10.714286% MI OGL7 x 16.666667% RI OGL7
x 2.754843% TP4) +
(3.571429% MI OGL7 x 16.666667% RI OGL7
x 10.360092% TP6)
Virgil D. Watson 0.00222983 RI 7, 23

[Address]
NRI:
(10.714286% MI OGL23 x 16.666667% RI
August 9, 2014
Page 43
OGL23 x 6.278843% TP2) +

(10.714286% MI OGL7 x 16.666667% RI OGL7
x 2.754843% TP4) +
(3.571429% MI OGL7 x 16.666667% RI OGL7
x 10.360092% TP6)
Kelley A. Crane 0.00222983 RI 7, 23

[Address]
NRI:
(10.714286% MI OGL23 x 16.666667% RI
OGL23 x 6.278843% TP2) +
(10.714286% MI OGL7 x 16.666667% RI OGL7
x 2.754843% TP4) +
(3.571429% MI OGL7 x 16.666667% RI OGL7
x 10.360092% TP6)
Louanne I. Deal 0.00222983 RI 7, 23

[Address]
NRI:
(10.714286% MI OGL23 x 16.666667% RI
OGL23 x 6.278843% TP2) +
(10.714286% MI OGL7 x 16.666667% RI OGL7
x 2.754843% TP4) +
(3.571429% MI OGL7 x 16.666667% RI OGL7
x 10.360092% TP6)
Melodi J. Calvin 0.00222983 RI 7, 23

[Address]
NRI:
(10.714286% MI OGL23 x 16.666667% RI
OGL23 x 6.278843% TP2) +
(10.714286% MI OGL7 x 16.666667% RI OGL7
x 2.754843% TP4) +
(3.571428% MI OGL7 x 16.666667% RI OGL7
x 10.360092% TP6)
Caroline L. McKenzie 0.00222983 RI 7, 23

[Address]
NRI:
(10.714285% MI OGL23 x 16.666667% RI
OGL23 x 6.278843% TP2) +
(10.714285% MI OGL7 x 16.666667% RI OGL7
x 2.754843% TP4) +
(3.571428% MI OGL7 x 16.666667% RI OGL7
x 10.360092% TP6)
August 9, 2014
Page 44
Kendra R. Quinn 0.00222983 RI 7, 23

[Address]
NRI:
(10.714285% MI OGL23 x 16.666667% RI
OGL23 x 6.278843% TP2) +
(10.714285% MI OGL7 x 16.666667% RI OGL7
x 2.754843% TP4) +
(3.571428% MI OGL7 x 16.666667% RI OGL7
x 10.360092% TP6)
Matt P. Frayser and Rosie Flora Frayser, 0.00124637 RI 8

as joint tenants
[Address]
NRI:
{[(10.00% MI OGL8 x 17.50% RI OGL8 x
2.00% WI OGL8) + (10.00% MI OGL8 x
20.00% RI OGL8 x 98.00% WI OGL8)] x
6.247449% TP1}
Agnes M. Granovsky, as Trustee of the 0.00124637 RI 9

Agnes M. Granovsky Trust
Agreement, dated August 9, 1984
and Amendment dated July 1,
1990
[Address]
NRI:
{[(10.00% MI OGL9 x 17.50% RI OGL9 x
2.00% WI OGL9) + (10.00% MI OGL9 x
20.00% RI OGL9 x 98.00% WI OGL9)] x
6.247449% TP1}
Geraldine Granovsky, for life, 0.00124637 RI 10

[Address]
with remainder to: Lucia F.
Granovsky15 and Christy A.
Klein16
NRI:
{[(10.00% MI OGL10 x 17.50% RI OGL10 x
2.00% WI OGL10) + (10.00% MI OGL10 x
20.00% RI OGL10 x 98.00% WI OGL10)] x
6.247449% TP1}
Alicia C. Meacham 0.00075101 RI 18

[Address]
NRI:
16.666667% MI OGL18 x 18.75% RI OGL18 x
15
[Address]
16
[Address]
August 9, 2014
Page 45
2.403227% TP3
Arden Durand 0.00075101 RI 19

[Address]
NRI:
16.666667% MI OGL19 x 18.75% RI OGL19 x
2.403227% TP3
B. LaVerne Lopez, for life, 0.00075101 RI 20

[Address]
with remainder to: Kevin Lopez, 17
Douglas Paul Broyles,18 Cheryl L.
Van Brand,19 Rita Michelle
Agnew,20
and Varyl Wayne Broyles21
NRI:
16.666666% MI OGL20 x 18.75% RI OGL20 x
2.403227% TP3
Christina Becker 0.00031159 RI 13

PO Box 187
Flagler, CO 80815
NRI:
{[(2.50% MI OGL13 x 17.50% RI OGL13 x
2.00% WI OGL13) + (2.50% MI OGL13 x
20.00% RI OGL13 x 98.00% WI OGL13)] x
6.247449% TP1}
Kevin T. Morris 0.00031159 RI 14

[Address]
NRI:
{[(2.50% MI OGL14 x 17.50% RI OGL14 x
2.00% WI OGL14) + (2.50% MI OGL14 x
20.00% RI OGL14 x 98.00% WI OGL14)] x
6.247449% TP1}
Billy E. Morris 0.00031159 RI 15

[Address]
NRI:
{[(2.50% MI OGL15 x 17.50% RI OGL15 x
2.00% WI OGL15) + (2.50% MI OGL15 x
20.00% RI OGL15 x 98.00% WI OGL15)] x
6.247449% TP1}
17
[Address]
18
[Address]
19
[Address]
20
[Address]
21
[Address]
August 9, 2014
Page 46
Elvira R. Parks 0.00031159 RI 16

[Address]
NRI:
{[(2.50% MI OGL16 x 17.50% RI OGL16 x
2.00% WI OGL16) + (2.50% MI OGL16 x
20.00% RI OGL16 x 98.00% WI OGL16)] x
6.247449% TP1}
Stat Oil Company 0.00863341 ORRI 1, 24

[Address]
NRI:
(2.50% ORRI OGL1 x 100.00% WI OGL1 x
100.00% MI OGL1 x 9.418265% TP8) +
(2.50% ORRI OGL24 x 100.00% WI OGL24 x
100.00% MI OGL24 x 25.115374% TP9)
Robot Royalty Company 0.00559855 ORRI 2-16,

[Address] 21
NRI:
(0.50% ORRI OGL8-16 x 98.00% WI OGL8-16
x 100.00% MI OGL8-16 x 6.247449% TP1)
+
(0.50% ORRI OGL11-12 x 98.00% WI OGL11-
12 x 50.00% MI OGL11-12 x 2.403227% TP3)
+
{[(2.00% ORRI OGL7 x 98.00% WI OGL7 x
75.00% MI OGL7) + (0.50% ORRI OGL2 x
98.00% WI OGL2 x 25.00% MI OGL2)] x
2.754843% TP4}
+
(2.00% ORRI OGL21 x 98.00% WI OGL21 x
100.00% MI OGL21 x 10.752519% TP5)
+
{[(2.00% ORRI OGL6,7,21 x 98.00% WI
OGL6,7,21 x 91.666667% MI OGL6,7,21) +
8.333333% MI OGL2)] x 10.360092% TP6}
+
(0.50% ORRI OGL2-5 x 98.00% WI OGL2-5 x
100.00% MI OGL2-5 x 15.673563% TP11)
Porter G. Iverson 0.00345337 ORRI 1, 24

[Address]
NRI:
(1.00% ORRI OGL1 x 100.00% WI OGL1 x
100.00% MI OGL1 x 9.418265% TP8) +
(1.00% ORRI OGL24 x 100.00% WI OGL24 x
100.00% MI OGL24 x 25.115374% TP9)
Boogie Holdings, Inc. 0.00188365 ORRI 22, 23

August 9, 2014
Page 47
[Address]
NRI:
3.00% ORRI OGL22-23 x 100.00% WI OGL22-
23 x 100.00% MI OGL22-23 x 6.278843% TP2
Krysta L. Shields 0.00172668 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 9.418265% TP8) +
(1.00% ORRI OGL24 x 50.00% WI OGL24 x
100.00% MI OGL24 x 25.115374% TP9)
Chance N. Neel 0.00155402 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 9.418265% TP8) +
(1.00% ORRI OGL24 x 45.00% WI OGL24 x
100.00% MI OGL24 x 25.115374% TP9)
Hidden Bench Oil LLC 0.00099822 ORRI 1

[Address]
NRI:
2.50% ORRI OGL1 x 42.395% WI OGL1 x
100.00% MI OGL1 x 9.418265% TP8
Jacob L. Mott 0.00034534 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 9.418265% TP8) +
(1.00% ORRI OGL24 x 10.00% WI OGL24 x
100.00% MI OGL24 x 25.115374% TP9)
Mike Neel 0.00031080 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 20.00% x 9.418265% TP8)
+
(1.00% ORRI OGL24 x 45.00% WI OGL24 x
100.00% MI OGL24 x 20.00% x 25.115374%
TP9)
Joleen Busby, Trustee of the Grant M. and Joleen Busby Revocable

0.00031080
Living Trust
ORRI Survivor’s
1, 24Trust
[Address]
NRI:
100.00% MI OGL1 x 20.00% x 9.418265% TP8)
August 9, 2014
Page 48
+
(1.00% ORRI OGL24 x 45.00% WI OGL24 x
100.00% MI OGL24 x 20.00% x 25.115374%
TP9)
WSC, LP 0.00025890 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 83.3% x 9.418265% TP8)
+
(1.00% ORRI OGL24 x 9.00% WI OGL24 x
100.00% MI OGL24 x 83.3% x 25.115374%
TP9)
Savanna Z. Neel 0.00020720 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 13.333333% x 9.418265%
TP8) +
(1.00% ORRI OGL24 x 45.00% WI OGL24 x
100.00% MI OGL24 x 13.333333% x
25.115374% TP9)
Wally Neel 0.00020720 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 13.333333% x 9.418265%
TP8) +
(1.00% ORRI OGL24 x 45.00% WI OGL24 x
100.00% MI OGL24 x 13.333333% x
25.115374% TP9)
Joshua L. Hawkins 0.00015697 ORRI 22, 23

[Address]
NRI:
0.50% ORRI OGL22-23 x 50.00% WI OGL22-
23 x 100.00% MI OGL22-23 x 6.278843% TP2
Lucid, LLC 0.00015697 ORRI 22, 23

[Address]
NRI:
0.50% ORRI OGL22-23 x 50.00% WI OGL22-
23 x 100.00% MI OGL22-23 x 6.278843% TP2
August 9, 2014
Page 49
Magic Energy, LLC 0.00012950 ORRI 22, 23

[Address]
NRI:
0.916667% ORRI OGL22-23 x 22.50% WI
OGL22-23 x 100.00% MI OGL22-23 x
6.278843% TP2
Colosses Acquisition LLLP 0.00012950 ORRI 22, 23

[Address]
NRI:
0.916667% ORRI OGL22-23 x 22.50% WI
OGL22-23 x 100.00% MI OGL22-23 x
6.278843% TP2
Mineral Hitch, LLC 0.00009842 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 47.5% x 13.333333% x
9.418265% TP8) +
(1.00% ORRI OGL24 x 45.00% WI OGL24 x
100.00% MI OGL24 x 47.5% x 13.333333% x
25.115374% TP9)
ROCK Resources, LLC 0.00009842 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 47.5% x 13.333333% x
9.418265% TP8) +
(1.00% ORRI OGL24 x 45.00% WI OGL24 x
100.00% MI OGL24 x 47.5% x 13.333333% x
25.115374% TP9)
Lime Co. 0.00005190 ORRI 1, 24

[Address]
NRI:
100.00% MI OGL1 x 16.70% x 9.418265% TP8)
+
(1.00% ORRI OGL24 x 9.00% WI OGL24 x
100.00% MI OGL24 x 16.70% x 25.115374%
TP9)
Tom O. Wing and Marnie M. Wing, as 0.00001036 ORRI 1, 24

joint tenants
[Address]
NRI:
100.00% MI OGL1 x 5.00% x 13.333333% x
August 9, 2014
Page 50
9.418265% TP8) +
(1.00% ORRI OGL24 x 45.00% WI OGL24 x
100.00% MI OGL24 x 5.00% x 13.333333% x
25.115374% TP9)
Johanna L. Howell and Belinda I. 0.00367349 NPRI 2-5

[Address]
NRI:
12.50% NPRI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5 x 15.673563% TP11
Steven R. Lutz 0.00367349 NPRI 2-5

[Address]
NRI:
12.50% NPRI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5 x 15.673563% TP11
Mary I. Kellogg, for life, 0.00367349 NPRI 2-5

[Address]
with remainder to: Irene Lee, 22
Tammy L. Green,23 and Christina
Taylor24
NRI:
12.50% NPRI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5 x 15.673563% TP11
Linda Wildman, Trustee of the Dixie 0.00367349 NPRI 2-5

Washington Trust
[Address]
NRI:
12.50% NPRI OGL2-5 x 100.00% MI OGL2-5 x
18.75% RI OGL2-5 x 15.673563% TP11
Tracey Rosa Granovsky 0.00173253 NPRI 11-12

[Address]
NRI:
(20.00% NPRI OGL11,12 x 60.00% MI
OGL11,12 x 17.50% RI OGL11,12 x 6.247449%
TP1) +
(20.00% NPRI OGL11,12 x 50.00% MI
OGL11,12 x 17.50% RI OGL11,12 x 2.403227%
TP3)
Leslie Granovsky 0.00173253 NPRI 11-12
22
[Address]
23
[Address]
24
[Address]
August 9, 2014
Page 51
[Address]
NRI:
(20.00% NPRI OGL11,12 x 60.00% MI
OGL11,12 x 17.50% RI OGL11,12 x 6.247449%
TP1) +
(20.00% NPRI OGL11,12 x 50.00% MI
OGL11,12 x 17.50% RI OGL11,12 x 2.403227%
TP3)
_________ _________
TOTAL: 1.00000000 1.00000000
TABULATION OF SUBJECT LEASES AND ASSIGNMENTS OF INTERESTS IN

SUBJECT LEASES
See Schedule I, attached hereto, for tabulations of the Subject Leases and assignments of
interests therein.
TAXES
1. Real Property Taxes. Real property taxes become delinquent, if not paid, after
March 1st following the year in which such taxes are levied. Delinquent real property taxes are
subject to interest penalties and become a lien against the assessed property in November of the
year such taxes become delinquent. If such taxes remain unpaid, the county auditor will
foreclose on the lien created by such delinquency in the second year following the year in which
the taxes become delinquent. See N.D.C.C. § 57-20-01 et seq. Tract Nos. 7 and 10 are tax
exempt as they are owned by the State of North Dakota. See N.D.C.C. § 57-02-08(2). Commented [BC26]: A title opinion should provide the basic
real property tax laws applicable to the lands, and distinguish the
effects of the same on fee, state, federal and tribal lands.
The Materials Examined indicate that property taxes for all portions of the Subject Lands
for the year 2012, and all prior years, are paid in full. Commented [BC27]: A title opinion should provide information
concerning the payment status of real property taxes, and in the
absence of such information, should require that the same be
REQUIREMENT: None; advisory only. obtained and examined.
2. Production Taxes. Personal property taxes become delinquent, if not paid, after
March 1st following the year in which such taxes are levied and are subject to interest penalties.
If such taxes remain unpaid, they become a lien against the real property of the owner of such
personal property in January following the year in which the taxes become delinquent.
Collection of personal property taxes entered as a lien on real estate may be enforced by
foreclosure. See N.D.C.C. § 57-22-01 et seq. Commented [BC28]: A title opinion should provide the basic
personal property (production-based) tax laws applicable to the
lands, although a discussion of ad valorem taxes is typically beyond
An examination of the online records maintained by the NDIC indicates the presence of the scope of a title opinion, unless specifically requested
active oil and gas wells on the Subject Lands. However, the Materials Examined contain no
information with respect to the payment of any State of North Dakota severance, conservation,
ad valorem or other production-based taxes which may burden production from the Subject
Lands and/or Leases. Accordingly, we make the following Requirement.
August 9, 2014
Page 52
REQUIREMENT: Company A should ensure the timely payment of all ad

valorem, severance, conservation taxes and/or other production-based taxes
applicable to hydrocarbon production from the Subject Lands and Leases. Commented [BC29]: In the absence of information concerning
the payment of personal property taxes, a title opinion should require
that the same be obtained and examined.
LIENS AND JUDGMENTS
Unpaid state income taxes are a lien against the debtor’s real and personal property,
attach in January 1st of each year without the recording of any instrument, and remain a lien until
paid or the real property is sold for payment of the arrearage. N.D.C.C. § 57-02 et seq. Federal
income tax liens have a similar effect on the debtor’s real and personal property, attach on the
date of tax assessment, and continue for a period of ten (10) years unless renewed. See I.R.C. §§
6502, 6321-22. Pursuant to N.D.C.C. § 28-20-13, a judgment becomes a lien upon the real
property of every person against whom such judgment is rendered, and continues for ten (10)
years from the time of docketing of judgment, if not renewed, unless satisfied See N.D.C.C. §
28-20-23. Commented [BC30]: A title opinion should provide the basic
lien and judgment law applicable to the lands and parties owning
interests.
The Materials Examined do not contain any evidence of record with respect to judgments
and liens; state or federal income tax liens; or miscellaneous liens arising pursuant to N.D.C.C. §
35-01, et. seq. against the owners of interests in the Subject Lands and Leases, or their respective Commented [BC31]: Miscellaneous liens, often referred to as
“mechanic’s liens,” are a bit of a different kind of encumbrance, and
predecessors in interest. issues concerning them should also be addressed in the “parties in
possession” portions of a title opinion.
However, the March 2013 Prior Opinion noted that the Liens and Judgments Report
provided in the March 2013 Prior Opinion’s Materials Examined indicated that there was a lien
and/or judgment filed against Luke Howell, as Case Type: Parenting Responsibility, Case No.
277. The Materials Examined do not contain any further information concerning the above-
referenced matter, nor have we examined any documents associated with the same. Accordingly,
we make the following Requirement.
REQUIREMENT: (i) Company A should obtain true and complete copies

of the above-referenced judgment from the applicable records of Black Gold
County, North Dakota, and provide a copy of the same to us for examination and
potential amendment of this Opinion consistent with this Comment and
Requirement. Commented [BC32]: A title opinion should require that copies
of all documents regarding liens and judgments of record be
submitted for examination.
Additionally, the Materials Examined do not indicate that the names of all of the owners
of interests in the Subject Lands and Leases as set forth in this Opinion were searched in the
records of the Office of the State Tax Commissioner; the United States Internal Revenue Service;
or the District Court of Black Gold County, North Dakota. Accordingly, we make the following
Requirement.
REQUIREMENT: (ii) Company A should investigate the applicable

records of the Office of the State Tax Commissioner; the United States Internal
Revenue Service; and the District Court of Black Gold County, North Dakota, and
August 9, 2014
Page 53
confirm that there are no active liens and/or judgments against any of the owners
of interests in the Subject Lands and Leases as set forth in this Opinion. Commented [BC33]: Because tax liens need not be recorded in
order to be effective, and because judgments can be issued and valid
but not recorded, a title opinion should require searches of the
repositories where the same are found.
MORTGAGES AND OTHER ENCUMBRANCES
Pursuant to N.D.C.C. § 35-03-14, unless extended, a mortgage on real property becomes

an ineffective encumbrance on real property if released of record or if a period of ten (10) years
passes from the final maturity date, provided the same is ascertainable from the record. If the
final maturity date of the mortgage is not ascertainable from the record, the lien of the mortgage
expires ten (10) years after the date the mortgage is filed for record. Additionally, security
interests in fixtures and personal property arising pursuant to North Dakota’s Uniform
Commercial Code, N.D.C.C. § 41-09 et seq., are perfected by the filing of financing statements
both in the county where the subject real property is located and with the North Dakota Secretary
of State, which remain effective for a period of five (5) years from the date of filing, unless
renewed. See N.D.C.C. § 41-09-86. Commented [BC34]: A title opinion should provide the basic
mortgage, deed of trust and UCC encumbrance law applicable to the
lands.
The Materials Examined contain the following mortgages encumbering previously
severed surface estates: Commented [BC35]: A title opinion should separately identify
and address encumbrances on severed surface estates, pre-leasing
mineral estates, post-leasing mineral estates and active leasehold
(a) Mortgage – Collateral Real Estate Mortgage, Security Agreement, Assignment of estates.
Rents and Leases, Fixture Filing and Financing Statement dated April 26, 2011, recorded
April 28, 2011, Reception No. 12345, from Pipeline Company LLC to Bank of America, N.A.;
as amended by First Amendment to Mortgage - Collateral Real Estate Mortgage, Security
Agreement, Assignment of Rents and Leases, Fixture Filing and Financing Statement, dated
January 4, 2013, recorded January 9, 2013, Reception No. 12345, in the amended principal
amount of $1,000,000,000.00.00, covering its interest in easements (h), (n), (o) and (w) as
tabulated in the Section of this Opinion titled “Easements and Right-of-Ways” below, with an
unknown maturity date; and
(b) Short Form Line of Credit Mortgage dated August 22, 2011, recorded
September 7, 2011, Reception No. 12345, from Shawn Howell and Tracy Howell to Wells Fargo
Bank, N.A. in a maximum principal amount of $215,400.00, covering Surface Tract No. 6(A),
with a maturity date of September 22, 2051.
As noted, the foregoing instruments only appears to affect interests in the previously-
severed surface estate of Surface Tract No. 6(A) and easements (h), (n), (o) and (w).
Accordingly, although surface estate access and agreements regarding the same may be impacted
by any foreclosure of the foregoing instrument, its ability to impact the interests of owners of the
mineral estate in the Subject Lands is minimal. In an abundance of caution, however, we make
the following Requirement.
REQUIREMENT: (i) Company A should investigate the encumbrances

set forth above, determine whether they are still an effective encumbrance against
the surface estate of Surface Tract No. 6(A) and easements (h), (n), (o) and (w),
August 9, 2014
Page 54
and be aware of the same with respect to surface access, and agreements
regarding the same, concerning the Subject Lands. Commented [BC36]: A title opinion should require an
investigation of severed surface estate encumbrances for surface use
agreement and easement purposes.
Additionally, the Materials Examined further contain the following mortgages and deeds
of trust encumbering leasehold interests in the Subject Lands:
(c)25 Mortgage – Collateral Real Estate Mortgage, Deed of Trust, Assignment of As-
Extracted Collateral, Security Agreement and Financing Statement dated June 22, 2007, recorded
July 10, 2007, Reception No. 12345, from Hidden Bench Oil LLC to Brian Malone, as Trustee
for the benefit of BNP Paribas, as Administrative Agent, and others; as amended by Amended
and Restated Mortgage – Collateral Real Estate Mortgage, Deed of Trust, Assignment of As-
Extracted Collateral, Security Agreement and Financing Statement, dated February 26, 2010,
recorded May 7, 2010, Reception No. 12345; as amended by First Amendment and Supplement
to Amended and Restated Mortgage - Collateral Real Estate Mortgage, Deed of Trust,
Assignment of As-Extracted Collateral, Security Agreement and Financing Statement, dated
January 21, 2011, recorded February 15, 2011, Reception No. 12345; and as amended by Second
Amended and Restated Mortgage - Collateral Real Estate Mortgage, Deed of Trust, Assignment
of As-Extracted Collateral, Security Agreement and Financing Statement, dated April 5, 2013,
recorded April 22, 2013, Reception No. 12345, in the original principal amount of
$2,500,000,000.00, covering Lease No. 1, with a maturity date of April 5, 2018.
(Prior DDOTO 2 Examiner’s Note – this mortgage is a lien on the working

interest of Hidden Bench Oil only.)
March 2013 Examiner’s Note: The Materials Examined contain a Second

Amendment to Amended and Restated Mortgage-Collateral Real Estate
Mortgage, Deed of Trust, Assignment of As-Extracted Collateral, Security
Agreement and Financing Statement dated effective October 6, 2011, recorded
November 8, 2011, Reception No. 12345, from Hidden Bench Oil, LLC to BNP
Paribas, as Administrative Agent, in the original principal amount of
$1,000,000,000.00, covering Lease No. 1 and other oil and gas leases, with an
unknown maturity date.26
25
Prior DDOTO No. 2 notes that Mortgage (c) as tabulated above, burdens Lease No. 1 in Section 2 we cannot
warrant the accuracy of the same for interests in Section 2, and accept no liability for errors or omissions therein.
26
In a Memorandum of Assignment of Liens and Security Interests dated effective July 1, 2012, recorded
August 14, 2012, Reception No. 12345, BNP Paribas, as Existing Agent (Assignor), Wells Fargo Bank, National
Association, as Successor Agent (Assignee), and Hidden Bench Oil LLC, as Mortgagor, Assignor assigned all of
Assignor’s powers of attorney, liens, security interests and all other rights, interests, benefits, remedies and
privileges in the USA SWD Well and Lease No. 1 to Assignee. Although copies of the reference instruments were
not included in the Materials Examined, however, they are set forth within this instrument. In the interest of brevity,
we have not listed the numerous instruments contained in the same. Upon the request of Company A, we will
provide a detailed list of all of the reference instruments contained in the same.
August 9, 2014
Page 55
(d)27 Third Amended and Restated Deed of Trust, Mortgage, Security Agreement,
Assignment of Production, Financing Statement and Mortgage-Collateral Real Estate Mortgage,
dated March 2, 1995, recorded March 13, 1995, Reception No. 12345, from the Stokes, LLC to
BankOne, Texas, N.A. Commented [BC37]: A title opinion should identify each
amendment and/or restatement of an encumbrance, allowing the
reader to track the history of the encumbrance against the lands.
(Prior DDOTO 3 Examiner’s Note – Encumbers the working interest of Redoil,
L.L.C. only.)
(e) Mortgage, Security Agreement, Assignment of Production and Financing

Statement, dated April 14, 1998, recorded April 29, 1998, Reception No. 12345, from Redoil
L.L.C. to BankOne, Texas, N.A.

L.L.C. only.)
(f) Amended, Restated and Supplemental Mortgage, Security Agreement,

Assignment of Production and Financing Statement, dated September 30, 1998, recorded
November 2, 1998, Reception No. 12345, from Redoil L.L.C. to BankOne, Texas, N.A.

L.L.C. only.)
(g) Amended and Restated Mortgage, Security Agreement, Assignment of

Production, Fixture Filing and Financing Statement, dated July 8, 2009, recorded July 24, 2009,
Reception No. 12345, from Redoil, L.L.C. to J.P. Morgan Chase Bank, N.A.

L.L.C. only.)
(h) Master Assignment, dated May 26, 2010, recorded June 7, 2010, Reception
No. 12345, from Doubledrill, Inc., to CIT USA, Inc., CIT Bank and Macquarie Bank Limited.
(Prior DDOTO 3 Examiner’s Note – Encumbers the working interest of

Doubledrill, Inc. only.)
(i) Amended and Restated Mortgage, Collateral Real Estate Mortgage, Line of Credit
Mortgage, Deed of Trust, Assignment of As Extracted Collateral, Security Agreement, Fixture
Filing and Financing Statement, dated May 26, 2010, recorded June 7, 2010, Reception
No. 12345, from Doubledrill, Inc. to Macquarie Holdings (USA) Inc., as Trustee.

Doubledrill, Inc. only.)
27
Mortgages (d)-(j) have been restated as they appear in the Prior DDOTO No. 3; accordingly, we cannot warrant
the accuracy of the same and accept no liability for errors or omissions therein.
August 9, 2014
Page 56
(j) Amendment to and Assignment of Mortgages, Security Agreements, Assignments

of Production, Fixture Filings and Financing Statement, dated June 10, 2011, recorded
July 8, 2011, Reception No. 12345 from Redoil, L.L.C. to J.P. Morgan Chase Bank, N.A. and
BOAF, N.A. dba Bank of Texas.

Quiethouse Corporation only.)
March 2013 Examiner’s Note - Hays Holding Company, formerly28 Hay

Development Company, is successor by merger to Quiethouse Corporation.
(k) Second Amended and Restated Mortgage, Collateral Real Estate Mortgage, Line
of Credit Mortgage, Deed of Trust, Assignment of As-Extracted Collateral, Security Agreement,
Fixture Filing and Financing Statement dated effective August 8, 2011, recorded
September 20, 2011, Reception No. 12345, from Doubledrill, Inc. to Macquarie Holdings
(USA), Inc., as Trustee for the benefit of Macquarie Bank Limited, as Administrative Agent, in
the original principal amount of up to $1,000,000,000.00, covering Lease Nos. 18-20 and other
oil and gas leases with a maturity date of May 26, 2014.29
(l) UCC Financing Statement dated October 4, 2011, recorded October 4, 2011,
Reception No. 12345, from Doubledrill, Inc. to Macquarie Bank Limited, covering Lease Nos.
18-20 and other interests.30
Each of the foregoing instruments lists and purports to encumber active, unexpired
leasehold interests in the Subject Lands. Accordingly, we make the following Requirement.
REQUIREMENT: (ii) Company A should contact the mortgagees and/or

secured parties of the above-referenced mortgages, financing statements and/or
deeds of trust, and obtain written instructions as to whether the payment of
production proceeds should be made to the mortgagor and/or debtor, or to the
current mortgagee and/or secured party, and confirm the same through the
execution of valid division orders. Commented [BC38]: With respect to encumbrances upon active
leaseholds, the title opinion should always require that the operator
obtain written payment instructions. When an encumbrance
Moreover, the computer research conducted by ATC indicates the existence of numerous covering a mineral estate is pre-lease in nature, a title opinion should
always require a subordination agreement, although the negotiations
financing statements filed pursuant to North Dakota’s Uniform Commercial Code, N.D.C.C. § here can often be difficult. A post-leasing encumbrance covering
41-09-01 et seq., against the following working, mineral and net revenue interest owners (or their the mineral estate is the least onerous encumbrance.
predecessors in interest): Commented [BC39]: UCC encumbrances should be classified
as expired or active first, and then discussed appropriately. In
addition, to the extent the names of certain owners of interests in the
lands have not been searched, the same should be required, at least
28
in the records of the state where the lands are located, and
Hays Holding Company is successor by name change to Hay Development Company, as evidenced by an preferably, in the state where each potential UCC debtor resides.
Affidavit of Name Change, dated July 12, 2010, recorded July 23, 2010, Reception No. 12345.
29
Although copies of the referenced instruments were not included in the Materials Examined, they are set forth
herein as listed in Mortgage (i) as tabulate above, from Doubledrill, Inc. to Macquarie Holdings (USA) Inc., as
Trustee for the benefit of Macquarie Bank Limited, as Administrative Agent.
30
Id.
August 9, 2014
Page 57
(a) Luke Howell;
(b) Belinda Howell;
(c) Belinda I. Howell;
(d) Johanna L. Howell;
(e) Shawn Howell;
(f) Bistate Oil Management Corp.;
(g) Voyager Exploration, LLC;
(h) Black Gold County Water Resource District;
(i) Bruce Meacham;
(j) Y-Oil Corp.;
(k) Doubledrill, Inc.;
(l) Hidden Bench Oil LLC;
(m) Palace Exploration Company;
(n) Roda Drilling L.P.;
(o) Hays Holding Company;
(p) Pipeline Company LLC;
(q) Triangle USA Petroleum Corporation;
(r) Zavanna, LLC; and
(s) Zenergy, LLC.
The Materials Examined do not include any substantive information concerning the
above-referenced financing statements. Accordingly, we make the following Requirement.
REQUIREMENT: (iii) Company A should obtain copies of the above

financing statements from the applicable records of Black Gold County, and/or
the Secretary of State of North Dakota and submit the same to this office for
August 9, 2014
Page 58
examination and amendment of this Opinion consistent with this Comment and
Requirement.
EASEMENTS AND RIGHTS-OF-WAY
The Materials Examined indicate the presence of the following easements and rights-of-
way affecting the Subject Lands. Easements labeled (u)-(z) and (aa)-(ff) have been reproduced
verbatim from the Prior DDOTO 1-6. In addition to those listed in the Prior DDOTO 1-6, the
Materials Examined contain Easements labeled (a)-(t)-(gg)-(jj): Commented [BC40]: A title opinion should describe the basic
location, validity and ownership of all easements and rights-of-way
of record, although highly specific details, such as the specific legal
(a) United States Patent Nos. 800, 62585, 258484, 255512, 5864161, 648841 and description contained in an as-built pipeline survey, often provide
too much information for all but the most conspicuous easements
514281, as more particularly described below in Comment and Requirement No. 1, each contain and rights-of-way.
a reservation in favor of the United States for the construction of ditches and canals;
(b) By County Road Easement dated April 16, 1948, recorded March 4, 1953, Book 3
of Misc., Page 2, Henry Sandborn conveyed to Black Gold County for use as a public highway,
an easement over and across the NE/4NW/4 of Section 11, being a portion of Tract No. 6;
(c) By County Road Easement dated April 16, 1948, recorded March 4, 1953, Book 3
of Misc., Page 23, Steve & Lisa M. Lutz conveyed to Black Gold County for use as a public
highway, an easement over and across the NE/4SW/4 of Section 11, being a portion of Tract No.
11;
(d) By County Road Easement dated April 16, 1948, recorded March 4, 1953, Book 3
highway, an easement over and across the NE/4SW/4 of Section 11, being a portion of Tract No.
11;
(e) By County Road Easement dated April 16, 1948, recorded March 4, 1953, Book 3
highway, an easement over and across the SW/4SW/4 of Section 11, being a portion of Tract No.
11;
(f) By Easement dated February 13, 1979, recorded September 25, 1979, Book 20 of
Deeds, Page 53, Marie A. Sandborn, Johanna L. Howell and Belinda I Howell conveyed to
Target Co. Oil Company an easement for use as a private road over and across the NE/4, being a
portion of Tract No. 11, and the NE/4NW/4, being a portion of Tract No. 6.31 The last owners of
record are XO Production Company, Inc., and Hays Holding Company, formerly Hay
Development, successor by merger to Quiethouse Corporation;
(g) By Pipeline Easement dated January 14, 1980, recorded February 25, 1980, Book
27 of Misc., Page 11, Steven Lutz and Lisa Lutz conveyed to Target Co. Oil Company an
31
The Easement in Subparagraph (f) also included a Lot 3 of Section 11, however no such lot exists for Section 11.
August 9, 2014
Page 59
easement for a pipeline across a portion of the SE/4 of Section 11 being a portion of Tract No. 9.
The last owners of record are Hidden Bench Oil, LLC, XO Production Company, Inc., Super
Income Program 2 and Super Production Company;
(h) By Right-of-Way Agreement dated April 16, 1980, recorded April 23, 1980,
Book 29 of Misc., Page 28, Steven Lutz and Lisa M. Lutz conveyed to Wesco Pipe Line
Company32 an easement for a pipeline across a portion of the SE/4 of Section 11 being a portion
of Tract No. 9. The last owner of record is Plains Pipeline Company;
(i) By Right-of-Way Easement dated May 3, 1981, recorded May 27, 1981, Book 23
of Misc., Page 8, Steve and Lisa Lutz conveyed to McKenzie Electric Cooperative an easement
for an electric distribution system over and across a portion the SE/4 of Section 11, being a
portion of Tract No. 9;
(j) By Pipeline Easement dated July 22, 1982, recorded August 30, 1982, Reception
No. 12345, Johanna L. Howell and Belinda Howell conveyed to Target Co. Oil Company an
easement for a pipeline across a portion of the SE/4NE/4 of Section 11, being a portion of Tract
No. 9. The last owners of record are Hidden Bench Oil, LLC, North River Energy, Inc., Super
Income Program 2 and Super Production Company;
(k) By Pipeline Easement dated July 21, 1982, recorded September 9, 1982,
Reception No. 12345, Steven Lutz and Lisa M. Lutz conveyed to Target Co. Oil Company an
easement for a pipeline across a portion of the N/2SE/4 of Section 11, being a portion of Tract
No. 9. The last owners of record are Hidden Bench Oil, LLC, Hays Holding Company, formerly
Hays Development Company, successor by merger to Quiethouse Corporation, and Sky Venture;
(l) By Right-of-Way Easement dated December 3, 1982, recorded May 3, 1983,

Reception No. 12345, Johanna L. Howell conveyed to McKenzie Electric Cooperative an
easement for an electric distribution system over and across the SE/4 of Section 11, being a
portion of Tract No. 9;
(m) By Right-of-Way Easement dated November 16, 1982, recorded May 3, 1983,
Reception No. 12345, Steven Lutz conveyed to McKenzie Electric Cooperative an easement for
an electric distribution system over and across Lot 1 of Section 11, being a portion of Tract No.
6;
(n) By Pipeline Right-of-Way Grant dated September 23, 1982, recorded

January 30, 1985, Reception No. 12345, Steven Lutz and Lisa M. Lutz conveyed to Wesco Pipe
Line Co.,33 an easement for a pipeline across the SE/4 of Section 11, being a portion of Tract No.
9. The last owner of record is Pipeline Company;
32
We note that the BLM Corporate Name Change and Merger Index indicates that Wesco Pipe Line Company
changed its name to WaltMarkPipeline Inc.
33
Id.
August 9, 2014
Page 60
(o) By Pipeline Right-of-Way Grant dated September 23, 1982, recorded

January 30, 1985, Reception No. 12345, Johanna L. Howell and Belinda I. Howell conveyed to
Wesco Pipe Line Co.,34 an easement for a pipeline across the NE/4 of Section 11, being a portion
of Tract No. 9. The last owner of record is Pipeline Company;
(p) By Right-of-Way Grant dated June 24, 1991, recorded December 9, 1991,
Reception No. 12345, Steven Lutz and Lisa M. Lutz conveyed to WMP Gathering Systems, Inc.
an easement for a pipeline over and across the S/2 of Section 11, being a portion of Tract Nos. 9
and 11. The last owner of record is Bear Paw Energy, Inc.;
(q) By Right-of-Way Grant dated June 24, 1991, recorded December 9, 1991,
Reception No. 12345, Johanna L. Howell and Belinda I. Howell conveyed to WMP Gathering
Systems, Inc. an easement for a pipeline over and across the NE/4 of Section 11, being a portion
of Tract No. 9. The last owner of record is North River Energy, Inc.;
(r) By Right-of-Way Easement dated September 15, 1998, recorded

January 17, 2001, Reception No. 12345, Steven Lutz conveyed to McKenzie Electric
Cooperative an easement for an electric distribution system over and across the S/2 and S/2NW/4
of Section 11, being a portion of Tract Nos. 8, 9 and all of Tract No. 11;35
(s) By Right-of-Way Easement dated March 5, 2001, recorded April 5, 2002,

Reception No. 12345, Johanna L. Howell conveyed to McKenzie Electric Cooperative an
easement for an electric distribution system over and across all of Section 11, being a portion of
Tract Nos. 6, 8, and all of Tract Nos. 9-11;
(t) By Right-of-Way Easement dated April 3, 2006, recorded November 16, 2006,
Reception No. 12345, Steven Lutz conveyed to McKenzie Electric Cooperative Inc., an
easement for an electric distribution system over and across a portion of the W/2 of Section 11,
being a portion of Tract Nos. 6, 8, and all of Tract No. 11;
(u) County Road Easement dated April --, 1948, recorded May 4, 1948, Reception
No. 12345 in Book 3 Misc. Page 27, from Robert Granovsky to Black Gold County for a strip of
land 82 feet wide lying 41 feet on each side of the center line of an extension of county road
No. 89 over and across Lot 1, Section 2, Township 180, Range 104. Such center line being
indicated on the plat map imposed hereon. Tract contains 2.00 acres more or less. Note: There is
no plat with the instrument examined showing the center line;
(v) Right-of-Way Easement, dated July 20, 1983, recorded September 16, 1983,
Reception No. 12345. Johanna L. Howell and Belinda I. Howell grant to The Mountain States
Telephone and Telegraph Company, the right to construct, operate maintain and remove
communication facilities across a strip of land 20 feet in width situated in the SE/4SW/4, SE/4,
34
Id.
35
We note that the Easement listed in subparagraph (r) above appears to have been executed on September 15, 1998,
but not recorded until January 17, 2001. We have presumed that those parties who purchased Tracts Nos. 8-9 and
11, before the Easement was recorded, had actual notice of the same.
August 9, 2014
Page 61
S/2NE/4 of Section 2, Township 180, Range 104, the centerline being more particularly
described on Exhibit A to the easement;
(w) Easement, dated January 16, 1989, recorded June 12, 1990, Reception No. 12345.
Johanna L. Howell and Belinda I. Howell grant to WaltMark Pipeline, Inc. an easement for the
purpose of constructing, operating, inspecting, maintaining, protecting, repairing, replacing,
change the size of, and removing a pipeline or pipelines, or other appurtenances, for the
transportation of oil, gas, petroleum, etc. A 50’ permanent easement in a portion of the E/2 of
Section 2, Township 180, Range 104, and other lands;
By Assignment dated December 2, 1996, recorded January 30, 1997, Reception

No. 12345, WaltMark Pipe Line, Inc. conveyed to Pipe Line Company all of assignor’s interest
in the above described easement.
March 2013 Examiner’s Note: The last owner of record is Pipeline Company.
(x) Right-of-Way Easement, dated December 3, 1983, recorded May 3, 1983,

Reception No. 12345. Johanna L. Howell grants to McKenzie Electric Cooperative a 99-year
easement for overhead and underground electric facilities located within 25 feet on each side of
the centerline of the facilities constructed in the E/2 of Section 2, Township 180, Range 104.
The easement grants the right to construct, reconstruct, operate, inspect, maintain and repair its
facilities, as well as the right to keep the easement clear of all buildings, structures or other
obstructions;
(y) Right-of-Way Easement, dated April 25, 1994, recorded April 7, 1995, Reception
No. 12345. Johanna L. Howell grants to McKenzie Electric Cooperative a 99-year easement for
overhead and underground electric facilities located within 25 feet on each side of the centerline
of the facilities constructed in the S/2 of Section 2, Township 180, Range 104. The easement
grants the right to construct, reconstruct, operate, inspect, maintain and repair its facilities, as
well as the right to keep the easement clear of all buildings, structures or other obstructions;
(z) Right-of-Way Easement, dated September 15, 1998, recorded January 17, 2001,
the centerline of the facilities constructed in the SE/4 and SE/4NE/4 of Section 2, Township 180,
Range 104. The easement grants the right to construct, reconstruct, operate, inspect, maintain
and repair its facilities, as well as the right to keep the easement clear of all buildings, structures
or other obstructions;
(aa) Right-of-Way Easement, dated November 12, 2002, recorded February 25, 2004
the centerline of the facilities constructed in the E/2 and SE/4SW/4 of Section 2, Township 180,
Range 104, and other lands. The easement grants the right to construct, reconstruct, operate,
August 9, 2014
Page 62
inspect, maintain and repair its facilities, as well as the right to keep the easement clear of all
buildings, structures or other obstructions;
(bb) Right-of-Way Easement, dated May 7, 1991, recorded July 9, 1991, Reception
No. 12345. Johanna L. Howell grants to McKenzie Electric Cooperative a 99-year easement for
overhead and underground electric facilities located within 25 feet on each side of the centerline
of the centerline of the facilities constructed in the S/2N/2 of Section 2, Township 180, Range
104. The easement grants the right to construct, reconstruct, operate, inspect, maintain and
repair its facilities, as well as the right to keep the easement clear of all buildings, structures or
other obstructions;
(cc) County Road Easement, dated April 16, 1948, recorded May 4, 1948, Reception
No. 12345 in Book 3 Misc. Page 28, from Henry Sandborn, Jr. to Black Gold County for a strip
of land 82 feet wide lying 41 feet on each side of the center line of an extension of county road
No. 89 over and across the SE/4NE/4 of Section 2, Township 180, Range 104. Such center line
being indicated on the plat hereon. Tract contains 2.82 acres more or less. Note: There is no plat
instrument examined showing the center line;
(dd) County Road Easement dated April 16, 1948, recorded May 4, 1948, Reception
No. 89 over and across the NE/4SE/4 of Section 2, Township 180, Range 104, such center line
being indicated on the plat map imposed hereon. Tract Contains 1.66 acres more or less. Note:
There is no plat with the instrument examined showing the centerline;
(ee) County Road Easement dated April 16, 1948, recorded May 4, 1948, Reception
No. 89 over and across the NW/4SE/4 and NE/4 of Section 2, Township 180, Range 104, such
center line being indicated on the plat map imposed hereon. Tract Contains 1.72 acres more or
less. Note: There is no plat with the instrument examined showing the centerline;
(ff) County Road Easement dated April 16, 1948, recorded May 4, 1948, Reception
No. 89 over and across the SE/4SW/4 of Section 2, Township 180, Range 104, such center line
being indicated on the plat map imposed hereon. Tract Contains 1.16 acres more or less. Note:
There is no plat with the instrument examined showing the centerline;
(gg) By Right-of-Way Easement dated February 23, 2012, recorded March 14, 2012,
Reception No. 12345, Angela Granovsky Trustee of the Tracie Granovsky Trust and Robert and
Tracie Granovsky Trust conveyed to the Black Gold County Water Resources District, an
easement for water pipelines over and across Lot 1 of Section 2, being a portion of Tract No. 1;
August 9, 2014
Page 63
(hh) By Right-of-Way Easement dated November 28, 2012, recorded January 2, 2013,
Reception No. 12345, Johanna L. Howell and Belinda I. Howell conveyed to the Black Gold
County Water Resource District an easement for water pipelines over and across Tract Nos. 2
and 8 and a portion of Tract Nos. 5 and 6;
(ii) By Right-of-Way Easement dated November 29, 2012, recorded

January 23, 2013, Reception No. 12345, Shawn Howell conveyed to the Black Gold County
Water Resource District an easement for water pipelines over and across a portion of Tract
No. 6; and
(jj) By Right-of-Way Easement dated November 29, 2012, recorded

January 23, 2013, Reception No. 12345, Johanna L. Howell and Belinda I. Howell conveyed to
the Black Gold County Water Resource District an easement for water pipelines over and across
Tract Nos. 2 and 8 and a portion of Tract Nos. 5 and 6.
REQUIREMENT: (i) Company A should be aware of the easements and

rights-of-way traversing the Subject Lands, and the rights of the owners thereof,
and conduct its operations on the Subject Lands in a manner that will not interfere
with the use and enjoyment of such easements and rights-of-way by the owners
thereof. Commented [BC41]: A title opinion should advise the operator
to be familiar with and respect the use of all easements and rights-of-
way on the lands that may be impacted by the operations.
SCOPE OF UPDATED OPINION AND STATUS OF MARCH 2013 PRIOR OPINION’S

COMMENTS AND REQUIREMENTS
The March 2013 Prior Opinion has been supplemented by thirty-one (31) additional
instruments filed of record since the March 2013 Prior Opinion’s August 17, 2012 certification
date. This Opinion is subject to the Comments and Requirements found in the March 2013 Prior
Opinion. For purposes of this Opinion, in the interest of brevity and in order to provide
Company A with a single comprehensive opinion, we have not exhaustively listed the status of
the Comments and Requirements found in the March 2013 Prior Opinion; rather, we have
updated the ownership of the Subject Lands and Leases pursuant to the Materials Examined, and
simply restated all unsatisfied Comments and Requirements. For those Comments and
Requirements that have been satisfied, we have provided a short summary of each below. Commented [BC42]: When a title opinion is an update or
supplemental opinion, it should describe the precise scope of the
new material, how the old materials were addressed by the examiner,
1. Comment and Requirement No. 3(i) required Company A to obtain an NDIC and provide the reader with a “roadmap” of the status of the same.
The prior opinion status set forth here is highly complex,
order creating a spacing unit consisting of all of the Subject Lands. incorporating multiple prior opinions.
STATUS: (i) Satisfied by NDIC Order No. 21514 dated

February 16, 2013 in Case No. 1051.
Comment and Requirement No. 3(ii)-(iii) required Company A to pool, either voluntarily
or statutorily, all fee leasehold working interests and any unleased fee mineral interest.
August 9, 2014
Page 64
STATUS: (ii) Partially satisfied by Declaration of Pooling dated

March 8, 2013, recorded April 3, 2013, Reception No. 471251, pooling interests
covered by Lease Nos. 1-24 and Order No. 102025 dated February 2, 2013 in
Case No. 15933.
2. Comment and Requirement No. 4 required Company A to lease the noted

unleased mineral owners.
STATUS: Satisfied by Lease No. 25.
3. Comment and Requirement No. 8 required Company A to file Overriding Royalty

Assignment Nos. 14 and 15, among others, with the BLM Lease File for Lease Nos. 24 and 1,
respectively.
STATUS: Partially satisfied by Assignment of Record Title Interest in a

Lease for Oil and Gas or Geothermal Resources dated August 6, 2012 and filed
August 13, 2012 in the BLM Lease File for Lease No. 24 (NDM-95000); and by
Assignment of Record Title Interest in a Lease for Oil and Gas or Geothermal
Resources dated August 6, 2012 and filed August 13, 2012 in the BLM Lease File
for Lease No. 1 (NDM-99000).
4. Comment and Requirement No. 10 required Company A to obtain and record an

Affidavit of Identity to clarify that Mary I. Kellogg, f/k/a Mary Lund, f/k/a and Mary Hubert
refer to one and the same person.
STATUS: Satisfied by Affidavit of Identity dated April 4, 2013, recorded

April 12, 2013, Reception No. 12345.
5. Comment and Requirement No. 16 required Company A to obtain and record a

stipulation and cross-conveyance between Johanna L. Howell and Belinda I. Howell and Luke
Howell confirming their respective interests in the SE/4NW/4, being a portion of Tract No. 8, the
SE/4, being a portion of Tract No. 9 and all of Tract No. 11.
STATUS: Satisfied by Stipulation of Interest and Cross-Conveyance dated

April 19, 2013, recorded April 30, 2013, Reception No. 12345.
6. Comment and Requirement No. 22 was advisory concerning the possible

application of the dormant mineral statutes with regard to any unleased mineral owners.
STATUS: Advisory only; however, all unleased mineral owners have been
leased. Accordingly, this Requirement has been removed.
7. Comment and Requirement No. 28 required Company A to obtain Ratifications of

Lease Nos. 2-7, 11, 12 and 18-21 which expressly provide that the leases cover all interests in the
leased lands, including all accretions thereto, to the low watermark.
August 9, 2014
Page 65
STATUS: Partially satisfied by several Ratifications of Oil and Gas Leases

dated April 12, 2013, recorded April 30, 2013, Reception Nos. 12345-12349.
However, ratifications have not been obtained for Lease Nos. 6-7, 11, 12, and 18-
21. See Comment and Requirement No. 28(iii).
8. Comment and Requirement Nos. 2, 3, 8, 28, and 29 have been supplemented

and/or amended to provide additional or updated information therein.
9. Comment and Requirement Nos. 35-39 are new additions to this Opinion and
have been listed in the Section of this Opinion titled “Additional Comments and Requirements.”
STATUS OF DDOTO 1-6’S PRIOR COMMENTS AND REQUIREMENTS
This Opinion is an update to the March 2013 Prior Opinion, which was partially an
update to Prior DDOTO 1-6.36 The March 2013 Prior Opinion was subject to the status of the
comments and requirements found in the Prior DDOTO 1-6. We have relied solely upon the
Materials Examined, including the Prior DDOTO 1-6, and we accept no liability with regards to
errors or omissions and matters not disclosed therein. The following refers to the comments and
requirements found in the Prior DDOTO 1-6 (collectively and respectively, “Prior Comment and
Requirement Nos. 1-79”). Commented [CBD43]: The handling of prior, but updated, title
comments and requirements can be complex. The examining
attorney should discuss options with the client, rather than offering
The Following Comments and Requirements are Common to Prior DDOTO 1-6: the “one size fits all” version or format . . .
1. Prior DDOTO 1-6 Comment and Requirement No. 1 required that an affidavit of
possession together with disclaimer of mineral interest from persons in possession if other than
the record title owner should be submitted for examination. Such affidavit should also include
the results of your investigation relevant to the existence or non-existence of any highway or
railroad right-of-way, schools, churches, cemeteries, placer and lode mining locations, if any,
located at any time on the captioned lands.
STATUS: Unsatisfied. See Comment and Requirement Nos. 31 and 32.
2. Prior DDOTO 1-6 Comment and Requirement No. 2 was an advisory comment
regarding the limitations of materials reviewed in preparation of the DDOTO 1-6.
STATUS: Advisory only.
3. Prior DDOTO 1-6 Comment and Requirement No. 3 required that if a spacing
unit is established by the North Dakota Industrial Commission which incorporates the captioned
lands with additional lands, then a pooling of the spacing unit must be accomplished and
36
For more information on Prior DDOTO 1-6, see Exhibit A. We note that Prior DDOTO 1-6 covered various
tracts in Section 2.
August 9, 2014
Page 66
documentation recorded in the Black Gold County Recorder’s Office. Prior DDOTO 2 also
required a communitization agreement from the Bureau of Land Management for the S/2SE/4 of
Section 2, being a portion of Tract No. 8, and recording of the same in the Black Gold County
Recorder’s Office.
STATUS: Partially satisfied. See Comment and Requirement No. 3.
4. Prior DDOTO 1-6 Comment and Requirement Nos. 7, 13, 32, 13, 13 and 11,
respectively, required that in the event of production, an Affidavit of Production pursuant to
N.D.C.C. § 47-16-40 will need to be obtained and recorded. The affidavit should evidence that
an oil and gas well was completed in the captioned lands, that commercial production of oil and
gas has been obtained therefrom, and that the tabulated oil and gas leases are being held by said
production.
STATUS: Unsatisfied. See Comment and Requirement No. 2.
5. Prior DDOTO 1-6 Comment and Requirement Nos. 15, 15, 33, 15, 15, and 13,
respectively, was an advisory comment regarding the requirement to execute a royalty division
order indicating to whom the royalty proceeds attributable to the Tract Nos. 1-5, Lot 6,
SE/4SW/4 of Section 2, being a portion of Tract No. 6, all of the Tract No. 7 mineral interest,
and the S/2SE/4 being a portion of Tract No. 8 are to be paid.
respectively, was an advisory comment regarding instruments indexed against Tract Nos. 1-11
by parties who are strangers to title in Tract Nos. 1-11.
STATUS: Advisory only. See also Comment and Requirement No. 15.
The Following Comments and Requirements are Common to Prior DDOTO 1 and 3:
August 9, 2014
Page 67
9. Prior DDOTO 1 and 3 Comment and Requirement Nos. 12 and 15 respectively

assumed that Robert Granovsky and Tracie Granovsky intended to assign 20.00% of their royalty
interest to Angela Granovsky, and required that a stipulation of interest from Robert Granovsky
and Tracie Granovsky, Angela Granovsky, as Trustee of the Tracie Granovsky Trust , and
Angela Granovsky, as Trustee of the Robert and Tracie Granovsky Trust , specifying the mineral
interest and royalty interest owned by each of them in Tract Nos. 1 and 3, should be obtained and
record with the Black Gold County Recorder.
STATUS: Unsatisfied.
The Following Comments and Requirements are Common to Prior DDOTO 1, 2 and 4-6:
10. Prior DDOTO 1, 2 and 4-6 Comment and Requirement Nos. 13, 12, 12, 12 and
10, respectively, was an advisory comment which stated that the prior examiner has disregarded
all documents indexed against Tract Nos. 1, 2, the NE/4SW/4 and N/2SE/4 of Section 2, being a
portion of Tract No. 5, the SE/4SW/4, being a portion of Tract No. 6, and the S/2SE/4, being a
portion of Tract No. 8, that cover the riverbed of the Missouri River in Section 2, although also
noting that such documents will impact other tracts within Section 2.
The Following Comments and Requirements are Unique to Prior DDOTO 1:
11. Prior DDOTO 1 Comment and Requirement No. 4 required that prior to
commencing drilling operations, (1) you should verify that real estate taxes are current for the
captioned lands; (2) the records of the Black Gold County Recorder and of the Black Gold
County Clerk of District Court should be reviewed to determine if there are any unsatisfied tax
liens or judgments against any of the owners identified in this Title Opinion. In addition, the
following names should also be checked: Jane Aiken, Angel Frayser, Angela Granovsky, as
Trustee of the Robert and Tracie Granovsky Trust, and Angela Granovsky. If real estate taxes
are delinquent, that information should be provided to us. Further, if any unsatisfied judgments
or tax liens are indicated, copies thereof should be provided to us for our examination and further
comment thereon.
STATUS: Part (1) satisfied; See also Taxes as provided in this Opinion. Part
(2) unsatisfied. See also Liens and Judgments as provided in this Opinion.
12. Prior DDOTO 1 Comment and Requirement No. 5 required that Company A
should obtain and record releases from the current record owner37 of the following Oil and Gas
Leases:
(1) Oil and Gas Lease dated April 16, 2004, recorded June 15, 2004,
Reception No. 12345, from Angela Granovsky, covering Township 180N, Range 104W: Section
37
According to Prior DDOTO 1 these leases were last held of record by R.T. Wise, Inc.
August 9, 2014
Page 68
2: Lots 1, 2, Section 12: NE/4NE/4, and Township 180N, Range 103W: Section 6: Lot 7, Section
7: Lots 1 and 2, for a primary term of 3 years;
Reception No. 12345, from Matt P. Frayser and Rosie Flora Frayser, covering Township 180N,
Range 104W: Section 2: Lots 1, 2, Section 12: NE/4NE/4, and Township 180N, Range 103W:
Section 6: Lot 7, Section 7: Lots 1 and 2, for a primary term of 3 years;
Reception No. 12345, from Karen J. Morris, covering Township 180N, Range 104W: Section 2:
Lots 1, 2, Section 12: NE/4NE/4, and Township 180N, Range 103W: Section 6: Lot 7, Section 7:
Lots 1 and 2, for a primary term of 3 years;
Reception No. 12345, from Angela Granovsky, as Trustee of the Robert and Tracie Granovsky
Trust, covering Township 180N, Range 104W: Section 2: Lots 1, 2, Section 12: NE/4NE/4, and
Township 180N, Range 103W: Section 6: Lot 7, Section 7: Lots 1 and 2, for a primary term of 3
years; and
Reception No. 12345, from Angela Granovsky, as Trustee of the Tracie Granovsky Trust,
covering Township 180N, Range 104W: Section 2: Lots 1, 2, Section 12: NE/4NE/4, Township
180N, Range 103W: Section 6: Lot 7, Section 7: Lots 1 and 2, and Township 189N, Range
104W: Section 35: Lot 5, for a primary term of 3 years.
should obtain and record releases from the current record owner38 of the following Oil and Gas
Leases:
(1) Oil and Gas Lease dated September 11, 2006, recorded October 13, 2006,
Reception No. 12345, from Angela Granovsky, covering Township 180N, Range 104W: Section
7: Lots 1 and 2, for a primary term of 3 years, from April 16, 2007;
38
According to Prior DDOTO 1 the leases were last held of record by Stephens Energy Company, LLC, as to a
50.00% interest, only insofar as said leases covered Lots 1 and 2 of Section 2, Township 189N, Range 104W; and
by Hay Development Company, Successor by merger to Quiethouse Corporation, as to all other interest and lands
covered by said leases. We also note that Hays Holding Company is now successor by name change to Hay
Development Company.
August 9, 2014
Page 69
Section 6: Lot 7, Section 7: Lots 1 and 2, for a primary term of 3 years, from April 16, 2007;
Lots 1 and 2, for a primary term of 3 years, from April 16, 2007;
Reception No. 12345, from Angela Granovsky, as Trustee of the Robert and Tracie Granovsky
Trust, covering Township 180N, Range 104W: Section 2: Lots 1, 2, Section 12: NE/4NE/4, and
Township 180N, Range 103W: Section 6: Lot 7, Section 7: Lots 1 and 2, for a primary term of 3
years, from April 16, 2007; and
Reception No. 12345, from Angela Granovsky, as Trustee of the Tracie Granovsky Trust,
covering Township 180N, Range 104W: Section 2; Lots 1, 2, Section 12; NE/4NE/4, Township
180N, Range 103W: Section 6: Lot 7, Section 7: Lots 1 and 2, and Township 189N, Range
104W: Section 35: Lot 5, for a primary term of 3 years, from April 16, 2007.
14. Prior DDOTO 1 Comment and Requirement No. 8 was an advisory comment
which stated that in preparation of the Prior DDOTO 1, all of the documents recorded on the
North Dakota Recorders Information Network (“NDRIN”) after June 17, 2010 through
May 13, 2011 at 5:00 p.m. were incorporated into the Prior DDOTO 1, and states the limitations
of the materials reviewed in preparation of the Prior DDOTO 1.
conduct an investigation to determine whether Robert Granovsky is alive or deceased.
If Robert Granovsky is alive, Prior DDOTO 1 recommends that a disclaimer of mineral

interest be procured form him wherein he disclaims any interest in and to the minerals that may
have been acquired by him by virtue of the mineral reservation in the Warranty Deed recorded at
Reception No. 12345. The disclaimer of mineral interest should be recorded in the office of the
Recorder of Black Gold County North Dakota.
If Robert Granovsky is deceased, Prior DDOTO 1 recommends that Company A obtain a

Proof of Death and Heirship from an individual who has personal knowledge of such fact. The
Proof of Death should indicate when he died, where he died, whether he left a will, whether the
will was ever probated and if so, where the will was probated as well as a copy of the will should
be attached to the proof of death, and should name all of his heirs. Upon procurement of the
Proof of Death, you should verify that you have procured oil and gas leases form all of his heirs.
August 9, 2014
Page 70
If Robert Granovsky is deceased, Prior DDOTO 1 recommends that in the event of

production, his estate be probated in North Dakota and his mineral interest, if any be distributed
to his legal heirs. The probate documents should be recorded in the office of the Recorder of
Black Gold County North Dakota.
STATUS: Unsatisfied. Company A should not rely on a Proof of Death and

Heirship as the prior examiner advises, but instead should obtain a stipulation and
cross-conveyance, containing words of present grant and executed by Shelley
Frayser, Karen J. Morris, Glenn Granovsky, Janet Aiken, Robert E. Granovsky
and Robert E. Granovsky (or their respective successors in interest), confirming
the ownership of interests in Tract No. 1 as set forth in this Opinion. Payment of
production proceeds associated with the 25.00% mineral interest should be held in
escrow, pursuant to N.D.C.C. §§ 47-16-39.1 through 47-16-39.3, pending
confirmation of title in Shelley Frayser, Karen J. Morris, Glenn Granovsky, Janet
Aiken, Robert E. Granovsky.
which stated that all royalty and bonus payments associated with Lease No. 10 should be
credited to the life tenant Geraldine Granovsky, for her lifetime.
obtain a copy of unrestricted Letters from the Montana Seventh Judicial District Court, Richland
County, appointing Billy E. Morris as personal representative of the Estate of Karen J. Morris,
certified to be in full force and effect on or after August 20, 2008, and record the same with the
Black Gold County Recorder.
regarding instruments indexed against Tract No. 1 relating to John Howell, Johanna L. Howell
and Belinda I. Howell, who are strangers to title in Tract No. 1.
19. Prior DDOTO 1 Comment and Requirement No. 19 required Company A to

obtain and record an Affidavit of Non-Development from the North Dakota Industrial
Commission, Oil and Gas Division, indicating there is currently no oil and gas production on the
following lands or on lands pooled therewith: Township 180N, Range 104W: Section 2; Lots 1,
2, Section 12; NE/4NE/4, Township 180N, Range 103W: Section 6; Lot 7, Section 7; Lots 1 and
2, and Township 189N, Range 104W: Section 35; Lot 5.
August 9, 2014
Page 71
STATUS: Partially satisfied. By Affidavit of Non-Development, dated

September 15, 2011, recorded October 24, 2011, Reception No. 12345, Annette
Fetzer, the Oil and Gas Production Analyst of the North Dakota Industrial
Commission, Oil and Gas Division, stated that there has been no oil/or gas wells
drilled on Township 180N, Range 104W, Section 2. See also Comment and
Requirement No. 20.
The Following Comments and Requirements are Common to Prior DDOTO 2 and 5:
20. Prior DDOTO 2 and 5 Comment and Requirement No. 6 was an advisory
comment regarding instruments indexed against the SE/4 of Section 2 relating to Glenn
Granovsky, a/k/a Glenn E. Granovsky, and Geraldine Granovsky, who are strangers to title in the
SE/4 of Section 2.
comment regarding instruments indexed against the SE/4 of Section 2 relating to Shelley
Frayser, Matt P. Frayser and Rosie Flora Frayser, who are strangers to title in the SE/4 of Section
2.
comment regarding instruments indexed against the SE/4 of Section 2 relating to Geraldine
Granovsky, Lucia F. Granovsky and Christy A. Klein, who are strangers to title in the SE/4 of
Section 2.
23. Prior DDOTO 2 and 5 Comment and Requirement No. 10 required that in the
event of ingress and egress, care should be exercised not to interfere with the vested rights of
others in relation to a partially canceled water permit discussed in an Order Canceling a Portion
of Water Permit No. 3306, dated April 26, 1995, recorded May 1, 1995, Reception No. 12345,
whereby the North Dakota State Engineer canceled a portion of Conditional Water Permit
No. 3306, issued on April 16, 1981 to Johanna L. Howell. 34.00 acres in the NE/4SE/4, 14.00
acres in the NW/4SE/4, and 31.00 acres in the SW/4SE/4 of Section 2 appear to be currently
subject to the Conditional Water Permit.
STATUS: Ongoing.
The Following Comments and Requirements are Common to Prior DDOTO 2 and 4-6:
24. Prior DDOTO 2 and 4-6 Comment and Requirement Nos. 9, 9, 9 and 7,
respectively, required that in the event of ingress and egress, care should be exercised not to
August 9, 2014
Page 72
interfere with the vested rights of others in relation to a Resolution dated January 24, 1938,
recorded January 26, 1938, in Book 1M, Page 10, at Reception No. 12345 whereby the Board of
County Commissioners of Black Gold County established the Towner Irrigation District within
Tract Nos. 3, 4, 5, Lot 6, SE/4SW/4 of Section 2, being a portion of Tract No. 6, and all of Tract
Nos. 7 and 8. Except those lands within the Order Excluding Lands from the Towner Irrigation
District, dated April 28, 1967, recorded May 3, 1967, in Book 4 Misc., Page 5, Reception No.
12345, whereby the NE/4SE/4 of Section 2 was excluded from the Towner Irrigation District.
STATUS: Ongoing.
25. Prior DDOTO 2 and 4-6 Comment and Requirement Nos. 14, 14, 14 and 12,
respectively, was an advisory comment which stated that in preparation of the Prior DDOTO 2
and 4-6, all of the documents recorded on the North Dakota Recorders Information Network
(“NDRIN”) after June 17, 2010 through June 28, 2011 at 5:00 p.m. were incorporated into the
Prior DDOTO 2 and 4-6, and states the limitations of the materials reviewed in preparation of the
Prior DDOTO 2 and 4-6.
The Following Comment and Requirement is Common to Prior DDOTO 2, 5 and 6:
26. Prior DDOTO 2, 5 and 6 Comment and Requirement Nos. 11, 11 and 9,
respectively, required that in the event of ingress and egress, care should be exercised not to
interfere with the vested rights of others in relation to Perfected Water Permit No. 183, dated
March 13, 1997, recorded March 25, 1997, Reception No. 12345, and the Towner Irrigation
District in the SE/4 of Section 2 established by Findings of Fact, Conclusions of Law and Order
of the Board dated December 8, 2004, recorded December 9, 2004, Reception No. 12345.
STATUS: Ongoing.
August 9, 2014
Page 73
following names should also be checked: Stat Oil Company, Mark R. Rock, Krysta L. Shields,
Jacob L. Mott, Chance N. Neel, Mike Neel, Porter Neel, Savanna Z. Neel, Wally Neel, Lime
Co., WSC, LP, Mineral Hitch, LLC, ROCK Resources LLC, Tom O. Wing, Marnie M. Wing,
Hexity Company, LLC, Hexity, Limited Partnership, Apache Petroleum, Incorporated, Total
Wreck Corporation, Coastal Corporation, Orange Production Company, and Sky Venture. If real
estate taxes are delinquent, that information should be provided to us. Further, if any unsatisfied
judgments or tax liens are indicated, copies thereof should be provided to us for our examination
and further comment thereon.
STATUS: Part (1) satisfied; see also Taxes as provided in this Opinion. Part
(2) partially satisfied for Tom O. Wing. See also Liens and Judgments as
provided in this Opinion.
regarding instruments indexed against a portion of Tract No. 8 relating to Marie A. Sandborn,
Johanna L. Howell and Belinda I. Howell, Johanna L. Howell and Belinda I. Howell, as Trustees
of the Johanna L. and Belinda I. Howell Mineral Trust dated March 28, 1991, Virgil Watson, Sr.,
Roberta Watson, Kelley A. Crane, Mona M. Watson, Melodi J. Calvin, Caroline L. McKenzie,
Kendra R. Quinn, Virgil D. Watson and Louanne I. Deal, who are strangers to title for the
mineral interest in that portion Tract No. 8.
29. Prior DDOTO 2 Comment and Requirement No. 19 assumed Lease No. 1 has
been continuously held and maintained by production in paying quantities and required that
Company A should satisfy itself that royalty proceeds have been timely and properly paid and
that production has been continuous and in paying quantities to properly maintain Lease No. 1
beyond its primary term.
STATUS: Unsatisfied. See also Comment and Requirement No. 2.
30. Prior DDOTO 2 Comment and Requirement No. 20 gave effect to Assignment
Nos. 9, 11 and 12 even though the BLM records do not contain these assignments, and required
that Assignment Nos. 9, 11 and 12 should be summited to the BLM for filing and approval.
STATUS: Unsatisfied. But see Comment and Requirement No. 7.

August 9, 2014
Page 74
31. Prior DDOTO 2 Comment and Requirement No. 21 gave effect to Overriding
Royalty Assignment Nos. 6, 7, and 9-11 even though the BLM records do not contain these
assignments, and required that Overriding Royalty Assignment Nos. 6, 7, and 9-11 should be
summited to the BLM for filing.
32. Prior DDOTO 2 Comment and Requirement No. 22 gave effect to Overriding
Royalty Assignment Nos. 6 and 9 even though there has been no probate for this interest, and
required, in the event of production, an ancillary probate of the estate of Art Neel should be
completed in Black Gold County, North Dakota, including the appointment of the personal
representatives, whereby they then ratify and confirm the two personal representatives deeds
which we have tabulated as Overriding Assignment Nos. 6 and 9. The ratifications should be
recorded in the office of the County Recorder of Black Gold County.
33. Prior DDOTO 2 Comment and Requirement No. 23 required that an affidavit or
other recordable instrument indicating that Apache Petroleum, Incorporated, a wholly-owned
subsidiary of Icetrans, Inc. was merged with and into Icetrans, Inc., the surviving corporation,
should be obtained and filed for record with the Black Gold County Recorder.
34. Prior DDOTO 2 Comment and Requirement No. 24 required that an affidavit or
other recordable instrument indicating that Hexity, Limited Partnership, also known as Hexity,
L.P., was merged with and into Hexity Company, LLC, the surviving entity, should be obtained
and filed for record with the Black Gold County Recorder.
35. Prior DDOTO 2 Comment and Requirement No. 25 required that in the event of
production, a division order should be executed by Hidden Bench Oil LLC and Brian Malone, as
Trustee for the benefit of BNP Paribas, as Administrative Agent, indicating to whom and in what
proportions any revenues from production from Lease No. 1 should be paid.
STATUS: Unsatisfied. See also Mortgages and Other Encumbrances as

36. Prior DDOTO 2 Comment and Requirement No. 26 an advisory comment which
stated the prior examiner has relied upon the federal status reports for the current status of the
United States of America’s oil and gas interest in a portion of Tract No. 8, and has ignored
expired federal oil and gas leases and assignments that appear of record.

August 9, 2014
Page 75
The Following Comment and Requirement is Common to Prior DDOTO 3 and 4:
37. Prior DDOTO 3 and 4 Comment and Requirement Nos. 30 and 11, respectively,
required that in the event of ingress and egress, care should be exercised not to interfere with the
vested rights of others in relation to Perfected Water Permit No. 183, dated March 13, 1997,
recorded March 25, 1997, Reception No. 12345. Including identified points of diversion,
including on those in the E/2 of Section 2.
STATUS: Ongoing.
The Following Comment and Requirement is Common to Prior DDOTO 3, 5 and 6:
38. Prior DDOTO 3, 5 and 6 Comment and Requirement Nos. 14, 5 and 5,
respectively, state that the prior examiner presumed that Danyell Blanton was entitled to all of
the interest of the Estate of John Sandborn in Lot 5, N/2SE/4, and NE/4SW/4 in Section 2, being
Tract No. 5 and Lot 6, SE/4SW/4 in Section 2, being a portion of Tract No. 6, and required that
if the probate file for the Estate of John Sandborn remains open, a Personal Representative’s
Deed of Distribution from Danyell Blanton, as Administratrix of the estate, conveying the
estate’s interest to the lawful heirs of John Sandborn, together with a certified copy of Letters of
Administration, stating that the Letters are in full force and effect as of the date of the Personal
Representative’s Deed of Distribution, must be obtained and filed for record with the Black Gold
County Recorder.
If the probate file for the Estate of John Sandborn has been closed, a Petition for
Subsequent Administration must be filed with the Court, requesting that the Court issue
subsequent Letters of Administration to Danyell Blanton, as personal representative of the estate.
Next, a Personal Representative’s Deed of Distribution from Danyell Blanton, as Administratrix
of the estate, conveying the estate’s interest to the lawful heirs of John Sandborn, together with a
certified copy of Letters of Administration, stating that the Letters are in full force and effect as
of the date of the Personal Representative’s Deed of Distribution, must be obtained and filed for
record with the Black Gold County Recorder.
STATUS: Unsatisfied. See also Comment and Requirement Nos. 12 and 13.
The Following Comment and Requirement is Common to Prior DDOTO 3 and 6:
39. Prior DDOTO 3 and 6 Comment and Requirement Nos. 29 and 8, respectively,
was an advisory comment which called attention to an Order Canceling a Portion of Water
Permit No. 3306, dated April 26, 1995, recorded May 1, 1995, Reception No. 12345, whereby
the North Dakota State Engineer canceled a portion of Conditional Water Permit No. 3306
covering Tract Nos. 3, 4, Lot 5 of Section 2, being a portion of Tract No. 5, Lot 6, SE/4SW/4 of
Section 2, being a portion of Tract No. 6 and all of Tract No. 7, issued on April 16, 1981 to
Johanna L. Howell.
August 9, 2014
Page 76
following names should also be checked: Robert E. Granovsky and Tracie M. Granovsky
Revocable Trust, Robert & Tracie Granovsky Family Trust, Robert & Tracie Granovsky Marital
Trust, Bruce Meacham, D. LaVerne Lopez, Beulah Lopez, Kevin Lopez, Douglas Broyles,
Cheryl Van Brand, Rita Agnew, Varyl Broyles, Tracey Granovsky , Leslie Granovsky , Janet
Aiken, Hilda Frayser, Roberta Watson, Marie Sandborn, Danyell F. Sandborn, John Sandborn,
Clarence Carl Sandborn, Johanna L. Howell and Belinda I. Howell Mineral Trust, Melodi J.
Calvin, Caroline L. McKenzie, Kendra Quinn, Louanne I. Deal, Sonia E. Austin, State of North
Dakota, Redoil, L.L.C., MicroX Company, or Stokes, LLC,. If real estate taxes are delinquent,
that information should be provided to us. Further, if any unsatisfied judgments or tax liens are
indicated, copies thereof should be provided to us for our examination and further comment
thereon.
STATUS: Part (1) satisfied; see also Taxes as provided in this Opinion. Part
(2) partially satisfied for Bruce Meacham, Beulah Lopez, Kevin Lopez, Douglas
Broyles, Rita Agnew, Varyl Broyles, Danyell F. Sandborn, John Sandborn,
Clarence Carl Sandborn, Redoil, L.L.C., and MicroX Company. See also Liens
and Judgments as provided in this Opinion.
which stated that in preparation of the Prior DDOTO 3, all of the documents recorded on the
North Dakota Recorders Information Network (“NDRIN”) after June 17, 2010 through
August 30, 2011 at 5:00 p.m. were incorporated into the Prior DDOTO 3, and states the
limitations of the materials reviewed in preparation of the Prior DDOTO 3.
which stated some of the rules that apply to ownership of lands under and adjacent to the
Missouri River.
43. Prior DDOTO 3 Comment and Requirement No. 7 required for drilling purposes,
you should obtain, from the State of North Dakota, for valuable consideration, a ratification of
Lease No. 17, which expressly provides that the lease covers all interests of the State of the
riverbed of the Missouri River, including interests between the high watermark and the low
August 9, 2014
Page 77
watermark in Section 2, Township 180 North, Range 104 West. The ratification should be
recorded with the Black Gold County Recorder.
In the event of production, you should obtain a stipulation of interest from the State of
North Dakota and all riparian mineral owners in Tracts 3, 4, lot 5 in Section 2, being a portion of
in Tract No. 5 and lot 6 in Section 2, being a portion of Tract No. 6, in which the parties agree as
to their ownership interests. The stipulation should be recorded with the Black Gold County
Recorder. If a stipulation of interest cannot be obtained, the ownership of the oil and gas
between the high and low watermarks in Section 2, Township 180 North, Range 104 West will
have to be judicially determined in a quiet title action in which the State of North Dakota and all
riparian mineral owners in Tracts 3, 4, lot 5 in Section 2, being a portion of in Tract No. 5, and
lot 6 in Section 2, being a portion of Tract No. 6, are parties.
which stated that the prior examiner has noted that the east bank of the Missouri River has
appeared to move west from the original government survey dated December 11, 1902, and the
1949 aerial survey map contained in the Bartlett & West report. The prior examiner has assumed
that the additional land associated tracts was formed, in each case, by accretion.
45. Prior DDOTO 3 Comment and Requirement No. 9 required Company A to cause
an investigation to be made to determine whether the United States of America claims the oil and
gas interests under the island described in a Certificate as to Title to Island Lying in Missouri
River, dated December 17, 1951, recorded December 18, 1951, in Book 2, of Misc., Page 2,
from the State of North Dakota by and through John O. Lyngstad, the Commissioner of
University and School Lands covering the SW/4NW/4, NW/4SW4, and SW/4SW/4 of Section 2,
and all accretions thereto. If the United States of America does not claim any such interest, it
should execute and place of record a disclaimer of interest in the subject lands. If the United
States of America does claim such an interest, a protective oil and gas lease should be secured
and recorded of the oil and gas under the island in the Missouri River in Section 2, Township
180 North, Range 104 West, and all accretions thereto.
In the event production is established, and the United States of America claims such an
interest, the State of North Dakota and the United States of America will need to stipulate and
agree to a division of interest, or have the ownership of the oil and gas under the island and all
accretions thereto judicially determined in a quiet title action.
August 9, 2014
Page 78
46. Prior DDOTO 3 Comment and Requirement No. 10 states the following:
The exact acreage being leased under the captioned lands as set forth under the
heading “Net Acres” in the body of this opinion cannot be determined from a review of
the recorded deeds and other documents in the instances identified below. The location
and acreage within such tracts is subject to interpretation and measurement by a
registered land surveyor.
There are six distinct areas within the spacing unit that will need to be surveyed
prior to preparation of a division order title opinion. First, the original government
survey dated December 11, 1902, indicates that Lot 3 of Section 2 consists of 30.62
acres. Lot 3 would be described by aliquot part as the NE¼NW¼. However, because the
north boundary of Section 2 consists of a correction line, all of the northern quarter-
quarter sections of Section 2 contain more or less than 40.0 acres. For example, Lot 1
contains 39.90 acres, and Lot 2 contains 39.70 acres. Lot 3 (the NE¼NW¼) will need to
be surveyed to determine its acreage as a result of the correction line adjustment.
Second, what would be described by aliquot parts as the NW¼NW¼ of Section 2 will
need to be surveyed to determine that tract’s exact acreage, again as a result of the
correction line adjustment.
Third, Lot 3 and the NW¼NW¼ of Section 2 will need to be surveyed to

determine how many acres have been added to Lot 3 due to accretion, how many acres
exist between the high watermark and the low watermark, and how many acres lie in the
riverbed of the Missouri River, below the low watermark, in Lot 3 and the NW¼NW¼ of
Section 2. From the maps and photos in the Bartlett & West report, it appears that none
of Lot 3 and its accretions are below the high watermark, and that a small portion of the
NW¼NW¼ of Section 2 (which has accreted to Lot 3) may consist of accretions to Lot 3
above the high watermark.
Fourth, Lot 4 of Section 2 will need to be surveyed to determine how many acres
have been added to Lot 4 due to accretion, how many acres exist between the high
watermark and the low watermark, and how many acres lie in the riverbed of the
Missouri River, below the low watermark in Lot 4. Fifth, Lot 5 of Section 2 will need to
be surveyed to determine how many acres have been added to Lot 5 due to accretion,
how many acres exist between the high watermark and the low watermark, and how
many acres lie in the riverbed of the Missouri River below the low watermark in Lot 5.
Sixth, Lot 6 of Section 2 will need to be surveyed to determine how many acres have
been added to Lot 6 due to accretion, how many acres exist between the high watermark
and the low watermark, and how many acres lie in the riverbed of the Missouri River
below the watermark in Lot 6.
None of the leases tabulated in [Schedule I] reference accretions to the captioned

lands, and thus it is likely that the lease bonus paid, if paid on an acreage basis, did not
include accretions. While we believe that the courts should hold that the accretions are
August 9, 2014
Page 79
included in the leased property, it is possible that they would hold otherwise if lease
bonuses were paid on an acreage basis and accretion acreages were not included.
Prior DDOTO 3 Comment and Requirement No. 10 required for drilling purposes, you
should obtain, from the respective mineral interest owners of Tracts 3, 4, lot 5 in Section 2, being
a portion of in Tract No. 5 and lot 6 in Section 2, being a portion of Tract No. 6, for valuable
consideration, a ratification of Lease Nos. 2, 7, 11, 12, 18-21 which expressly provides that the
leases cover all interests in the leased lands, including all accretions thereto, to the low
watermark in Section 2, Township 180 North, Range 104 West, regardless of the quantity of the
interest owned, the acreage actually covered, and the amount of consideration paid. The
ratifications should be recorded with the Black Gold County Recorder.
STATUS: Partially satisfied as to Lease No. 2, which was ratified by

Ratification of Oil and Gas Lease dated April 19, 2013 and recorded April 30,
2013, Reception No. 12345, but unsatisfied as to the remainder of the referenced
leases. See also Comment and Requirement No. 28.
47. Prior DDOTO 3 Comment and Requirement No. 11 required the following:
(1) The estate of Elsa Pratt should be probated in the State of North Dakota.
The necessary documents to distribute her mineral interest in Lot 3 of Section 2, being Tract No.
3, to Blanche Torres should be recorded in the office of the Recorder, Black Gold County, North
Dakota;
(2) Due to the discrepancy in names between D. LaVerne Lopez and B.

LaVerne Lopez, an affidavit of identity, stating that they are one and the same person,
notwithstanding the discrepancy in names, should be obtained and recorded in the office of the
Black Gold County Recorder; and
(3) The power of attorney executed by Blanche Torres on or before

December 20, 1996 and May 16, 1997 giving Barbara Hopkins the authority to sell and convey
real property on Blanche Torres’s behalf, must be obtained and recorded in the office of the
Recorder, Black Gold County, North Dakota.
48. Prior DDOTO 3 Comment and Requirement No. 12 required the power of
attorney executed by Barbara R. Hopkins on or before May 5, 2010 giving Arden Durand the
authority to execute Lease No. 19 on Barbara R. Hopkins’s behalf must be obtained and recorded
in the office of the Recorder, Black Gold County, North Dakota.
August 9, 2014
Page 80
which stated that all royalty and bonus payments associated with Lease No. 20 should be
credited to the life tenant Beulah LaVerne Lopez, a/k/a B. LaVerne Lopez, for her lifetime.
50. Prior DDOTO 3 Comment and Requirement No. 16 assumed Lease No. 17 has
been continuously held and maintained by production in paying quantities and required that
Company A should satisfy itself that Oil and Gas Lease No. 17 has been continuously held and
maintained by production in paying quantities, such that it is a current and effective lease
covering all of the riverbed of the Missouri River in Sections 2 and 3, Township 180 North,
Range 104 West.
51. Prior DDOTO 3 Comment and Requirement No. 17 noted that Assignment No. 32
is issued pursuant to a General Assignment, Conveyance, Bill of Sale or Transfer dated,
executed, and delivered on December 31, 1984, and required that prior to commencement of
operations, you should insure that your operations are conducted in compliance with said
General Assignment, Conveyance, Bill of Sale or Transfer.
is issued pursuant to a Purchase and Sale Agreement dated January 11, 1985, and required that
prior to commencement of operations, you should insure that your operations are conducted in
compliance with said Purchase and Sale Agreement dated January 11, 1985.
is issued pursuant to a Purchase and Sale Agreement dated effective April 15, 1998, and required
that prior to commencement of operations, you should insure that your operations are conducted
in compliance with said Purchase and Sale Agreement.
54. Prior DDOTO 3 Comment and Requirement No. 20 noted that the prior examiner
presumed that WaltMark Producing Inc. and WaltMark Exploration and Production Inc. are one
and the same corporation, and required that Company A obtain an affidavit of identity stating
that WaltMark Producing Inc. and WaltMark Exploration and Production Inc. are one and the
same, notwithstanding the discrepancy in names, and file the affidavit with the Black Gold
County Recorder.
August 9, 2014
Page 81
which stated Lease Nos. 2 and 18-20 contain an acreage pugh clause and Lease No. 20 contains a
formation pugh clause.
commencement of operations, you should obtain and record a partial assignment of Lease No. 17
as to Section 2, Township 180 North, Range 104 West, from Redoil, L.L.C. In addition, the
partial assignment should be submitted to the State Land Department, Bismarck, North Dakota,
for approval by the State of North Dakota.
57. Prior DDOTO 3 Comment and Requirement No. 23 required that prior
to commencement of operations, you should obtain and record an assignment of Lease Nos. 2,
7, 11, 12, and 21 from Voyager Exploration, LLC, Sub-Zero Natural Resources, LLC and
Magnetic, LLC.
STATUS: Partially satisfied by Assignment No. 45.
commencement of operations, you should obtain and record a partial assignment of Lease
Nos. 18-20 from Doubledrill, Inc.
STATUS: Satisfied by Assignment No. 35.
59. Prior DDOTO 3 Comment and Requirement No. 25 required that, prior to
distribution of royalty proceeds, division orders be obtained from Redoil, L.L.C. and the
mortgagees as tabulated in Mortgages and other Encumbrances in subparagraphs (d)-(g), and (j)
above, specifying to whom production proceeds are to be tendered during the term of the
mortgages.
STATUS: Unsatisfied. See also Mortgages and Other Encumbrances above.
distribution of royalty proceeds, we recommend that division orders be obtained from
Doubledrill, Inc. and the mortgagees as tabulated in Mortgages and Other Encumbrances in
subparagraphs (h) and (i) above specifying to whom production proceeds are to be tendered
during the term of the mortgages.
STATUS: Unsatisfied. See also Mortgages and Other Encumbrances above.

August 9, 2014
Page 82
which called attention to an Order Excluding Lands from the Towner Irrigation District, dated
April 28, 1967, recorded May 3, 1967, in Book 4 Misc., Page 35, Reception No. 12345, whereby
Lot 3 of Section 2 was excluded from the Towner Irrigation District.
which called attention to a perfected Water Permit No. 05726, dated August 18, 2005, recorded
September 1, 2005, Reception No. 12345, including an identified point of diversion, in the NW/4
of Section 2.
63. Prior DDOTO 3 Comment and Requirement No. 37, assumed that the following
Oil and Gas Lease have expired by their own terms, and required that Company A should obtain
and record releases from the current record owner of the following Oil and Gas Leases:
(1)39 Oil and Gas Lease dated July 16, 2004, recorded August 9, 2004,
Reception No. 12345, from Danyell Blanton and Donald R. Blanton, to W. R. Everett, covering
Township 180N, Range 104W: Section 2: Lots 5, 6, E/2SW/4, N/2SE/4, for a primary term of 3
years;
(2) Oil and Gas Lease dated May 1, 2008, recorded June 11, 2008, Reception
No. 12345, from Danyell Blanton and Donald R. Clayton, to Freshfind Company, covering
years from July 16, 2008;
(3) Oil and Gas Lease dated July 14, 2004, recorded August 9, 2004,
Reception No. 12345, from Johanna L. Howell and Belinda I. Howell, individually and as Co-
Trustees of the Johanna L. and Belinda I. Howell Mineral Trust, to W. R. Everett, covering
Township 180N, Range 104W: Section 2: Lots 4, 6, E/2SW/4, Section 10: Lots 3, 6, 7, Section
11: Lots 1, 2, NE/4NW/4, SW/4, for a primary term of 3 years;
No. 12345, from Johanna L. Howell and Belinda I. Howell, individually and as Co-Trustees of
the Johanna L. and Belinda Howell Mineral Trust, to Freshfind Company, covering Township
180N, Range 104W: Section 2: Lots 4, 6, E/2SW/4, Section 10: Lots 3, 6, 7, Section 11: Lots 1,
2, NE/4NW/4, SW/4, for a primary term of 2 years from July 14, 2008;
Reception No. 12345, from Roberta Watson, to W. R. Everett, covering Township 180N, Range
39
According to Prior DDOTO 3, the leases identified in subparagraphs (1)-(6) were last held of record by Hay
August 9, 2014
Page 83
104W: Section 2: Lots 4, 6, SE/4SW/4, and Section 11: Lot 1, NE/4NW/4, for a primary term of
3 years;
No. 12345, from Roberta Watson, to Freshfind Company, covering Township 180N, Range
2 years from July 20, 2008;
(7)40 Oil and Gas Lease dated July 2, 2004, recorded September 27, 2004,
Reception No. 12345, from B. LaVerne Lopez, to Springfield Oil Company, covering Township
180N, Range 104W: Section 2: Lot 3 and, Township 189N, Range 104W: Section 35: Lots 4, 5,
including all accretions and riparian rights appurtenant thereto for a primary term of 3 years;
(8) Oil and Gas Lease dated July 2, 2004, recorded September 27, 2004,
Reception No. 12345, from Barbara R. Hopkins, to Springfield Oil Company, covering
Township 180N, Range 104W: Section 2: Lot 3 and, Township 189N, Range 104W: Section 35:
Lots 4, 5, including all accretions and riparian rights appurtenant thereto for a primary term of 3
years;
(9) Oil and Gas Lease dated July 2, 2004, recorded September 27, 2004,
Reception No. 12345, from Alicia C. Meacham, to Springfield Oil Company, covering Township
180N, Range 104W: Section 2; Lot 3 and, Township 189N, Range 104W: Section 35: Lots 4, 5,
(10)41 Oil and Gas Lease dated August 17, 2007, recorded September 24, 2007,
Reception No. 12345, from B. LaVerne Lopez, to Quiethouse Corporation, covering Township
(11) Oil and Gas Lease dated August 17, 2007, recorded September 26, 2007,
Reception No. 12345, from Alicia C. Meacham, to Quiethouse Corporation, covering Township
(12) Oil and Gas Lease dated August 17, 2007, recorded October 15, 2007,
Reception No. 12345, from Barbara R. Hopkins, to Quiethouse Corporation, covering Township
180N, Range 104W: Section 2: Lot 3, and Township 189N, Range 104W: Section 35: Lots 4, 5,
including all accretions and riparian rights appurtenant thereto for a primary term of 3 years; and
Reception No. 12345, from Robert E. Granovsky and Tracie M. Granovsky, as Trustees of the
40
According to Prior DDOTO 3, the leases identified in subparagraphs (7)-(9) were last held of record by R.T.
Wise, Inc.
41
According to Prior DDOTO 3, the leases identified in subparagraphs (10)-(13) were last held of record by
Stephens Energy Company, LLC.
August 9, 2014
Page 84
Perry E. Granovsky and Tracie M. Granovsky Revocable Trust dated July 18, 2000, to
Quiethouse Corporation, covering Township 180N, Range 103W: Section 6: Lot 7, Section 7:
Lots 1 and 2, Township 180N, Range 104W: Section 2: Lots 1, 3 and 3, Section 12: NE/4NE/4,
and Township 189N, Range 104W: Section 35: Lot 5, for a primary term of 3 years from April
16, 2007.
64. Prior DDOTO 3 Comment and Requirement No. 38 required Company A to

following lands or on lands pooled therewith: Township 180N, Range 103W: Section 6; Lot 7,
Section 7; Lots 1 and 2, Township 180N, Range 104W: Section 2; Riverbed of the Missouri
River, Lots 1-6, E/2SW/4, N/2SE/4, NE/4, Section 10; Lots 3, 7 and 7, Section 11; Lots 1, 2,
NE/4NW/4, SW/4, Section 12; NE/4NE/4 , and Township 189N, Range 104W: Section 35; Lot
4, and 5, including all accretions and riparian rights thereto.
STATUS: Partially satisfied. By Affidavit of Non-Development, dated

drilled on Township 180N, Range 104W, Section 2. See also Comment and
Requirement No. 20.
following names should also be checked: Johanna L. Belinda Howell Mineral Trust, Melodi J.
Calvin, Caroline L. McKenzie, Kendra Quinn, Louanne I. Deal, Roberta Watson, Marie
Sandborn, Sonia E. Austin, Wise Exploration, Oscar Wise, Shawn Wise, Production Properties,
Oscar Wise Oil, TRUE, TWO Oil & Gas Partners (U.S.A.), Boogie Holdings, Joshua L.
Hawkins, Sand Lot Properties, Colosses Acquisition, LLLP, Northern Supply, Great Rockies or
HD. If real estate taxes are delinquent, that information should be provided to us. Further, if any
unsatisfied judgments or tax liens are indicated, copies thereof should be provided to us for our
examination and further comment thereon.
STATUS: Part (1) Satisfied; see also Taxes as provided in this Opinion. Part
(2) Partially satisfied for Joshua L. Hawkins. See also Liens and Judgments as
August 9, 2014
Page 85
66. Prior DDOTO 4 Comment and Requirement No. 5 assumed Lease Nos. 22 and 23
have been continuously held and maintained by production in paying quantities and required that
Company A should satisfy itself that Lease Nos. 22 and 23 have been continuously held and
maintained by production in paying quantities, such that they are current and effective leases
covering the oil and gas interests in question.
regarding instruments indexed against Tract No. 2 by True Exploration, Inc., who is a stranger to
title in Tract No. 2.
68. Prior DDOTO 4 Comment and Requirement No. 7 assumed that the Assignees in
Assignment No. 36 had actual knowledge of Overriding Royalty Assignment No. 16 and
required that in the event of production, a royalty division order should be executed by the
parties, reflecting the division of interest shown herein. If any of the parties to the above
Assignments do not agree to such division of interest, we should be so advised.
69. Prior DDOTO 4 Comment and Requirement No. 8 required that a royalty division
order should be executed by Quiethouse Corporation, and the mortgagees tabulated in
subparagraph (k) in Mortgages and Other Encumbrances above, as provided in this Opinion.
STATUS: Unsatisfied. See also Mortgages and Other Encumbrances as

provided in this Opinion. Additionally, Hays Holding Company, formerly Hay
Development Company, is successor by Merger to Quiethouse Corporation.
ingress and egress, care should be exercised not to interfere with the vested rights of others in
relation to a Resolution dated January 24, 1938, recorded January 26, 1938, in Book 1M,
Page 19, at Reception No. 12345 whereby the Board of County Commissioners of Black Gold
County established the Towner Irrigation District within Tract No. 2.
STATUS: Ongoing.
ingress and egress, care should be exercised not to interfere with the vested rights of others in
relation to a partially canceled water permit discussed in an Order Canceling a Portion of Water
Permit No. 3306, dated April 25, recorded May 1, 1995, Reception No. 12345, whereby the
North Dakota State Engineer canceled a portion of Conditional Water Permit No. 3306, issued
on April 16, 1981 to Johanna L. Howell. 21.00 acres in the SE/4NE/4 of Section 2 appear to be
currently subject to the Conditional Water Permit.
August 9, 2014
Page 86
STATUS: Ongoing.
following names should also be checked: Danyell F. Sandborn, John Sandborn and Clarence Carl
Sandborn. If real estate taxes are delinquent, that information should be provided to us. Further,
if any unsatisfied judgments or tax liens are indicated, copies thereof should be provided to us
for our examination and further comment thereon.
(2) Satisfied. See also Liens and Judgments as provided in this Opinion.
73. Prior DDOTO 5 Comment and Requirement No. 19 assumed that the following
Oil and Gas Leases have expired by their own terms and required that Company A obtain and
record releases from the current record owner of the following oil and gas leases:
Township 180N, Range 104W: Section 2; Lots 5, 6, E/2SW/4, N/2SE/4, for a primary term of 3
years; and
No. 12345, from Danyell Blanton and Donald R. Blanton, to Freshfind Company, covering
Township 180N, Range 104W: Section 2; Lots 5, 6, E/2SW/4, N/2SE/4, for a primary term of 2
years from July 16, 2008.
following lands or on lands pooled therewith: Township 180N, Range 104W: Section 2: Lots 4-
6, E/2SW/4, N/2SE/4.
STATUS: Satisfied. By Affidavit of Non-Development, dated

42
August 9, 2014
Page 87
drilled on Township 180N, Range 104W, Section 2.
following names should also be checked: Roberta Watson, Marie Sandborn, Danyell Sandborn,
John Sandborn, Clarence Carl Sandborn, Johanna L. and Belinda I. Howell Mineral Trust,
Melodi J. Calvin, Caroline L. McKenzie, Kendra Quinn, or Louanne I. Deal. If real estate taxes
are delinquent, that information should be provided to us. Further, if any unsatisfied judgments
or tax liens are indicated, copies thereof should be provided to us for our examination and further
comment thereon.
(2) Partially satisfied for Danyell Sandborn, John Sandborn, and Clarence Carl
Sandborn. See also Liens and Judgments as provided in this Opinion.
which stated that Lease No. 21 contains an acreage pugh clause and formation pugh clause.
77. Prior DDOTO 6 Comment and Requirement No. 17 assumed that the following
Oil and Gas Lease have expired by their own terms and required that Company A should obtain
and record releases from the current record owner of the following Oil and Gas Leases:
years;
43
August 9, 2014
Page 88
Reception No. 12345, from Johanna L. Howell and Belinda I. Howell, individually and as Co-
Trustees of the Johanna L. and Belinda I. Howell Mineral Trust, to W. R. Everett, covering
Township 180N, Range 104W: Section 2: Lots 4, 6, E/2SW/4, Section 10: Lots 3, 6, 7, Section
11: Lots 1, 2, NE/4NW/4, SW/4, for a primary term of 3 years;
the Johanna L. and Belinda I. Howell Mineral Trust, to Freshfind Company, covering Township
180N, Range 104W: Section 2: Lots 4, 6, E/2SW/4, Section 10: Lots 3, 6, 7, Section 11: Lots 1,
2, NE/4NW/4, SW/4, for a primary term of 2 years from July 14, 2008;
Reception No. 12345, from Roberta Watson, to W. R. Everett, covering Township 180N, Range
3 years; and
2 years from July 20, 2008.
78. Prior DDOTO 6 Comment and Requirement No. 18 required Company A obtain
and record an Affidavit of Non-Development from the North Dakota Industrial Commission, Oil
and Gas Division, indicating there is currently no oil and gas production on the following lands
or on lands pooled therewith: Township 180N, Range 103W: Section 6: Lot 7, Section 7: Lots 1
and 2, Township 180N, Range 104W: Section 2: Lots 4-6, E/2SW/4, N/2SE/4.
STATUS: Satisfied. By Affidavit of Non-Development, dated

drilled on Township 180N, Range 104W, Section 2.
The Following Formal Comment and Requirement is Common to Prior DDOTO 1-6:
79. The Prior DDOTO 1-6 Formal Requirement expressly limited the examination of
Prior DDOTO 1-6 as follows:
This opinion is subject to the following:

August 9, 2014
Page 89
(a) Examination of the mineral title refers only to the oil, gas and other related
hydrocarbons and does not include or purport to cover the division of minerals, if any there be,
other than those enumerated above;
(b) Compliance with all applicable city or county zoning ordinances and the
enforcement of regulations or orders by the governmental bodies having jurisdiction. This must
be determined by contact with county and/or city officials;
(c) The obtaining of all permits and the filing of all notices concerning
drilling and seismic operations as required by applicable laws, ordinances, rules and regulations;
(d) Any applicable bankruptcy or insolvency laws, liens for current taxes not
yet due, statutory mechanic’s, oil and gas and materialman’s liens not of record;
(e) Matters of area, conflicts and boundary lines that might be revealed or
resolved by survey;
(f) North Dakota Century Code Chapter 38-11.1, effective July 1, 1979,
provides for payment to the surface owner of a sum of money equal to the amount of damages
sustained by the surface owner, and further provides that the mineral developer shall give the
surface owner written notice of all drilling operations contemplated. You are hereby referred to
said chapter for all terms and provisions thereof;
(g) Compliance with all applicable spacing, pooling and other conservation
laws, rules and orders established by the North Dakota Industrial Commission, including, but not
limited to the voluntary or forced pooling of all interest in a spacing unit. Federal lands included
in a force pooling order issued by the North Dakota Industrial Commission must be
communitized pursuant to the rules and regulations governing federal leases;
(h) Assure yourselves that all prior contracts, assignments and assignments of
overriding royalty which were burdens on your prior leasehold estate, if any, do not constitute a
burden on your present leasehold estate by virtue of extension or renewal agreements;
(i) North Dakota Century Code Chapter 47-16-39.3, effective July 1, 1987,
provides that royalty payments may not be withheld because an interest owner has not executed a
division order and that a division order may not alter or amend the terms of an oil and gas lease.
The statute also states that a division order that varies the terms of an oil and gas lease is invalid
to the extent of the variance and the terms of the oil and gas lease take precedence;
(j) The recording of an appropriate affidavit in compliance with the

provisions of Section 47-16-40, North Dakota Century Code, prior to the expiration of the
primary term of an oil and gas lease in the event the oil and gas lease is extended past the
expiration of its primary term;
August 9, 2014
Page 90
(k) Any and all pending actions or other proceedings not disclosed by a filed
lis pendens, including, but not limited to, challenges for non-compliance with any environmental
laws, whether now pending or hereafter filed; the identity or capacity of persons; the legal
existence and qualifications of corporations, partnerships, and other entities; frauds and
forgeries; liens for taxes not yet delinquent, federal judgments and estate tax liens and any other
liens not shown in the instruments/materials examined; and
(l) The current oil and gas leases covering the captioned lands are
summarized on Exhibit B. The oil and gas leases are assumed to be in full force and effect.
Exhibits C and D summarize the relevant oil and gas lease assignments and overriding royalty
assignments. Exhibit E summarizes the encumbrances affecting the oil and gas in the captioned
lands. These exhibits provide only summaries of the oil and gas leases, assignments and
assignments of overriding. Should a question arise as to any specific provision in the
instruments, the actual instruments must be obtained and reviewed in their entirety.
COMMENTS AND REQUIREMENTS
1. Patents. Section 11 of the Subject Lands passed into fee simple private ownership Commented [BC44]: A title opinion should provide
confirmation of the mechanism by which the lands passed into
as follows:44 private ownership, and confirm/refute the reservation of minerals by
the United States of America.
(a) By United States Patent No. 8275 dated August 17, 1908, recorded
November 8, 1909, in Book 1 of Patents, Page 30, Lot 4 and the E/2SW/4 of Section 2, and the
NE/4NW/4 of Section 11, being all of Tract No. 4 and a portion of Tract Nos. 5 and 6, passed
into the fee simple ownership of Henry Sandborn;
(b) By United States Patent No. 61581 dated May 14, 1909, recorded
January 31, 1911, in Book 1 of Patents, Page 47, Lot 2 and the NW/4SW/4 of Section 11, being a
portion of Tract No. 11, passed into the fee simple ownership of Mable J. Walker;
(c) By United States Patent No. 234352 dated November 20, 1911, recorded
March 14, 1913, in Book 9 of Patents, Page 2, Lot 1 of Section 11, being a portion of Tract No.
6, passed into the fee simple ownership of Henry Sandborn, assignee of Frank R. Allen,
Administrator of the Estate of Samuel B. Brown;
(d) By United States Patent No. 206936 dated June 15, 1911, recorded
March 16, 1915, in Book 18 of Deeds, Page 67, the N/2SE/4, SW/4NE/4, and SE/4NW/4 of
Section 11, being a portion of Tract Nos. 8 and 9, passed into the fee simple ownership of Roy F.
Rider;
(e) By United States Patent No. 568064 dated February 19, 1917, recorded
April 17, 1917, in Book 138 of Deeds, Page 25, the E/2SW/4 and SW/4SW/4 of Section 11,
being a portion of Tract No. 11, passed into the fee simple ownership of John M. Hart;
44
We note that the Prior DDOTO 1-6 did not contain a patents section.
August 9, 2014
Page 91
(f) By United States Patent No. 636112 dated June 17, 1918, recorded
November 2, 1918, in Book 222 of Deeds, Page 37, the S/2SE/4 and SE/4NE/4 of Section 11,
being a portion of Tract No. 9, passed into the fee simple ownership of George A. Rider; and
(g) By United States Patent No. 583648 dated May 9, 1917, recorded
April 6, 1936, in Book 3 of Deeds, Page 50, the SW/4SE/4 of Section 2 and the N/2NE/4 of
Section 11, being a portion of Tract Nos. 2 and 11, passed into the fee simple ownership of
Edward Haney.
The copies of the foregoing instruments contained within the Materials Examined are
recorder’s forms, typically transcribed from the original instruments. However, we have
obtained online copies of the original instruments from the General Land Office online records
maintained by the BLM, and can confirm that such instruments do not purport to reserve oil, gas
or other hydrocarbons to the United States of America.
REQUIREMENT: None; advisory only.
2. Status of Subject Leases. Lease Nos. 2-7,45 18-2146 and 25 (collectively, “Primary Commented [BC45]: A title opinion should provide a lease-by-
lease proof showing the mechanism by which each tabulated oil and
Term Leases”) are each “paid-up” oil and gas leases within their respective primary terms as of the gas lease remains valid, and identifying well names, locations, and
Certification Date. Likewise, Lease Nos. 8-10 and 13-16 are “paid-up” oil and gas leases within production information, including formations and spacing units.
their extended primary terms as of the Certification Date (collectively, “Extended Primary Term
Leases”).47
Lease Nos. 11 and 12 are “paid-up” oil and gas leases with three year primary terms set to
expire on April 16, 2013 (collectively, the “April HBP Leases”); however, the online records of the
NDIC indicate that the Subject Well was spud on March 7, 2013 and is currently in “Confidential
Status.” Therefore, the April HBP Leases appear to have been extended beyond their primary terms
due to continuous drilling operations and/or production from the Subject Well.
Based on the foregoing, for purposes of this Opinion, we have assumed that the Subject
Well is producing oil and/or gas in paying quantities and that the Primary Term Leases, the
Extended Primary Term Leases, and the April HBP Leases have all been extended by production
from the Subject Well. However, due to the lack of information available on the online records
maintained by the NDIC, we make the following Requirement.
45
We also note the online records of the NDIC indicate the presence of the STATE 1H Well, API #300-00, located
in the NW/4NE/4 of Section 3, Township 180 North, Range 104 West, 5th P.M., which is currently identified as
producing from lands covered by Lease Nos. 2-5, or lands spaced therewith. However, as further described in
Schedule I, Lease Nos. 2-5 each contain pugh clauses.
46
We note that the Materials Examined contain Affidavit of Production dated January 22, 2013, recorded
February 1, 2013, Reception No. 12345, executed by Hays Holding Company, indicating that production was
obtained from the Oakland 13-31H Well, (“Oakland Well”), located in Lot 4, Section 31, Township 151 North,
Range 103 West, 5th P.M. on or about September 12, 2012. The drilling unit for the Oakland 13-31H Well is
identified as Sections 35 and 36, Township 151 North, Range 104 West, 5th P.M. However, while the Oakland 13-
31H Well has been drilled on lands covered by Lease Nos. 18-20, all contain pugh clauses.
47
For further discussion of the Extended Primary Term Leases, see Comment and Requirement No. 38.
August 9, 2014
Page 92
REQUIREMENT: (i) In order to maintain the Primary Term Leases, the

Extended Primary Term Leases, and the April HBP Leases beyond their
respective primary terms, Company A should confirm that the Subject Well is
producing oil and/or gas in paying quantities pursuant to the terms of the Primary
Term Leases, the Extended Primary Term Leases, and the April HBP Leases. Commented [BC46]: Despite the provision of a proof as to oil
and gas lease validity, a title opinion will generally still require
independent confirmation due to limitations in the materials
The online records of the NDIC 48 indicate the presence of the USA Well, API #33, examined.
located in the NE/4SE/4, Section 11, Township 180 North, Range 104 West, 5 th P.M., which
experienced first production on August 10, 1979 from the Towner-Red River Pool, Towner
Field,49 which is listed as having been permanently abandoned effective March 14, 1987.
Thereafter, the USA Well was reentered and experienced first production on March 14, 1987
from the Towner-Interlake Pool, Towner Field,50 which is listed as having being permanently
abandoned effective June 25, 1988. The USA Well was then reentered and experienced first
production on June 25, 1988 from the Towner-Madison Pool,
Towner Field,51 which is listed as having been shut-in effective October 27, 2005. Finally, the
USA Well was reentered and experienced first production on October 28, 2005 from the Bakken
Pool, Towner Field, 52 which is currently listed as producing.53
48
In the interest of brevity, for purposes of this Opinion, we have only listed wells located on the Subject Lands
which are currently producing wells, i.e. the NDIC online records indicate the well as an active or shut-in oil and/or
gas well. We have not listed those wells which were drilled on the Subject Lands and are currently listed as plugged
and abandoned or listed as dry wells. Additionally, all other wells located on lands described in Lease Nos. 24 are
indicated to have been plugged and abandoned, pursuant to the online records of the NDIC; however, we do note
that the online records of the NDIC indicate the presence of an apparently active saltwater disposal well, the USA
Well (API No. 33), located in the NE/4SE/4 of Section 11.
49
Pursuant to NDIC Order No. 2009 in Case No. 1805 dated March 5, 1980 (as amended by NDIC Order No. 2455
in Case No. 2189 dated August 26, 1981 and other NDIC Orders; “Red River Pool Spacing Order”), the E/2 of
Section 11, Township 180 North, Range 104 West, 5th P.M. was included within the Cartwright Field for the
production of hydrocarbons from the Red River Pool. Pursuant to the Red River Pool Spacing Order, the approved
drilling unit for the USA Well was identified as the E/2 of Section 11, Township 180 North, Range 104 West, 5th
P.M.
50
Pursuant to NDIC Order No. 4864 in Case No. 4262 dated May 22, 1987 (“Interlake Pool Spacing Order”), the
E/2 of Section 11, Township 180 North, Range 104 West, 5th P.M. was included within the Cartwright Field for the
production of hydrocarbons from the Interlake Pool. Pursuant to the Interlake Pool Spacing Order, the approved
drilling unit for the USA Well was identified as the SE/4 of Section 11, Township 180 North, Range 104 West, 5th
P.M.
51
Pursuant to NDIC Order No. 2309 in Case No. 2017 dated February 19, 1981 (as amended by NDIC Order
No. 2833 in Case No. 2513 dated August 12, 1982 and other NDIC Orders; “Madison Pool Spacing Order”), the E/2
of Section 11, Township 180 North, Range 104 West, 5th P.M. was included within the Cartwright Field for the
production of hydrocarbons from the Madison Pool. Pursuant to the Madison Pool Spacing Order, the approved
drilling unit for the USA Well was identified as the SE/4 of Section 11, Township 180 North, Range 104 West, 5th
P.M.
52
Pursuant to NDIC Order No. 10324 in Case No. 8791 dated January 13, 2006 (as amended by NDIC Order
No. 11303 in Case No. 9526 dated August 28, 2007 and other NDIC Orders; “Bakken Pool Spacing Order”), the E/2
of Section 11, Township 180 North, Range 104 West, 5th P.M. was included within the Cartwright Field for the
production of hydrocarbons from the Cartwright-Bakken Pool. Pursuant to the Bakken Pool Spacing Order, the
approved drilling unit for the USA Well was identified as the SE/4 of Section 11, Township 180 North, Range 104
West, 5th P.M.
August 9, 2014
Page 93
Based on the foregoing, it appears that Lease No. 24 is held by production from the USA
Well. Accordingly, for purposes of this Opinion, we have presumed that Lease No. 24 is
currently held by production; however, because the online records of the NDIC disclose certain
gaps in production from the USA Well, we make the following Requirement.
REQUIREMENT: (ii) Company A should investigate and satisfy itself that

Lease No. 24 has been held by continuTownerous production in paying quantities.
REQUIREMENT: (iii) Intentionally omitted. We have discussed Lease

Nos. 18-20 as part of Requirement No. 2(i) above.
As evidenced by the online records of the NDIC, Lease Nos. 1, 22 and 23 appear to be
held beyond their primary terms by production from the following wells:54
(a) Granovsky 1HR Well, API #332-00-00, located in the NW/4SE/4 of

Section 1, Township 180 North, Range 104 West, 5th P.M., which experienced first production
on March 28, 1989 from the Madison Pool, Towner Field, 55 and which is currently listed as
producing; and
(b) Sandborn-USA 1 Well, API #345, located in the NW/4SW/4 of Section 1,

Township 180 North, Range 104 West, 5th P.M., which experienced first production on
November 14, 1987 from the Duperow Pool, Towner Field, and from the Madison Pool, Towner
Field56 on June 6, 1988, and which is currently listed as producing from both pools.
Additionally, Lease No. 17 appears to be held beyond its primary term by production
from the following wells:
(a) D Well, API #356, located in the NW/4SE/4 of Section 3, Township 180
North, Range 104 West, 5th P.M., which experienced first production on March 24, 1983 from
the Red River Pool, Black Tree Field, and from the Duperow Pool,57 Black Tree Field on
53
Finally, pursuant to NDIC Order No. 4446 in Case No. 5099 dated February 5, 1988 (as amended by NDIC Order
No. 7731 in Case No. 6633 dated December 31, 1996 and other NDIC Orders; “Duperow Pool Spacing Order”), the
E/2 of Section 11, Township 180 North, Range 104 West, 5th P.M. was included within the Cartwright Field for the
production of hydrocarbons from the Cartwright-Duperow Pool with 160.00 acre spacing.
54
We also note the existence of a permit to drill the USA H Well, API #3-00-00, located in Lot 3, Section 24,
Township 180 North, Range 104 West, 5th P.M., which is currently in Confidential Status, spaced as Sections 13
and 24, Township 180 North, Range 104 West, 5th P.M., and will ultimately affect Lease No. 1. All other lands
located on lands described in Lease Nos. 1, 22 and 23 are indicated to have been dry holes or plugged and
abandoned, pursuant to the online records of the NDIC.
55
Pursuant to the Madison Pool Spacing Order, the approved drilling unit for the Granovsky 33-1HR Well is
identified as all of Section 1, Township 180 North, Range 104 West, 5th P.M.
56
Pursuant to the Madison Pool, and Duperow Pool Spacing Orders, the approved drilling unit for the Iszley-USA 1
Well is identified as the W/2 of Section 1, Township 180 North, Range 104 West, 5th P.M.
57
Pursuant to NDIC Order No. 8281 in Case No. 7100 dated January 13, 2006 (other NDIC Orders; “Nelson
Bridge-Duperow Pool Spacing Order”), all of Section 3, Township 180 North, Range 104 West, 5th P.M. was
included within the Nelson Bridge Field for the production of hydrocarbons from the Nelson Bridge-Duperow Pool.
August 9, 2014
Page 94
October 18, 1996, and which is currently listed as producing from the Duperow Pool, as
evidenced by the online records of the NDIC; and
(b) STATE 1H Well, API #300-00, located in the NW/4NE/4 of Section 3,

Township 180 North, Range 104 West, 5th P.M., which experienced first production in February
2013 from the Bakken Pool, and which is currently listed as producing from the Bakken Pool, as
evidenced by the online records of the NDIC.58
As noted above, the Granovsky 33-1HR Well, Sandborn-USA 1 Well, Dore 3-10X Well,
and STATE 150-104-3A-10-1H Well each appear to be shown as producing as of the
Certification Date. Based on the foregoing, it appears that Lease Nos. 1, 22 and 23 are held by
production from the Granovsky 33-1HR Well and Sandborn-USA 1 Well, 59 while Lease No. 17
appears to be held by production from the Dore 3-10X Well and STATE 150-104-3A-10-1H
Well. Accordingly for purposes of this Opinion, we have presumed that Lease Nos. 1, 17, 22
and 23 are currently held by production; however, because the online records of the NDIC
disclose certain gaps in production, we make the following Requirement.
REQUIREMENT: (iv) Company A should investigate and satisfy itself that

Lease Nos. 1, 17, 22 and 23 have been held by continuous production in paying
quantities.
Additional information regarding the Subject Leases can be found in our Tabulation of
Oil and Gas Leases, attached hereto as Schedule I. The Subject Leases contain certain specific Commented [BC47]: The tabulations of oil and gas leases in a
title opinion should provide all material information, but should not,
provisions and stipulations. For example, Lease No. 17 contains provisions requiring the written absent specific request, go into great detail. For example, verbatim
consent of the State of North Dakota for assignment of the lease. Additionally, Lease Nos. 1 reproduction of oil and gas lease provisions should be eschewed.
(NDM-99000) and 24 (NDM-95000) are federal oil and gas leases covering 100.00% of the
mineral interest in Tract Nos. 8 and 9, respectively, and other lands. Lease No. 24 was
segregated out of Lease No. 1. Pursuant to 43 C.F.R. 3107.3-2, since Lease No. 24 was
segregated from Lease No. 1, it remains subject to the terms of the original lease. We assume
that Company A is familiar with the same, and in the interest of brevity, have not exhaustively
summarized such provisions and stipulations, but make the following Requirement.
REQUIREMENT: (v) Company A should refer to and familiarize itself

with the specific provisions and stipulations of the Subject Leases, and comply
with the same in conducting its operations on the Subject Lands.
Pursuant to the Nelson Bridge-Duperow Pool Spacing Order, the approved drilling unit for the Dore 3-10X Well is
identified as the E/2 of Section 3, Township 180 North, Range 104 West, 5th P.M.
58
We also note that the following wells, all listed as in Confidential Status, are spaced as Sections 3 and 10,
Township 180 North, Range 104 West, 5th P.M., and cover lands covered by Lease No. 17: (a) STATE 2H Well,
API #36-00-00, located in Lot 1 of Section 3, Township 180 North, Range 104 West, 5th P.M.; (b) STATE 3H Well,
API #37-00-00, located in Lot 1 of Section 3, Township 180 North, Range 104 West, 5th P.M.; and (c) STATE 4H
Well, API #38-00-00, located in Lot 1 of Section 3, Township 180 North, Range 104 West, 5th P.M..
59
We note that the Materials Examined also contain Affidavit of Production dated April 29, 1988, recorded
May 23, 1988, Reception No. 12345, evidencing the extension of Lease Nos. 1, 22-24, by production from the
U.S.A. #1 Well. However, we note that Lease No. 24 is no longer held by production by the U.S.A. #1 Well as
Lease No. 24 has been segregated from Lease No. 1.
August 9, 2014
Page 95
Via mesne conveyances, Belinda Howell and Johanna L. Howell acquired a 25.00%
mineral interest in Tract No. 11, as joint tenants. Lease No. 2 was executed by Belinda I. Howell
and Johanna L. Howell in their capacities as Co-Trustees of the Johanna L. Howell and Belinda
I. Howell Mineral Trust and not in their individual capacities. However, as Johanna L. Howell
and Belinda I. Howell owned the mineral interest in Tract No. 11 as individuals, Lease No. 2
must be ratified by Belinda I. Howell and Johanna L. Howell in their individual capacities to
effectively encumber their mineral interest in Tract No. 11. Accordingly, for purposes of this
Opinion, we have credited Belinda Howell and Johanna L. Howell’s Tract No. 11 mineral
interest as leased by Lease No. 2, subject to the following Requirement.
REQUIREMENT: (vi) Company A should obtain and record a ratification

of Lease No. 2 executed by Johanna L. Howell and Belinda Howell, in their
individual capacity as joint tenants, covering Tract No. 11. Commented [BC48]: A title opinion should discuss the facts
underlying the need for any oil and gas lease ratification
requirements.
Pursuant to N.D.C.C. § 47-16-40, the recording of an oil and gas lease provides public
notice of the same “for the definite term expressed therein, but no longer.” However, the owner
of a recorded oil and gas lease claiming an extension of the definite term set forth therein may
execute and record an affidavit stating the facts of such extension, and in doing so, conclusively
establish public notice of the perpetuation of such oil and gas lease beyond its stated definite
term, until the same is forfeited, canceled or surrendered. Accordingly, we make the following
Requirement.
REQUIREMENT: (vii) Subject to Comment and Requirement No. 2(i)-(vi),

in the event Company A claims an extension of Lease Nos. 1-25 beyond the
definite terms stated therein, whether through production or otherwise, Company
A should execute and record an affidavit pursuant to N.D.C.C. § 47-16-40. Commented [BC49]: Unless otherwise present, a title opinion
should provide recitation of applicable law concerning the provision
of public notice regarding the perpetuation of oil and gas leases.
3. Division of Interest Basis; Drilling Unit; Pooling of Subject Leases. The Commented [BC50]: A title opinion should provide the basis of
Materials Examined indicate that pursuant to NDIC Order No. 21 dated February 1, 2013 in Case all divisions of interest provided (unless adequately set forth in those
No. 191, the Subject Lands have been designated a 1280.00-acre drilling unit for up to five divisions of interest themselves), as well as an identification of the
applicable spacing units and the manner in which the lands have (or
horizontal wells per drilling unit for the production of hydrocarbons from the Towner-Bakken have not been) pooled for development.
Pool. The Towner-Bakken Pool is defined as that accumulation of oil and gas found in the
interval from 50 feet above the top of the Bakken Formation to 50 feet below the top of the
Three Forks Formation.
There are several variations by depth as indicated in Assignment Nos. 3, 4, 45, 47, and
48. However, for purposes of this Opinion, we have produced a single Division of Interest and
Distribution of Production Proceeds schedule based on a 1,280.00-acre drilling unit comprised of
all of the Subject Lands, limited to those depths in the interval between the surface of the earth to
the base of the Three Forks Formation and excluding the Madison Formation.
REQUIREMENT: (i) None; advisory only.

August 9, 2014
Page 96
As set forth above in the Section of this Opinion entitled “Division of Interest and
Distribution of Production Proceeds,” the leasehold working interests in the Subject Lands are
owned in undivided proportions by separate parties on a tract basis. However, the establishment
of a drilling unit does not pool the interests therein for purposes of development and operation.
Pursuant to N.D.C.C. § 38-08-08, the interests of parties in two or more separately owned
tracts embraced within a drilling unit may be voluntarily pooled for purposes of development and
operation of such drilling unit. Lease Nos. 2-16 and 18-23 provide such pooling authority to the
lessees thereof. According to Order No. 195 dated February 21, 2013 in Case No. 133,60 all oil
and gas interests in the spacing unit comprising the Subject Lands were pooled for the
development and operation of the above-described spacing unit. Additionally, by Declaration of
Pooling dated March 1, 2013, recorded April 30, 2013, Reception No. 12345, Company A,
among others, have agreed to pool all their interests in the Subject Lands.
However, Lease Nos. 17 and 25, issued by the State of North Dakota, do not provide such
pooling authority. N.D.A.C. § 85-06-06-06 requires that all pooling agreements must be
submitted to and approved by the Board of University and School Lands. Likewise, Lease
Nos. 1 and 24, issued by the United States of America, also do not provide pooling authority to
the lessees thereof. Applicable federal law and regulation requires the communitization of oil
and gas leases issued by the United States of America for purposes of development and
distribution of production proceeds. See e.g., 43 C.F.R. § 3105.2-3. Accordingly, we make the
following Requirement.
REQUIREMENT: (ii) Company A should contact the appropriate State of

North Dakota and BLM offices and submit the necessary documents for approval
of the pooling and communitization of interests in the Lease Nos. 1, 17, 24,
and 25. Commented [BC51]: A title opinion, when addressing pooling
of interests, should take into account the manner in which the same
may be accomplished if absent, with particular attention paid to the
4. Intentionally Omitted. Comment and Requirement No. 4, regarding the leasing of pooling of state- and federally-owned interests.
unleased mineral owners, has been satisfied.
5. Incomplete BLM Lease Files. The Federal Lease Case File, Serial Numbers, Commented [CBD52]: Remaining title comments and
requirements will be discussed individually, as applicable and time
NDM-99000 and NDM-95000, do not contain all of the instruments listed in the Serial Register permitting.
Page for each respective Federal Lease Case File. For example, we note that Assignment No. 8
is in the NDM-95000 file but not the NDM-99000 file. Further, the certification date for the
federal records provided by ATC is unclear. Accordingly, we make the following Requirement.
REQUIREMENT: Company A should be aware that we have examined

limited materials regarding the Subject Lands. Also, Company A should obtain a
certification date for the Federal Lease Case Files.
6. Missing Portion of Instrument. We note that Assignment No. 24 by Icetrans, Inc. Commented [CBD53]: Instruments with illegible language or
missing pages/exhibits should be discussed specifically.
appears to have only conveyed a 20.00% interest in the SE/4 of Section 11, being a portion of
60
Recorded March 22, 2013, Reception No. 1234.
August 9, 2014
Page 97
Lease No. 24 to Hexity Limited Partnership. We note that the Abstract Report prepared by ATC
contains a note that states “Incomplete Document Copy as Provided by County Recorder”. We
have therefore assumed that Assignment No. 24 is missing a portion of its pages. We note that
the BLM form counterpart to the county assignment conveyed a 20.00% interest, being all of its
interest in all of Lease No. 24.
For purposes of this opinion, we assume that by Assignment No. 24, Icetrans, Inc.
conveyed all of its interest in Lease No. 24 to Hexity Limited Partnership, subject to the
REQUIREMENT: Company A should confirm our treatment of Assignment

No. 24 by obtaining a complete copy of the same.
7. Assignment of Record Title Not Approved by the BLM. The Materials Examined Commented [CBD54]: Unapproved BLM/BIA assignments of
interest should be specifically identified and discussed.
contain the following assignments recorded in Black Gold County which have not been filed
with and/or approved by the BLM:
(a) Assignment No. 9, from ClearTex Company to TEAEnergy, Inc., insofar

as it covers Lease Nos. 1 and 24;
(b) Assignment No. 11, from TEAEnergy Inc., to Forcenergy Inc., insofar as
it covers Lease Nos. 1 and 24; and
(c) Assignment No. 12, from TEAEnergy Inc. and Forcenergy Inc., to Super
Income Program 2, insofar as it covers Lease Nos. 1 and 24.
Pursuant to 43 C.F.R. 3106.1, federal oil and gas leases may be transferred by assignment
or sublease as to all or part of the acreage in the lease, or as to a divided or undivided interest
therein. However, the rights of the transferee of a federal oil and gas lease, or any interest
therein, shall not be recognized by the BLM until the transfer has been approved by an
authorized officer of the BLM. See 43 C.F.R. 3106.1; see also 30 U.S.C.A. § 187.
We note that the BLM approved an assignment of record title interest of Lease Nos. 1
and 24 from ClearTex Company to Super Energy Corporation, dated September 19, 1988, which
was not recorded in Black Gold County. This assignment, coupled with Assignment No. 18,61
between Super Energy Corporation and Super Income Program 2, ultimately provides for the
same leasehold ownership in Lease Nos. 1 and 24 as Assignment Nos. 9, 11, 12 and 18 do.
Therefore, while the ownership of the interests in question diverged when comparing the records
of the BLM with those of the Black Gold County Recorder’s Office, both sets of records lead to
the same outcome.
REQUIREMENT: None; advisory only. However, Company A should be

aware of the above-referenced assignments and the differences contained therein.
61
Assignment No. 18 has been filed with both the BLM and with the Black Gold County Recorder’s Office.
August 9, 2014
Page 98
8. Overriding Royalty Assignments Not Filed With the BLM. The Materials Commented [CBD55]: Although the BLM/BIA do not
adjudicate ORRI ownership, the presence of instruments concerning
Examined contain the following overriding royalty assignments recorded in Black Gold County the same in the BLM/BIA official files assists in the overall
which have not been filed with the BLM: completeness of records.
(a) Overriding Royalty Assignment No. 6, from Beth Neel and William B.
Collister, as Personal Representatives of the Estate of Brett Neel, deceased to Chance N. Neel,
insofar as it covers Lease Nos. 1 and 24;
(b) Overriding Royalty Assignment No. 7, from John J. Smith to Jacob L.

Mott, insofar as it covers Lease Nos. 1 and 24;
(c) Overriding Royalty Assignment No. 8, from Beth Neel and William B.
Collister, as Personal Representatives of the Estate of Brett Neel, a/k/a Brett A. Neel, a/k/a B. A.
Neel, a/k/a Art Neel, deceased to Kim Neel, Savanna Z. Neel, Wally Neel, Mike Neel, Porter
Neel, Lime Co., and WSC, LP, insofar as it covers Lease No. 24;
(d) Overriding Royalty Assignment No. 9, from Beth Neel and William B.
Collister, as Personal Representatives of the Estate of Brett Neel, a/k/a Brett A. Neel, a/k/a B. A.
Neel, a/k/a Art Neel, deceased to Kim Neel, Savanna Z. Neel, Wally Neel, Mike Neel, Porter
Neel, Lime Co., and WSC, LP, insofar as it covers Lease Nos. 1 and 24;
(e) Overriding Royalty Assignment No. 10, from Kim Lisa Klien, a/k/a Kim
L. Klien, a/k/a Kim Klien, f/k/a Kim Neel, a single woman to Tom O. Wing, insofar as it covers
Lease Nos. 1 and 24;
(f) Overriding Royalty Assignment No. 11, from Tom O. Wing to Mineral
Hitch, LLC, ROCK Resources LLC, and Tom O. Wing and Marnie M. Wing, as joint tenants,
insofar as it covers Lease Nos. 1 and 24;
(g) Overriding Royalty Assignment No. 12, from Jeffrey L. Hill, Chapter 7
Trustee of the Bankruptcy Estate of Porter Neel, Case No. 00-120 SBB, in the United States
Bankruptcy Court for the District Court of Colorado to Grant M. Busby and Joleen Busby,
Trustees of the Grant M. and Joleen Busby Revocable Living Trust insofar as it covers Lease
Nos. 1 and 24; and
(h) Overriding Royalty Assignment No. 13, from Joleen Busby, Trustee of the
Grant M. and Joleen Busby Revocable Living Trust dated February 22, 2000 to Joleen Busby,
Trustee of the Grant M. and Joleen Busby Revocable Living Trust Survivor’s Trust, insofar as it
covers Lease Nos. 1 and 24.
The above listed assignments convey an interest in federal oil and gas leases, but are not
in the corresponding BLM Lease Files. While assignments of overriding royalty interest are not
adjudicated by the BLM, they must be filed with the BLM. Therefore, we make the following
Requirement.
August 9, 2014
Page 99
REQUIREMENT: Company A should file Assignment of Overriding Royalty

Interest Nos. 6-7 and 9-13 in the BLM Lease File for Lease Nos. 1 and 24, and
file Assignment of Overriding Royalty Interest No. 8 in the BLM Lease File for
Lease No. 24.
STATUS: We note that Overriding Royalty Assignment Nos. 14 and 15 have

been omitted from the above list because Overriding Royalty Assignment Nos. 14
and 15 have been filed in the BLM Lease Files for Lease Nos. 24 and 1,
respectively.
9. Instruments Not Properly Indexed In Black Gold County. The following Commented [CBD56]: Improperly indexed instruments should
be specifically identified. In some states, this is critical; for
instruments were not indexed or not properly indexed against the proper lands in Black Gold example, in North Dakota, an improperly indexed instrument does
County: not provide constructive notice.
(a) Assignment No. 3 from Target Co. Oil Company, to Target Co. Onshore
Partnership, insofar as it covers the E/2 and SE/4NW/4 of Section 11, being a portion of Lease
No. 1, and all of Lease No. 24;
(b) Assignment dated November 1, 2001, recorded July 25, 2003, Reception
No. 12345, where BP Pipelines (North America) Inc., assigned all of its interest in the easements
tabulated in subparagraph (h), (n), (o), and (w) above in Easements and Right-of-Ways to
Pipeline Company;
(c) Overriding Royalty Assignment No. 12 from, Jeffrey L. Hill, Chapter 7

Trustee of the Bankruptcy Estate of Porter Neel, Case No. 00-120 SBB, in the United States
Bankruptcy Court for the District Court of Colorado, to Grant M. Busby and Joleen Busby,
Trustees of the Grant M. and Joleen Busby Revocable Living Trust, insofar as it covers Lease
Nos. 1 and 24; and
(d) Overriding Royalty Assignment No. 13 from Joleen Busby, Trustee of the
Grant M. and Joleen Busby Revocable Living Trust dated February 22, 2000, to Joleen Busby,
Trustee of the Grant M. and Joleen Busby Revocable Living Trust Survivor’s Trust, insofar as it
covers Lease Nos. 1 and 24.
The Materials Examined indicate that the instrument above in subparagraph (a) was not
indexed in Black Gold County. Additionally, although the Materials Examined indicate that the
instruments above in subparagraphs (b)-(c) were indexed in Black Gold County, the Materials
Examined do not indicate that they were indexed against any of the Subject Lands. Furthermore,
the instrument in subparagraph (d) above was indexed against Section 11; however, it was not
indexed against Tract No. 8.
In Hanson v. Zoller, 187 N.W.2d 47 (N.D. 1971), the North Dakota Supreme Court stated
that “the tract index is the only practical index through which instruments on record can be
located[,]” Id. at 56, while “the grantor-grantee index is actually a carryover from the old system,
August 9, 2014
Page 100
and is only an additional tool available for title searchers for other purposes.” Id. Therefore, in
North Dakota, a purchaser cannot be held to have constructive notice of instruments not correctly
indexed in the tract index. Accordingly, for purposes of this Opinion, we have credited the
instruments above as being properly indexed, but make the following Requirement.
REQUIREMENT: Company A should obtain and properly record in the tract

index of Black Gold County the instruments described above in subparagraphs
(a)-(d), thereby confirming the ownership of interests in the described lands as set
forth in this Opinion.
10. Intentionally Omitted. Comment and Requirement No. 10, regarding a naming
discrepancy concerning Mary Kellogg, has been satisfied.
11. Fractional Royalty or a Fraction of a Royalty Ambiguity. By Warranty Deed, Commented [CBD57]: “Fractional” vs. “fraction of” interests
should be discussed in detail, with an explanation of the differences
dated January 22, 1946, recorded January 23, 1946, in Book 5 of Deeds, Page 91, Steven Lutz under the applicable law.
and Lisa M. Lutz acquired a fee simple interest in Tract No. 11 as joint tenants.
By Assignment of Royalty dated July 23, 1980, recorded July 30, 1980, Reception
No. 12345 (“1980 Deed”), Steven Lutz and Lisa M. Lutz, conveyed “unto each assignee, an
undivided one-eight (1/8) royalty interest in and to all the minerals presently owned by the
assignor” in Tract No. 11, and other lands, to Lila Stewart, Steve Lutz, Mary Kellogg, and
Belinda Howell, as tenants in common. The instrument further states that “it is the intent to
convey 45 royalty acres to each assignee.” However the instrument also states that “assignor
does hereby assign said royalty under the lease now covering said lands as well as any leases, or
leases, that may be hereafter made covering said premises . . . .” The language used in this
instrument creates an ambiguity as it is possible that the instrument granted a fractional royalty
or a fraction of a royalty.
Additionally, by Corrective Assignment of Royalty dated June 27, 1985, recorded

July 18, 1985, Reception No. 12345, Steven Lutz and Lisa M. Lutz,62 in an attempt to correct the
1980 Deed, conveyed “[a]nd set over unto each Assignee, one-eighth (1/8th) of the landowners’
interest in and to royalties under. . .” Tract No. 11, and other lands, to Dixie Washington, Steven
R. Lutz, Mary I. Kellogg, and Belinda Howell, as tenants in common, with the instrument further
stating that “it is the intent to convey 45 royalty acres to each assignee.” The instrument also
states that “assignor does hereby assign said royalty under the lease now covering said lands as
well as any leases, or leases, that may be hereafter made covering said premises. . . .” Here, the
instrument makes it clear that the intent is to convey a fraction of a royalty interest to the
grantees. However, as it is possible that Steven Lutz and Lisa M. Lutz already conveyed a
62
The grantees, being Dixie Washington, Steven R. Lutz, Mary I. Kellogg, and Belinda Howell, did not join in
executing Corrective Assignment of Royalty dated June 27, 1985. We draw attention to the fact because it is
unclear whether the royalty interest conveyed was a fraction of a royalty or a fractional royalty, and in the event the
royalty interest conveyed by the corrective instrument was a smaller interest than that which the grantees initially
received, then the grantees would be required to join in executing the corrective instrument. See Johnson v.
Hovland, 2011 ND 64, ¶17.
August 9, 2014
Page 101
fractional royalty to the grantees, a corrective assignment executed by Steven Lutz and Lisa M.
Lutz is ineffective to cure the 1980 Deed defect.
Accordingly, for purposes of this Opinion, we have credited Dixie Washington, Steven R.
Lutz, Mary I. Kellogg, and Belinda Howell each with a fraction of a royalty interest consisting of
1/8th of all oil royalty in Tract No. 11 received from any oil and gas leases executed by Steven
Lutz and Lisa M. Lutz (or their respective successors in interest), subject to the following
Requirement.
REQUIREMENT: Company A should obtain and record a stipulation of

interest and cross-conveyance, containing present words of grant and executed by
all mineral and royalty interest owners in Tract No. 11, confirming their
respective Tract No. 11 mineral and royalty interests as set forth in this Opinion.
12. Third Party Mineral Reservation. The Materials Examined include Warranty Commented [CBD58]: Any third party reservations, and the
applicable law concerning the same, should be discussed in detail.
Deed dated July 21, 1960, recorded September 9, 1960, Book 11 of Deeds, Page 39, from John
Sandborn and Danyell Sandborn to Henry D. Sandborn and Marie A. Sandborn, as joint tenants,
conveying a 100.00% surface interest and undivided 1/3 (33.333333%) mineral interest in Lot 1
and the NE/4NW/4 of Section 11, and other lands, being a portion of Tract No. 6, and reserving
an undivided 2/3 (66.666667%) mineral interest in a portion of Tract No. 6.
At the time of the execution of the above-described conveyance, Danyell Sandborn

owned no interest in the described lands. The North Dakota Supreme Court in Malloy v.
Boettcher, 334 N.W.2d 8 (N.D. 1983) overturned the common law rule prohibiting third party
reservations, stating that in a conveyance which includes a reservation or exception in favor of a
third party, the reservation can be effective to convey a property interest to a third party who is a
stranger to title where that is determined to have been the grantor’s intent.
Because the Materials Examined provide no further guidance regarding the intent of the
above-named grantors regarding the foregoing instrument, for purposes of this Opinion, we have
not credited Danyell Sandborn with any interest in that portion of Tract No. 6 described above,
but make the following Requirement.
REQUIREMENT: Company A should obtain stipulations and cross-

conveyances, containing words of present grant and executed by John Sandborn
and Danyell Sandborn (or their respective successors in interest), confirming the
ownership of interests in the described lands as set forth in this Opinion.
13. Heirs of John Sandborn a/k/a Clarence Carl Sandborn. Subject to Comment and
Requirement No. 12 above, John Sandborn a/k/a Clarence Carl Sandborn (“John Sandborn”)
owned a 2/3 (66.666667%) mineral interest in Lot 1 and the NE/4NW/4 of Section 11, being a
portion of Tract No. 6. The Materials Examined contain no further conveyances of the subject
interest by John Sandborn, no conclusive evidence of the death of John Sandborn, nor any
evidence of the probate of the Estate of John Sandborn.
August 9, 2014
Page 102
However, Lease No. 6 was executed by Danyell Blanton, f/k/a Danyell Sandborn and
Donald R. Blanton, wife and husband, and ratified Danyell Blanton, as Administratrix of the
Estate of John Sandborn, deceased, dated June 25, 2012, recorded June 27, 2012, Reception No.
12345. We also note that in Comment and Requirement No. 38 the prior examiner presumed
that Danyell Blanton was entitled to all of the interest of the Estate of John Sandborn in Lot 5,
the N/2SE/4, and NE/4SW/4 of Section 2, being Tract No. 5, and Lot 6 and the SE/4SW/4 in
Section 2, being a portion of Tract No. 6.
Based on the foregoing, for purposes of this Opinion, we have assumed that John
Sandborn is deceased, and have credited ownership of the subject interest in Danyell Blanton and
her successors in interest, subject to the following Requirements.
REQUIREMENT: (i) Company A should investigate and confirm that

John Sandborn a/k/a Clarence Carl Sandborn is deceased, and place evidence of
the same of record.
REQUIREMENT: (ii) Company A should investigate and confirm the title

of Danyell Blanton in the subject interest, and ensure that title is quieted,
domestic or ancillary probate administration undertaken, and/or proper
conveyances executed and recorded to establish the ownership set forth herein.
Payment of production proceeds associated with the subject interest should be
held in escrow, pursuant to N.D.C.C. §§ 47-16-39.1 through 47-16-39.3, pending
confirmation of title in Danyell Blanton.
14. Heirs of Brett Neel, a/k/a B. A. Neel, a/k/a Art Neel. By mesne conveyances,
Brett Neel a/k/a B. A. Neel, a/k/a Art Neel acquired a 9/10 (0.90%) overriding royalty interest in
Lease Nos. 1 and 24. The Materials Examined contain no further conveyances of the subject
interest by Brett Neel, nor any evidence of North Dakota probate of the Estate of Brett Neel.
However, Overriding Royalty Assignment Nos. 6, 8 and 9 were executed by Beth Neel
and William B. Collister, as Personal Representatives of the Estate of Brett Neel, deceased, in
which Overriding Royalty Assignment No. 6 distributed ½ of the 9/10 interest to Chance N.
Neel, and the remaining ½ of the 9/10 interest was distributed to numerous parties as shown by
Overriding Royalty Assignment Nos. 8 and 9.
We also note that the Materials Examined contain Affidavit dated August 5, 1982,
recorded August 10, 1982, Reception No. 12345, executed by William B. Collister, which
evidences Brett Neel’s death on January 28, 1980, and further contains the (i) holographic will of
Brett A. Neel dated March 19, 1979,63 (ii) Order Admitting Will to Formal Probate and Formal
Appointment of Co-Personal Representatives, dated March 24, 1980, (iii) a Petition for Formal
Probate of Will and for Formal Appointment of Co-Personal Representatives, dated February 8,
1980, and (iv) Letters Testamentary, issued by the Probate Court of the City and County of
63
The instruments identified as (i)-(iv) were re-recorded on September 3, 1982 at Reception No. 12345 and the
instruments identified as (i) and (iv) were re-recorded on August 13, 1984 at Reception No. 12345.
August 9, 2014
Page 103
Denver, CO, appointing William B. Collister and Beth Neel as Co-Personal Representatives of
the Estate of Brett A. Neel, deceased. The affidavit further states that the above instruments are
filed in the Clerk of the District Court, Probate Division, Black Gold County, North Dakota.
Based on the foregoing, for purposes of this Opinion, we have credited ownership of the
subject interest in the assignees of Overriding Royalty Assignment Nos. 6, 8 and 9 and their
successors in interest, subject to the following Requirement.
REQUIREMENT: Company A should investigate and confirm the title of the

assignees in Overriding Royalty Assignment Nos. 6, 8 and 9 in the subject
interest, and ensure that title is quieted, domestic or ancillary probate
administration undertaken, and/or proper conveyances executed and recorded to
establish the ownership set forth herein. Payment of production proceeds
associated with the subject interest should be held in escrow, pursuant to
N.D.C.C. §§ 47-16-39.1 through 47-16-39.3, pending confirmation of title in the
assignees of Overriding Royalty Assignment Nos. 6, 8 and 9.
15. Strangers to Title. The Materials Examined contain the following instruments of Commented [CBD59]: Stranger to title instruments of any kind
should be specifically listed and discussed.
record executed by apparent strangers to title (as to some right, title or interest in the Subject
Lands) at the time of execution:
(a) Mortgage dated August 3, 1910, recorded August 8, 1910, Book 1 of Mtg.,
Page 175, from George B. Ream to John H. Gallagher, covering the N/2NE/4 of Section 11, and
other lands, being a portion of Tract No. 9;
(b) Mortgage dated April 10, 1918, recorded June 21, 1919, Book 43 of Mtg.,
Page 36, from John Hart to Black Gold County, covering the SE/4NE/4 of Section 11, and other
lands, being a portion of Tract No. 9;
(c) Seed Grain and Feed Contract dated April 10, 1918, recorded
September 21, 1919, Book 7 of Mtg., Page 211, from John Hart to Black Gold County, covering
the SE/4NE/4 of Section 11, and other lands, being a portion of Tract No. 9;
(d) Seed Grain and Feed Contract dated May 15, 1918, recorded
September 21, 1919, Book 7 of Mtg., Page 225, from John Hart to Black Gold County, covering
the SE/4NE/4 of Section 11, and other lands, being a portion of Tract No. 9;
(e) Right-of-Way Easement dated November 16, 1982, recorded

March 3, 1983, Reception No. 12345, from Steven Lutz to McKenzie Electric Cooperative for an
easement for an electric distribution system over and across a portion of Lot 1 of Section 11,
being a portion of Tract No. 6;
(f) Assignment No. 18 as it pertains to Super Energy Corporation and Super

Income Program 2, and a listed Easement and Lease for Salt Water Disposal dated September
10, 1991, recorded September 30, 1991, Reception No. 12345, from Steven Lutz and Lisa Lutz,
August 9, 2014
Page 104
to Orange Production Company, for the right to use the SWD Well 11 located in the NE/4SE/4
of Section 11;
(g) UCC Financing Statement of unknown date, recorded November 15, 2006,
Reception No. 12345, from Palace Exploration Company and Bistate Oil Management Corp. to
Zenergy, Inc., covering the Subject Lands, and other lands;
(h) Memorandum of Operating Agreement and Financing Statement dated

December 30, 2005, effective March 16, 1999, recorded November 17, 2006, Reception
No. 12345, between Zinke & Trumbo, Inc., now known as Zenergy (operator) and Palace
Exploration Company, Zavanna, LLC, RZ, Inc., now known as Zeneco, Inc. purported to place
third parties on notice of mutual security interests in numerous parcel of land, including 180N-
104W Sections 1 through 36;
(i) Affidavit dated November 16, 2009, recorded November 20, 2009,
Reception No. 12345, by Zeneco, Inc., purported to place third parties on notice of agreements in
numerous parcel of land, including 180N-104W Sections 1 through 36;
(j) Release of Affidavit dated July 30, 2010, recorded August 6, 2010,
Reception No. 12345, by Zeneco, Inc., purported to release the above instrument in subparagraph
(i), indexed against numerous parcel of land, including the Subject Lands;
(k) Partial Release of Memorandum of Operating Agreement and Financing

Statement dated July 30, 210, recorded August 6, 2010, Reception No. 12345, from Zenergy,
Inc., Palace Exploration Company, Zavanna, LLC, and Zeneco, Inc. purports to release the
(unknown) interest of Zavanna, LLC and its assignee, Miranda Energy, LLC, as indexed against
numerous parcel of land, including the Subject Lands;
(l) Memorandum of Leasehold Dedication dated August 15, 2012, recorded

August 16, 2012, Reception No. 12345, by and between Triangle Petroleum Corporation,
Triangle USA Petroleum Corporation, (together “Triangle”) and Caliber Midstream, LLC
(“Caliber”), memorializing a certain production gathering arrangement dated January 23, 2012
where all of Triangle’s interest in the oil and gas produced from its leases owned in the Subject
Lands are committed to the Agreement; and
(m) Assignment No. 45 as it pertains to Ruth Oil & Gas, LLC and Green Tree
Resources LLC regarding Lease Nos. 2-16 and 21.
REQUIREMENT: Company A should investigate and satisfy itself as to the

validity of any legal or equitable claim to interests in the Subject Lands indicated
by the above-referenced documents, and should provide us with all evidence of
any such claim for potential amendment of this Opinion consistent with this
Comment and Requirement.
August 9, 2014
Page 105
16. Intentionally Omitted. Comment and Requirement No. 16, regarding the
clarification of the surface ownership of portions of Tract Nos. 8, 9, and 11, has been satisfied.
17. Assignment No. 45 - Scrivener’s Error. Lease No. 8 has a Reception No. of
395753, while Lease No. 9 has a Reception No. of 12345; however, by Assignment No. 45, Y-
Oil Corporation, Voyager Exploration LLC, Magnetic, LLC, Ruth Oil & Gas, LLC and Green
Tree Resources LLC assigned oil and gas leases listed as being executed by Matt P. Frayser and
Rosie Flora Frayser, husband and wife and recorded at Reception No. 123452, and Agnes M.
Granovsky Trust Agreement dated August 9, 1984 by Agnes M. Granovsky, Trustee and
recorded at Reception No. 123456. For purposes of this Opinion, we have assumed that
Assignment No. 45 intended to assign Lease Nos. 8 and 9, and we have given effect to
Assignment No. 45 as doing so, but make the following Requirement.
REQUIREMENT: In an abundance of caution, Company A should obtain and

record a correction of Assignment No. 45, containing words of present grant and
demise, from Y-Oil Corporation, Voyager Exploration LLC, Magnetic, LLC,
Ruth Oil & Gas, LLC and Green Tree Resources LLC (or their successor(s) in
interest), listing the correct Reception No. for Lease Nos. 8 and 9.
18. Subject Lands Surface Access. The online records of the NDIC indicate that the Commented [CBD60]: Surface access issues should always be
discussed, although the detail sought may be different from opinion
surface location for the Subject Well is located in the SW/4SW/4 of Section 11 (“Wellsite to opinion, depending on the operator’s plans and needs, e.g. the
Lands”). Additionally, the Materials Examined contain the following documents: need for a wellpad on the lands vs. the need for a gathering line or
pipeline easement alone.
(a) Memorandum of Access and Surface Damage Agreement dated

November 28, 2012, recorded December 19, 2012, Reception No. 12345, indicating that Belinda
Howell has entered into an unrecorded Access and Surface Damage Agreement, whereby she has
granted unto Company A certain rights of use and occupancy upon the SW/4 of Section 11 and
other lands; and
(b) Memorandum of Access and Surface Damage Agreement dated

January 23, 2013, recorded February 5, 2013, Reception No. 12345, indicating that Luke Howell
has entered into an unrecorded Access and Surface Damage Agreement, whereby he has granted
unto Company A certain rights of use and occupancy upon the SW/4 of Section 11.
Accordingly, we make the following Requirements.
REQUIREMENT: (i) Company A should familiarize itself with the

provisions of the unrecorded Access and Surface Damage Agreements and ensure
that Company A complies with the same.
REQUIREMENT: (ii) Company A should ensure that it complies with

applicable local, state and federal laws, rules and regulations regarding the surface
access and use, specifically including the surface owner notice and negotiation
provisions of N.D.C.C. § 38-08-01 et seq.
August 9, 2014
Page 106
19. Subsurface Pore Space Access. N.D.C.C. § 47-31-01 et seq. addresses the issue Commented [CBD61]: A title opinion should set forth the
applicable subsurface pore space law, and how it might affect the
of ownership of subsurface pore space in North Dakota. § 47-31-03 provides that “[t]itle to pore development of the lands covered by the opinion.
space in all strata underlying the surface of lands and waters is vested in the owner of the
overlying surface estate.” While pore space ownership does not necessarily alter the traditional
access and development rights of mineral estate owners, complications may arise in situations
where a well bore passes through the pore space of lands not included in the applicable spacing
unit. Therefore, Company A should confirm that it has addressed subsurface pore space access
in its surface access agreements. Accordingly, we make the following Requirement.
REQUIREMENT: Company A should be familiar with the provisions of

N.D.C.C. § 47-31-01 et seq., and ensure that it has addressed pore space access in
any surface use agreements obtained.
20. Unreleased Oil and Gas Leases. The Materials Examined contain multiple Commented [CBD62]: The treatment of unreleased (but
expired) oil and gas leases can differ greatly from opinion to
unreleased oil and gas leases, further described in Schedule II attached hereto. As noted above, opinion; care should be taken to customize the treatment scope.
an examination of the online records of the NDIC as of the Certification Date indicates that,
aside from the Subject Well, the USA Well is the only active well producing oil and/or gas
located on the Subject Lands. Accordingly, for purposes of this Opinion, we presume that the
unreleased oil and gas leases listed in Schedule II have each terminated by their own respective
terms, as each contained a primary term that expired prior to the spud date of the active wells,
did not contain lands spaced within producing drilling units, or contained Pugh clauses, but make
the following Requirement.
REQUIREMENT: Company A should obtain a release of each unreleased oil

and gas lease of record affecting the Subject Lands and place the same of record.
In the alternative, Company A should satisfy itself that each of the unreleased oil
and gas leases of record have expired by their respective terms for lack of
production from the lands covered by the oil and gas leases or from any lands
pooled, communitized or unitized therewith.64
21. Unreleased Leases/Agreements. The Materials Examined contain the following

unreleased leases and agreements which appear to have expired:
(a) Ground Lease dated September 4, 1979, recorded October 29, 1979, Book
2, Page 55, from Steven Lutz and Lisa M. Lutz, to Target Co. Oil Company, covering a tract of
land in the NW/4SE/4 and NE/4SE/4 of Section 11, as more particularly described in the
instrument, being 4.04 acres more or less, for a tank battery site, for a primary term of twenty
(20) years, with an option to extend the lease four (4) times for terms of five (5) years each.65
64
We note that we have received confirmation from the NDIC that it will no longer execute affidavits of non-
development. It is unclear, however, whether this is a permanent decision on behalf of the NDIC or whether it will
again execute affidavits of non-development at a future date. Accordingly, Company A may wish to inquire
whether affidavits of non-development are available for the above-referenced lands.
65
Unreleased Agreements (a) and (d) were mortgaged by Hay Development Company, Hay Company, Quiethouse
Corporation, NPC Inc., and Hays Holding Company (formerly Hay Development Company), as further described
and tabulated above in Mortgages and Other Encumbrances as Mortgages (k) and (l) respectively.
August 9, 2014
Page 107
The last owners of record are Icetrans, Inc., and Hays Holding Company, formerly Hay
Development Company, successor by merger to Quiethouse Corporation;
(b) Salt Water Disposal Agreement dated July 1, 1982, recorded

September 27, 1982, Reception No. 12345, from Steven Lutz and Lisa M. Lutz, to Target Co.
Oil Company, for the right to use the SWD Well 11 located in the NE/4SE/4 of Section 11, for
the purpose of the disposal of salt water that may be produced form any well or wells, together
with the right to lay, install, maintain and repair pipeline and equipment for the purposes of
disposing saltwater, for a primary term of ten (10) years. The last owners of record are XO
Production Company, Inc., and Orange Production Company;
(c) Easement and Lease for Salt Water Disposal dated September 10, 1991,
recorded September 30, 1991, Reception No. 12345, from Steven Lutz and Lisa Lutz, to Orange
Production Company, for the right to use the SWD Well 11 located in the NE/4SE/4 of Section
11, for the purpose of the disposal of salt water, together with the right of constructing,
maintaining, operating, etc., except during June 1st through August 31st each year of the lease, for
a primary term of ten (10) years terminating December 31, 2001. The last owner of record is
Hexity, Limited Partnership66; and
(d) Easement and Lease for Salt Water Disposal dated September 5, 2001,
recorded November 7, 2001, Reception No. 12345, from Johanna L. Howell and Belinda
Howell, to Hexity Limited Partnership, for the right to use the SWD Well 11 located in the
NE/4SE/4 of Section 11, for the purpose of the disposal of salt water, together with the right of
constructing, maintaining, operating, etc., for a primary term of ten (10) years terminating
December 31, 2011, with the option to extend for two (2) additional terms of ten (10) years each.
The last owner of record is Hays Holding Company, formerly Hay Development Company, and
successor by merger to Quiethouse Corporation.
Accordingly, for purposes of this Opinion, we presume that the agreements listed above
have each terminated by their own respective terms, but make the following Requirement.
REQUIREMENT: Company A should obtain a release of each of the above-

referenced agreements affecting the Subject Lands and place the same of record.
In the alternative, Company A should satisfy itself that each of the unreleased
agreements have expired by their respective terms.
22. Intentionally Omitted. Comment and Requirement No. 22, which was advisory
and concerned the possible application of the dormant mineral statutes with regard to any
unleased mineral owners, is no longer necessary with all unleased mineral owners having been
leased.
66
In Assignment No. 18, Super Energy Corporation and Super Income Program 2 convey all of their interest in the
referenced easement; however, they are strangers to title as to this easement.
August 9, 2014
Page 108
23. Unrecorded Agreements. The Materials Examined contain references to, and/or Commented [CBD63]: Unrecorded agreements should be
identified and the applicable law governing constructive notice
certain instruments have been made subject to, the following unrecorded agreements: should be discussed. For example, a mere reference to a PSA in a
Colorado-recorded instrument gives notice of the existence of the
PSA alone, while that same reference, under North Dakota law,
(a) An Agreement dated February 6, 1981, between Johanna L. Howell and affords constructive notice of the entire PSA and all of its
Belinda I. Howell and LOW Co., as referenced in Option to Purchase Oil and Gas Lease dated terms/exhibits.
February 6, 1981, recorded February 13, 1981, Reception No. 12345;
(b) An Agreement dated February 6, 1981, between Marie A. Sandborn and

LOW Co., as referenced in Option to Purchase Oil and Gas Lease dated February 6, 1981,
recorded February 13, 1981, Reception No. 12345;
(c) A Participation Agreement dated July 25, 1984, between ClearTex Co.
and Gas Exploration Corporation, as referenced in Assignment No. 6;
(d) An Assignment Agreement dated July 25, 1984, between ClearTex Co.
and Gas Exploration Corporation, as referenced in Assignment No. 6;
(e) A Restated Participation Agreement dated July 26, 1984, between

ClearTex Company and Orange Production Company, as referenced in Assignment No. 7;
(f) A Restated Assignment Agreement dated July 26, 1984, between

ClearTex Company and Orange Production Company, as referenced in Assignment No. 7;
(g) An undated Participation Agreement, between ClearTex Company and

Sundown Minerals, Inc., as referenced in Assignment No. 8;
(h) An undated Assignment Agreement, between ClearTex Company and

Sundown Minerals, Inc., as referenced in Assignment No. 8;
(i) A Participation Agreement dated July 26, 1984, between ClearTex

Company and TEAEnergy, Inc., as referenced in Assignment Nos. 9 and 11;
(j) An Assignment Agreement dated July 26, 1984, between ClearTex

Company and TEAEnergy, Inc., as referenced in Assignment Nos. 9 and 11;
(k) A Participation Agreement dated July 16, 1984, as amended by

amendment dated July 20, 1984, between ClearTex Company and Super Energy Corporation, as
referenced in Assignment No. 10;
(l) An Assignment Agreement dated July 16, 1984, between ClearTex

Company and Super Energy Corporation, as referenced in Assignment No. 10;
August 9, 2014
Page 109
(m) Numerous unrecorded agreements67, as referenced in Assignment No. 14;
(n) Numerous unrecorded agreements68, as referenced in Assignment No. 15;
(o) Letter Agreement dated June 20, 1988, between Sundown Minerals, Inc.
and Orange Production Company, as referenced in Assignment No. 16;
(p) A Gas Sales Contract, dated July 18, 1986, as referenced in Assignment
No. 17;
(q) Agreement for Sale of the Stateline Gas System and Related Gathering
Systems dated December 31, 1991, as referenced in an Assignment of Rights of Way dated
effective December 31, 1991, recorded September 27, 1993, Reception No. 12345, from Orange
Production Company to WMP Hydrocarbon Company, a Division of WMP Industries, Inc.;
(r) A Purchase and Sale Agreement dated November 16, 1995, between Super
Energy Corporation, Super Income Program 2 and Sky Venture, as referenced in Assignment
No. 18;
(s) Buyer’s Terms and Conditions of Purchase dated July 10, 1996, executed
by Icetrans, Inc., as referenced in Assignment No. 20;
(t) Agreement for Sale McKenzie Gas Processing Plant and Grasslands
Gathering System dated October 31, 1996, as referenced in Revised Assignment of Surface,
Surface Leases, Easements, and of Rights-of-Way, Black Gold County, North Dakota, dated
effective October 1, 1996, recorded August 18, 1998, Reception No. 12345, from WMP
Hydrocarbon Company, a division of WMP Industries, Inc., WMP Industries Inc., WMP Energy
Services Company (formerly Quivira Gas Company), WMP Pipeline Company, L.P., (formerly
WMP Gathering Systems, Inc.,), by its general Partner, Win, Inc. to North River Energy, Inc.;
(u) Purchase and Sale Agreement dated February 15, 1996, as referenced in
an Assignment, dated effective December 2, 1996, recorded January 30, 1997, Reception
No. 12345, from WaltMark Pipeline, Inc., to Pipeline Company;
(v) Purchase and Sale Agreement dated November 21, 1997, between Orange
Production Company and Coastal Corporation, as referenced in Assignment No. 21;
(w) Exchange Agreement dated October 21, 1997, between Coastal

Corporation, Great River Engineering, Ltd., and Hexity Company, as referenced in Assignment
No. 22;
67
In the interest of brevity, we have not listed the numerous instruments contained in the same. Upon the request of
Company A, we will provide a detailed list of all of the reference instruments contained in the same.
68
August 9, 2014
Page 110
(x) Purchase and Sale Agreement dated June 25, 1999, as referenced in an
Assignment, Conveyance and Bill of Sale, dated effective July 1, 1999, recorded
December 13, 1999, Reception No. 12345, from Sky Venture, to Hexity, Limited Partnership;
(y) Purchase and Sale Agreement dated effective July 1, 2002, as referenced
in an Assignment and Bill of Sale, dated effective July 1, 2002, recorded January 31, 2003,
Reception No. 12345, from Icetrans, Inc., to XO Production Company;
(z) Purchase and Sale Agreement dated effective July 1, 2003, between
Icetrans, Inc., and XO Production Company, as referenced in Assignment No. 26;
(aa) Amended and Restated Credit Agreement dated April 7, 2005, between
Jay Chernosky, Trustee and Wachovia Bank, National Association, as referenced in Mortgage
(k) as tabulated in Mortgages and Other Encumbrances above;
(bb) Credit Agreement dated June 22, 2007, between Hidden Bench Oil LLC
and BNP Paribas, as referenced in Mortgage (c) as tabulated in Mortgages and Other
Encumbrances above;
(cc) Amended and Restated Credit Agreement dated May 26, 2010, that
Amended and Restated Mortgage, Collateral Real Estate Mortgage Line of Credit Mortgage,
Deed of Trust, Assignment of As-Extracted Collateral, Security Agreement, Fixture Filing and
Financing Statement, dated May 26, 2010, a certain Guaranty and Collateral Agreement dated
May 26, 2011, as referenced in a Second Amended and Restated Mortgage, Collateral Real
Estate Mortgage, Line of Credit Mortgage, Deed of Trust, Assignment of As-Extracted
Collateral, Security Agreement, Fixture Filing and Financing Statement dated effective
August 8, 2011, recorded September 20, 2011, Reception No. 12345, from Doubledrill, Inc. to
Macquarie Holdings (USA), Inc., as Trustee for the benefit of Macquarie Bank Limited, as
Administrative Agent, and in a UCC Financing Statement dated October 4, 2011 and recorded on
October 4, 2011, Reception No. 12345, from Doubledrill, Inc. to Macquarie Bank Limited;
(dd) Credit Agreement dated April 26, 2011 from Pipeline, LP, and Bank of
America, N.A, as Administrative Agent, and L/C Issuer, as referenced in in Mortgage (a) as
tabulated above in Mortgages and Other Encumbrances;
(ee) Numerous unrecorded agreements,69 as referenced in Mortgage (l) as

tabulated above in Mortgages and Other Encumbrances;
(ff) Credit Agreement dated February 26, 2010, between Hidden Bench Oil
LLC and BNP Paribas, as referenced in Mortgage (c) as tabulated above in Mortgages and Other
Encumbrances;
69
August 9, 2014
Page 111
(gg) Lease Acquisition Agreement dated May 1, 2012, between Y-Oil

Corporation, Voyager Exploration LLC, Magnetic, LLC, Ruth Oil & Gas, LLC, Green Tree
Resources LLC, and Company A Corporation, as referenced in Assignment No. 45;
(hh) Purchase Agreement dated July 10, 2012, between Hays Holding
Company; Turning Energy Fund A, L.P.; Turning Energy Fund B, L.P.; and Turning Energy
Fund C, L.P., as referenced in Assignment No. 46; and
(ii) Lease Acquisition Agreement dated November 14, 2012, between Oasis
Petroleum, Inc. and Company A Corporation, as referenced in Assignment No. 47.
The foregoing instruments are not contained within the Materials Examined.
Accordingly, the leasehold and other ownership interests expressed in this Opinion are based
upon our review of the Materials Examined only, and do not reflect any unrecorded limitations
included in the foregoing agreements. Although the mere recitation of the referenced unrecorded
agreements do not conclusively establish successor liability with respect to the same, Company
A is deemed to have constructive notice of the existence of the unrecorded agreements pursuant
to North Dakota’s recording statute, N.D.C.C. § 47-19-19. Accordingly, we make the following
Requirement.
REQUIREMENT: Company A should obtain true and complete copies of the

foregoing instruments, and satisfy itself that nothing contained therein alters the
ownership of interest in the Subject Lands and Leases as set forth in this Opinion.
24. Payment of Production Proceeds. N.D.C.C. §§ 47-16-39.1 through 47-16-39.3 Commented [CBD64]: A title opinion should clearly identify
the operator’s obligations concerning production proceeds payment
provide for certain requirements regarding an oil and gas operator’s obligation to pay royalties, pursuant to applicable law.
and establish penalties for the breach thereof. Further, N.D.C.C. § 38-08-06.3 requires an
information statement be provided to royalty owners by an oil and gas operator which will allow
“[t]he royalty owner to clearly identify the amount of oil or gas sold and the amount and purpose
of each deduction made from the gross amount due. A person who fails to comply with the
requirements of this section is guilty of a class B misdemeanor.” Accordingly, we make the
following Requirements.
REQUIREMENT: (i) Company A should be familiar with the

requirements of N.D.C.C. §§ 47-16-39.1 through 47-16-39.3, as well as N.D.C.C.
§ 38-08-06.3, and ensure compliance with the same in its distribution of the
proceeds of production from the Subject Lands and Leases.
REQUIREMENT: (ii) Company A should attempt to obtain a signed

division order from each person entitled to a distribution of proceeds, although it
may not withhold payment for failure to sign a division order.
In addition, as indicated above, certain interests in the Subject Lands and Leases are
owned by life tenants and remaindermen. Because the apportionment of the proceeds of
August 9, 2014
Page 112
production between such life tenants and remaindermen is not clear in all cases, we make the
REQUIREMENT: (iii) Company A should obtain agreements between all

life tenants and remaindermen, respective to each interest in the Subject Lands
and Leases as set forth herein, specifying how the life tenants and remaindermen
are to be paid production proceeds.
Furthermore, as to nonparticipating royalty interests, the general rule in other

jurisdictions provides that a nonparticipating royalty owner is not entitled to lease bonus and
delay rentals. 2 Williams and Meyers, Oil and Gas Law, section 328. However a problem arises
in determining whether some payments under a lease are properly classified as a bonus or a
royalty. North Dakota courts have yet to address this issue; therefore, we make the following
Requirement.
REQUIREMENT: (iv) Company A should obtain agreements from all non-

participating royalty interest owners, respective to each interest in the Subject
Lands and Leases as set forth herein, specifying how they are to be paid
production proceeds.
25. Validity of Instruments; General Index Search; Business Entity Succession. Commented [CBD65]: Certain title opinion items may be
converted for time/cost saving purposes; for example, presumptions
Except as otherwise noted in this Opinion, we have presumed the authority of individuals may be applied universally, except where the Materials Examined
executing instruments on behalf of other individuals or business entities such as corporations, indicate a different treatment is necessary.
partnerships, limited liability companies or trusts. We have also presumed the existence of any
technical requirements relating to the conveyance of homesteaded property. Accordingly, we
have not made any Comments or Requirements regarding such matters.
Likewise, the Materials Examined do not contain, and we have not reviewed, any general
indices maintained by Black Gold County, North Dakota with respect to corporate documents or
other instruments that were recorded without a specific legal description. This Opinion is
necessarily limited in scope regarding the same.
Finally, in the interest of brevity with respect to the succession of business entities, and
unless otherwise noted herein, we have presumed the validity of, and have not made Comments
and Requirements concerning, such succession pursuant to business entity name changes,
mergers, etc., where the Materials Examined provide satisfactory evidence of the same. This
Opinion is necessarily limited in scope regarding the same.
REQUIREMENT: None; advisory only. However, if Company A has special

cause for concern, please do not hesitate to contact us if Company A wishes to
discuss this Comment and Requirement in greater detail.
26. Taxation Districts. Although we have not confirmed the same based upon the
Materials Examined, the Subject Lands may lie within the boundaries of designated taxation
districts established by the State of North Dakota, or political subdivision thereof, and may be
August 9, 2014
Page 113
subject to taxation by such water, soil, or other districts and/or statutes, ordinances, and rules
applicable to such taxation districts. Any unpaid and past due assessments levied by these taxing
districts constitute a lien against the Subject Lands. The Materials Examined does not indicate
any such liens affecting the Subject Lands, but in an abundance of caution, we make the
REQUIREMENT: Company A should satisfy itself that there are no unpaid

and past due assessments by any water, soil, or other taxation districts affecting
the Subject Lands. Company A should conduct its operations on the Subject
Lands with consideration for the presence of any surface taxation districts,
including any applicable statutes, rules, or ordinances.
27. Missouri River. The Missouri River, a navigable river, traverses the Subject Commented [CBD66]: Specialty items should be included with
the proper scope and purpose; for example, riverine lands in North
Lands. Because of legal principles associated with ownership of and transfers related to Dakota may often have navigable waterway issues.
riverbeds, islands, omitted lands, riverbanks, accretion, avulsion, erosion, and reliction, title to
land in and around a navigable river is subject to question and such title is subject to change over
time. Competing title claims often exist among and between the State of North Dakota, the
United States of America, and fee owners, including fee owners in adjacent sections.
The resolution of such title questions depends on facts outside the record and requires
either a judicial determination or an agreement among all interested parties. The ownership set
forth in this Opinion is subject to such title questions and changes. Some of the rules that apply
are as follows:
(a) The State of North Dakota owns the bed of navigable rivers from low
water mark to low water mark,70 abandoned channels within the meander lines, and islands
emerging between the low water marks after November 2, 1889 (i.e. the date of North Dakota’s
statehood) and their accretions;
(b) The United States owns islands existing as of the date of statehood and
certain “omitted lands” between the meander line and the river;
(c) The upland owner (generally a fee owner, but occasionally the United
States or the State of North Dakota) generally owns beyond the meander line to the low water
mark;
(d) Where land is gained by accretion or reliction (a gradual process) the

owner of the upland gains title to the added land. The allocation of accretion or reliction
between adjoining tracts is dependent on the configuration of the water body relative to the
tracts, not simply an extension of subdivision or boundary lines;
70
However, see Comment and Requirement No. 28 for further discussion regarding ownership between the ordinary
high and low watermarks.
August 9, 2014
Page 114
(e) Where land is lost by erosion (a gradual process) the owner of the upland
loses title;
(f) If a change in the location of the river occurs by an avulsive change (a

sudden change) the title boundaries remain where they were. However, the State of North
Dakota becomes the owner of the new bed of the river and the former owners of the new bed of
the river become the new owners of the abandoned river channel;
(g) A conveyance of the upland by reference to a meander line (or the

equivalent) generally passes to the low water mark, including land added by accretion or
reliction, unless a contrary intent can be shown;
(h) Title to severed minerals is subject to the same rules; and
(i) Where a tract is completely eroded away and then the river moves back by
accretion to expose the completely eroded tract, the land is restored to the original nonriparian
and riparian owners.
Application of the foregoing rules is complex; they are generally germane to the title to
severed minerals and involve fact-intensive analysis, issues which are further complicated
because of the periods of time involved and the constant changing of the river.
REQUIREMENT: None; advisory only. In other requirements, we discuss

certain specific significant issues associated with the Missouri River suggested by
the Materials Examined.
28. Dispute as to Mineral Ownership between High and Low Watermarks along
Missouri River. The State of North Dakota is the owner of the bed of a navigable body of water
if navigable as of the date of North Dakota’s November 2, 1889 admission to the Union. The
Missouri River has been determined to be navigable. At the time of admission to the Union,
North Dakota was granted the bed of navigable bodies of water to the high watermark. The high
watermark is defined as the line reached by water when the navigable lake or stream is ordinarily
full and water ordinarily high. Since 1877, North Dakota has had a statute that provides in part
that the riparian landowner, when it borders on a navigable lake or stream, takes to the edge of
the lake or stream at low watermark. See N.D.C.C. § 47-01-15. The low watermark is defined
as the line to which the water recedes at its lowest stage in ordinary seasons, as distinguished
from exceptional drought.
The State of North Dakota has litigated the issue of the ownership rights of the riparian
landowner and the State to the land between the high watermark and low watermark along
navigable bodies of water. See State ex rel. Sprynczynatyk v. Mills, 523 N.W.2d 537 (N.D.
1994). The North Dakota Supreme Court has held that the State and riparian landowner have
correlative rights in the land between the two watermarks (“Riparian Shorezone”). However,
Sprynczynatyk involved the use of the surface of the land and did not address the issue of
ownership of the minerals. The State of North Dakota continues to press its claim of ownership
August 9, 2014
Page 115
of the minerals between the high and low watermarks under the Equal Footing Doctrine and
Submerged Lands Act. In line with its claim of ownership to the ordinary high watermark, the
North Dakota State Land Commissioner commissioned a survey71 (the “OHWM Survey”) to
determine the high watermark of the Missouri River.
Recently, the Northwest District Court in Williams County, North Dakota concluded in
an Order for Partial Summary Judgment dated January 28, 2013, in the consolidated matters of
Reep, et al. v. State, et al. (Case No. 53-2012-CV-00213) and Brigham Oil & Gas, L.P. v. North
Dakota Board of University & School Lands, et al. (Case No. 53-2011-CV-00495), that the State
of North Dakota “owns the minerals in the area between the ordinary high and low watermarks
on these waterways, and that this public title excludes ownership and any proprietary interest by
riparian landowners.” However, the judge recognized the enormity of the decision and noted
that “[t]he Court understands that its decision is not necessarily the final word on this title
question, and that the circumstances may warrant an immediate appeal.”
Both the Reep case (Docket No. 20130110) and the Brigham Oil & Gas, L.P. case
(Docket No. 20130111) have been appealed72 to the North Dakota Supreme Court. Accordingly,
uncertainty remains over the riparian ownership of the mineral estate lying within the Riparian
Shorezone under N.D.C.C. § 47-01-15. Accordingly, for purposes of this Opinion, the tract
acreages and boundaries within the Subject Lands and the ownership schedules herein are based
upon: (a) acreages derived from the official Master Title Plat maintained by the BLM and (b) the
recorded instruments maintained by the Recorder’s Office of Black Gold County, North Dakota,
but we make the following Requirements.
REQUIREMENT: (i) For drilling purposes, advisory only. In the event

production is established, the State of North Dakota will need to have the
ownership of the oil and gas between the high and low watermarks in Sections 2
and 11, T180N, R104W, judicially determined in a quiet title action in which the
riparian mineral owners in Sections 2 and 11, T180N, R104W, are parties.
REQUIREMENT: (ii) Company A should monitor the Reep case, and be

aware that pending the ultimate outcome of the litigation over the riparian
ownership, the tract acreages and boundaries within the Subject Lands and
ownership schedules herein may require revision.
REQUIREMENT: (iii) For drilling purposes, Company A should obtain

from the respective mineral interest owners, for valuable consideration,
ratifications of Lease Nos. 6-7, 11, 12, and 18-21 which expressly provides that
the leases cover all interests in the leased lands, including all accretions thereto, to
the low watermark of the Subject Lands, regardless of the quantity of the interest
71
Bartlett & West High-Water Mark Survey dated November 2010 (which is referred to as the “Bartlett and West
report” in the discussion concerning the comments and requirements present in the Prior DDOTO 1-6).
72
According to the North Dakota Supreme Court’s website, available at: http://www.ndcourts.gov/, the Reep and
Brigham Oil & Gas, L.P. cases appear to be tentatively scheduled for oral argument during the September 2013
Term of Court.
August 9, 2014
Page 116
owned, the acreage actually covered, and the amount of consideration paid. The
ratifications should be recorded with the Black Gold County Recorder’s Office.
See also Prior Comment and Requirement No. 46.
29. Missouri River Acreage. Lots 3-6 of Section 2 and Lots 1 and 2 of Section 11 are
upland to the Missouri River, being all of Tract Nos. 3 and 4 and a portion of Tract Nos. 5, 6 and
11, while Tract Nos. 7 and 10 contain the riverbed of the Missouri River. Comparing the BLM
Master Title Plat to the OHWM Survey, it appears that portions of the east bank of the Missouri
River may have moved west. We have assumed that the additional land on the east side of the
Missouri River was formed by accretion. In the event that accretion has taken place along Lots
3-6 of Section 2 and Lots 1 and 2 of Section 11 such that said lands and underlying minerals are
now owned by the owners of Lots 3-6 of Section 2 and Lots 1 and 2 of Section 11, the additional
mineral acreage would likely fall under the coverage of Lease Nos. 2-7, 11-12 and 18-21.73
In addition, we specifically note that the exact acreage of the Subject Lands cannot be
determined from a review of the BLM Master Title Plat alone. Additionally, there is a
significant difference in acreage/ownership rights identified in the Prior DDOTO 1-6, BLM
Master Title Plat, and the OHWM Survey. Furthermore, a review of aerial photography of the
Subject Lands reveals islands in the Missouri River that are otherwise not accounted for by either
the BLM Master Title Plat nor the OHWM Survey.
Because the BLM Master Title Plat does not give the water acreage of Section 2 and
because Section 2 contains a correction line we are unable to determine the total Section 2
acreage based upon the BLM Master Title Plat alone. However, the BLM Master Title Plat
indicates that Section 2 contains 503.72 upland acres. Furthermore, because the BLM Master
Title Plat of Section 11 does not contain a correction line, we have assumed that Section 11
comprises a total of 640.00 acres, including 630.30 upland acres and 9.70 acres of water.
However, the OHWM Survey indicates that Section 2 is comprised of 639.75 acres,
including 136.23 acres of water, while Section 11 is comprised of 639.50 acres, including 13.77
acres of water. The implication is that the Subject Lands are comprised of 1,279.25 acres,
including 150.00 acres of water.
Furthermore, the North Dakota Department of Trust Lands website indicates that Section
2 contains of 126.5 acres of water, while Section 11 contains 13.60 acres of water.
For purposes of this Opinion, we have used the BLM Master Title Plat upland acreage
and the North Dakota Department of Trust Lands Missouri River acreage to determine the total
acreage for the Subject Lands. Therefore, we have determined that Section 2 contains 126.50
acres of water and 503.72 upland acres, while Section 11 contains 13.60 acres of water and
630.30 upland acres, indicating that the Subject Lands are comprised of a cumulative 1,274.12
acres, subject to the following Requirement.
73
However, see Comment and Requirement No. 28(iii).
August 9, 2014
Page 117
REQUIREMENT: Payment of production proceeds associated with the upland

owners, being Lots 3-6 of Section 2 and Lots 1 and 2 of Section 11, collectively
being all of Tract Nos. 3, 4, 7 and 10, and a portion of Tract Nos. 5, 6 and 11,
should be held in escrow, pursuant to N.D.C.C. §§ 47-16-39.1 through 47-16-
39.3, pending confirmation of the controlling acreage for the Subject Lands.
30. Federal, State and Local Laws, Rules and Regulations. This Opinion does not
cover zoning rules or regulations imposed on drilling operations in Black Gold County or the
State of North Dakota, nor do we advise Company A regarding environmental considerations
imposed by local, state or federal laws, rules and regulations. Unless otherwise addressed herein,
we assume Company A is aware of the requirements of the same, and will conduct its operations
on the Subject Lands accordingly. Furthermore, except as specifically addressed herein, this
Opinion does not cover the drilling, spacing, surface owner notice, or other requirements of the
NDIC, and we assume Company A has determined or will determine the nature of such
requirements and will comply with them in the conduct of its operations on the Subject Lands.
REQUIREMENT: Company A should be familiar with the existence and

requirements of the various federal, state and local laws, rules and regulations
concerning its operations on the Subject Lands, and comply with the same in the
conduct of those operations. Please advise us if Company A wishes to discuss
this Comment and Requirement in greater detail.
31. Parties in Possession. This Opinion is subject to the rights of all parties in
possession of the Subject Lands and to matters of survey which are not readily apparent from the
Materials Examined, including but not limited to easements and road and railroad rights-of-way;
rights in reservoirs, ditches or laterals thereto; and/or mining activities which may be located
upon, traverse and/or touch and concern the Subject Lands.
REQUIREMENT: Prior to conducting operations upon the Subject Lands, a

detailed inspection should be made of the surface of the Subject Lands, and
Company A should be satisfied that none of the above-referenced matters exist
which would in any way be in derogation of the ownership of the Subject Lands
as set forth herein.
32. Affidavit of Possession. No information has been submitted concerning the actual Commented [CBD67]: Interests of parties in actual possession
of the lands should always be discussed, including the utility of a
use and possession of the Subject Lands. Accordingly, we make the following Requirement. possession affidavit, even where applicable law may not expressly
require the same.
REQUIREMENT: Company A should submit an affidavit executed by the
person or persons in actual possession and occupancy of the Subject Lands stating
the authority by which they occupy said acreage and what right, title or interest
they claim therein. If no one is occupying said acreage by cultivation, grazing or
otherwise, an affidavit to that effect should be submitted.
33. Opinion Exceptions and Limitations. Notwithstanding anything herein to the

contrary, we cannot express any opinion as to matters not disclosed in the Materials Examined.
August 9, 2014
Page 118
Those matters include, without limitation: (a) railroad and/or other rights-of-way or claims not
reflected in the Materials Examined which could be determined by physical inspection of the
Subject Lands; (b) possessory rights and discrepancies of survey or location that may be
reflected by physical examination of the Subject Lands; (c) zoning or other land use controls; (d)
pending litigation not reflected by a recorded notice of lis pendens; (e) matters not disclosed in a
prior title opinion prepared by a third party attorney upon which we have been asked to rely for
purposes of this Opinion; (f) matters within the scope of exceptions to abstract coverage and
matters not disclosed as a result of guidelines for title examination agreed to by Company A and
Fox Rothschild LLP; (g) proceedings which by statute are privileged and not open to public
inspection; (h) taxes on oil, gas and other leasehold estates listed separately from the taxes on the
surface or mineral rights, including taxes assessed by special districts; (i) adverse rights or
defects unknown to us but of which Company A has actual knowledge of or which the law may
presume it to have knowledge; (j) matters concerning whether there is a right of access to the
Subject Lands from a public road; (k) all financing statements and other documents reflecting
security interests in crops or fixtures; (l) matters of fact not disclosed of record which vary from
statutorily permitted presumptions of fact or statutorily created prima facie evidence of fact; (m)
applicable bankruptcy or insolvency laws; (n) liens for taxes not yet due; (o) statutory,
mechanic’s, materialmen’s, oil and gas, and operator’s liens not reflected in the Materials
Examined; (p) liens securing the payment of proceeds of production from the Subject Lands; (q)
enforcement of regulations or orders by any governmental authority having jurisdiction over the
Subject Lands; (r) this Opinion does not cover ownership of or encumbrances upon coal or other
minerals other than oil and gas; (s) the capacity or competency of parties executing documents,
including fraud, the fact of delivery, and/or alteration after delivery; and/or (t) this Opinion does
not cover ownership of or encumbrances upon water and/or water rights.
REQUIREMENT: None; advisory.
34. Attorney – Client Privilege. This Opinion is rendered solely for the use of
Company A and its affiliates, and shall not be relied upon by any other person or legal entity
without Fox Rothschild LLP’s express written consent. This Opinion was prepared by Fox
Rothschild LLP at the request of Company A, and accordingly, an attorney-client privilege exists
between Fox Rothschild LLP and Company A regarding the content of this Opinion. However,
disclosure of this Opinion, or the information contained herein, by Company A to any third
party, including without limitation any third party with whom Company A has entered into a
joint operating or other agreement concerning the Subject Lands, may potentially operate as a
waiver of the attorney-client privilege between Fox Rothschild LLP and Company A. Such
disclosure may result in the admissibility of the information contained in this Opinion in a
judicial or administrative proceeding.
REQUIREMENT: None; advisory only. However, please do not hesitate to

contact us if Company A wishes to discuss this Comment and Requirement in
greater detail.
August 9, 2014
Page 119
ADDITIONAL COMMENTS AND REQUIREMENTS
35. Over-conveyance in Warranty Deed dated December 6, 2012. Via mesne

conveyances, Barbara Hopkins owned a 1/6 mineral interest in Tract No. 3. By Warranty Deed
dated December 6, 2012, recorded December 12, 2012, Reception No. 12345, Barbara Hopkins
conveyed to Arden Durand an undivided one-fourth Tract No. 3 mineral interest, reserving an
undivided three-fourths mineral interest. However, Barbara Hopkins only owned a 1/6 Tract No.
3 mineral interest. Accordingly, for purposes of this Opinion, we have treated Warranty Deed
dated December 6, 2012 as conveying Barbara Hopkins’s entire 1/6 mineral interest in Tract No.
3 and given no effect to the reservation therein.
36. Overriding Royalty Assignment No. 17. Prior DDOTO 4 indicated that
Overriding Royalty Assignment No. 17 conveyed a non-proportionately reduced 1.0% of 8/8ths
overriding royalty in Lease Nos. 22 and 23. However, in calculating the burdens on Lease
Nos. 22 and 23, we reviewed Overriding Royalty Assignment No. 17 and discovered that it does
contain proportionate reduction language, reducing the total override by the actual working
interest that the Assignor owned at the time of the conveyance. Therefore, we have made the
appropriate corrections to both the division of interest table as well as to the tabulations.
37. Overriding Royalty Reservation in Assignment No. 47. Via mesne assignments,
Hidden Bench Oil, LLC owned a 42.395000% working interest in Lease No. 1, a lease issued by
the United States of America. By Assignment No. 47, Hidden Bench Oil, LLC assigned to
Company A all of its right, title, and interest in Lease No. 1, limited to Tract No. 8 and from the
surface to the base of the Three Forks Formation, while reserving an overriding royalty interest
equal to the positive difference between 20% and existing burdens [being 2.50%]. We note,
though, that the form for Assignment No. 37 recorded in the Black Gold County Recorder’s
Office does not contain a proportionate reduction provision. Assignment No. 47 also indicates
that it is made pursuant to the terms of unrecorded Lease Acquisition Agreement dated effective
November 14, 2012, which we have not examined a copy of but may contain a proportionate
reduction provision therein.
However, the form of Assignment No. 47 filed with and approved by the BLM indicates
that an overriding royalty equal to 7.50% was reserved through Assignment No. 47 [presumably
being the total cumulative overriding royalty interest burdening the lease, including the 2.50%
overriding royalty described in the Black Gold County form].74 Accordingly, for purposes of
this Opinion, we have assumed that Hidden Bench Oil, LLC and Company A intended for
Hidden Bench Oil, LLC to reserve a proportionately reduced overriding royalty equal to 2.50%,
but make the following Requirement.
74
See Comment and Requirement No. 8 concerning assignments of overriding royalty which have not been filed in
the BLM Lease File.
August 9, 2014
Page 120
REQUIREMENT: Company A should investigate and confirm our assumption

that the overriding royalty reserved in Assignment No. 47 was intended to be
proportionately reduced. Company A should submit to this office the results of its
investigation for possible amendment of this Opinion consistent with this
Comment and Requirement.
38. January Extensions of Lease Nos. 8-10 and 13-16. Via mesne assignments,
Company A owns a 98.00% working interest in Lease Nos. 8-10 and 13-16. Lease Nos. 8-10
and 13-16 (“Extended Leases”) originally covered Tract No. 1 and the NE/4NE/4 of Section 12
of Township 180 North, Range 104 West, 5th P.M., as well as Lot 7 of Section 6 and Lots 1 and
2 of Section 7, Township 180 North, Range 103 West, 5th P.M. The Extended Leases each
originally had three year primary terms and were set to expire on April 15, 2013. On
January 29, 2013, Company A entered into extensions and amendments with the lessors of Lease
Nos. 8-10 and 13-16, and/or their successors in interest,75 thereby extending the primary term of
the Extended Leases by three (3) years and amending the royalty of each from 17.50% to 20.00%
(“January Extensions”). Additionally, the extensions and amendments noted that such
extensions and amendments only applied to Tract No. 1 and the NE/4NE/4 of Section 12 of
Township 180 North, Range 104 West, 5th P.M.
Prior to the expiration of the original primary terms of the Extended Leases, Company A
began drilling the Subject Well.76 The Extended Leases do not contain pugh clauses; therefore,
we are assuming that all lands originally covered by the Extended Leases are being held beyond
their original primary terms due to the drilling operations on the Subject Well.
While the Extended Leases appear to have been extended beyond their original primary
terms due to drilling operations on the Subject Well, nevertheless, Company A entered into the
January Extensions, which increased the royalty rates on the Extended Leases to 20.00%.
However, Company A was the only working interest holder to enter into the January Extensions;
Sub-Zero Natural Resources, LLC, the owner of the remaining 2.00% working interest in the
Extended Leases, was not a party to the 2013 Extensions. Therefore, for purposes of this
Opinion, we have credited Company A’s 98.00% working interest in the Extended Leases as
being subject to the increased 20.00% royalty rate, while Sub-Zero Natural Resources, LLC’s
2.00% working interest remains subject to the original 17.50% royalty rate.
REQUIREMENT: None; advisory only. However, please note that if

Company A obtains production from Lot 7 of Section 6 and/or Lots 1 and 2 of
Section 7, Township 180 North, Range 103 West, 5th P.M., or lands spaced
therewith, the royalty burdening Company A’s working interest on those lands
would remain at 17.50%.
75
For a list of the referenced extensions and amendments, see each lease tabulation listed in Schedule I.
76
The online records of the NDIC indicate that the spud date for the Subject Well was March 7, 2013.
August 9, 2014
Page 121
39. Scrivener’s Error in Lease Nos. 13-15 Extensions. The Materials Examined
contain the following instruments which appear to extend the primary terms of Lease Nos. 13-
15:
(a) Extension and Amendment of Oil and Gas Lease dated January 29, 2013,
recorded February 21, 2013, Reception No. 12345, executed by Christina Becker, a married
woman dealing in her sole and separate property, extending the primary term and amending the
royalty of Lease No. 16;
(b) Extension and Amendment of Oil and Gas Lease dated January 29, 2013,
recorded February 21, 2013, Reception No. 12345, executed by Kevin T. Morris, a married man
dealing in his sole and separate property, extending the primary term and amending the royalty
of Lease No. 16; and
(c) Extension and Amendment of Oil and Gas Lease dated January 29, 2013,
recorded February 21, 2013, Reception No. 12345, executed by Billy E. Morris, a married man
dealing in his sole and separate property, extending the primary term and amending the royalty
of Lease No. 16 (collectively, “2013 Extensions”).
Christina Becker, Kevin T. Morris, and Billy E. Morris are not parties to Lease No. 16;
instead, Christina Becker, Kevin T. Morris, and Billy E. Morris are the lessors of Lease Nos. 13-
15, respectively. For purposes of this Opinion, we have presumed that the references to Lease
No. 16 in the 2013 Extensions are scrivener errors, that the parties intended to extend the primary
terms of Lease Nos. 13-15, and have given effect to the 2013 Extensions as extending the
primary terms of Lease Nos. 13-15, but make the following Requirement.
REQUIREMENT: Company A should obtain and record corrections of the

2013 Extensions, containing words of present grant and demise and executed by
Christina Becker, Kevin T. Morris and Billy E. Morris (or their successor(s) in
interest), which respectively identify the correct Reception No. for Lease Nos. 13-
15.
This Opinion was rendered from an examination of the Materials Examined and is
subject to the Comments, Requirements, Exceptions and Limitations contained herein, and to
any other matters not ascertainable from an examination of the Materials Examined. Subject to
the foregoing Comments, Requirements, Exceptions and Limitation, we find Company A’s title
to the Subject Lands to be acceptable for drilling and division order purposes.
Respectfully Submitted,
FOX ROTHSCHILD LLP
Brent Chicken
August 9, 2013
Page i of Schedule I
SCHEDULE I
SUBJECT LEASES:
Lease Nos. 1-25, as tabulated below, are referred to in this Opinion individually as a
“Lease” or collectively as the “Subject Leases.” Lease Nos. 8-23 have been tabulated directly
from the Prior DDOTO 1-6. Although in some instances we have reformatted or summarized
data, we have conducted no independent examination of the same. Accordingly, we cannot
warrant the accuracy of the same and accept no liability for errors or omissions therein.
In addition to those listed in the prior opinions, Lease No. 25 has been tabulated from the
Materials Examined of this Opinion.
Lease No. 1:
Execution Date: October 7, 1976

Effective Date: November 1, 1976
Recording Information: April 18, 1988, Reception No. 12345 (BLM Serial No: NDM-
99000), with Lease No. 24 (BLM Serial No. NDM-95000)
segregated from the same
Original Lessor(s): United States of America Department of the Interior Bureau of
Land Management
Original Lessee(s): Ryan Greer
Legal Description: Township 180 North, Range 104 West, 5th P.M.
Section 1: SW/4
Section 2: S/2SE/4
Section 11: SE/4NW/4
Section 12: NW/4NE/4, S/2NE/4, W/2, NW/4SE/4
Section 13: SE/4NE/4, SW/4NW/4, S/2
Section 14: N/2
Section 21: Lots 5, 6, N/2SE/4
Section 22: Lots 3, 4, 5, 6, SE/4NE/4
Section 23: Lot 2, NW/4SE/4
Section 29: E/2SE/4
Tract(s) Covered: 8
Mineral Interest: 100.000000%
Primary Term: Ten (10) years
Royalty: 1/8th (12.50%)
Delay Rentals: $1.00 per year – See lease
Shut-In Royalty: None
Pooling Clause: No
Unitization Clause: No
Pugh Clause: No
August 9, 2013
Page ii of Schedule I
Notes: Minimal surface impact stipulation.

All exploration work, other than test drilling, will be done during
dry soil periods or after the ground has frozen, unless a site specific
approval has been obtained.
No surface occupancy within the Upland Breaks ecosystem.
Lease Terms Amended on January 17, 1979 for Section 13:
SE/4NE/4, NE/4SE/4, S/2SE/4 as to the royalty of production for
these lands only.
Lease Terms Amended on June 7, 1985 for Section 13: SE/4NE/4,
NE/4SE/4, S/2SE/4 invalidating county royalty of production for
these lands only.
Lease Terms Amended on June 24, 1991 for Section 13: SE/4NE/4,
NE/4SE/4, S/2SE/4 reinstating county royalty of production for
these lands only.
Lease No. 2:77
Execution Date: November 19, 2009

Effective Date: July 14, 2010
Recording Information: December 30, 2009, Reception No. 12345
Original Lessor(s): Johanna L. Howell and Belinda I. Howell, Co-Trustees of the
Johanna L. Howell and Belinda I. Howell Mineral Trust
Original Lessee(s): Bigline Energy, LLC
Section 2: Lots 4(35.10), 6(21.40), SE/4SW/4
Section 10: Lots 3(30.65), 6(13.50), 7(39.98)
Section 11: Lots 1(30.60), 2(39.70), NE/4NW/4, SW/4
Tract(s) Covered: 4, 6 and 11
Mineral Interest: Tract No. 4: 25.000000%
Tract No. 6: 8.333333%
Tract 11: 25.000000%
Primary Term: Three (3) years
Royalty: 3/16th (18.75%)
Delay Rentals: None; paid-up lease
Shut-In Royalty: $1.00 per year per net mineral acre
Pooling Clause: Yes
Unitization Clause: Yes
Pugh Clause: Yes; vertical and horizontal
77
The mineral interest indicated for Lots 4 and 6 of Section 2 has been tabulated directly from the information
provided in Prior DDOTO 3, while the mineral interest for the SE/4SW/4 of Section 2 has been tabulated directly
from the information provided in Prior DDOTO 6. Although in some instances we have reformatted or summarized
data, we have conducted no independent examination of the same. Accordingly, we cannot warrant the accuracy of
the same and accept no liability for errors or omissions therein.
August 9, 2013
Page iii of Schedule I
Notes: 1) Top Lease.

2) No warranty of title.
3) This lease is not for coalbed methane.
4) No surface occupancy.
5) By Ratification of Oil and Gas Lease dated April 19, 2013 and
recorded April 30, 2013, Reception No. 12345, this lease was
ratified by Johanna L. Howell and Belinda I. Howell, Co-Trustees
of the Johanna L. Howell and Belinda I. Howell Mineral Trust, to
include “all accretions thereto to the low watermark of the of the
[sic] described lands, regardless of the quantity of the interest
owned, the acreage actually covered, and the amount of
consideration paid.”
Lease No. 3:

Original Lessor(s): Steven R. Lutz and Lisa Lutz, husband and wife
Section 10: Lots 3(30.65), 6(13.50), 7(39.98)
Section 11: Lot 2(39.70), SW/4
Tract(s) Covered: 11
Royalty: 3/16th (18.75%)
Pooling Clause: Yes
Notes: 1) No warranty of title.
4) Ratified by Steven R. Lutz and Lisa Lutz to include “all
accretions thereto to the low watermark of the of the [sic] described
lands, regardless of the quantity of the interest owned, the acreage
actually covered, and the amount of consideration paid[,]” at
Reception No. 12345.
Lease No. 4:

August 9, 2013
Page iv of Schedule I

Original Lessor(s): Faye Brooks, a married woman dealing in her sole and separate
property
Section 10: Lots 3(30.65), 6(13.50), 7(39.98)
Royalty: 3/16th (18.75%)
Pooling Clause: Yes
4) Ratified by Irene Lee as to Tract No. 11 at Reception No.
12345.
5) Ratified by Christina Taylor as to Tract No. 11 at Reception
No. 12345.
6) Ratified by Tammy L. Green as to Tract No. 11 at Reception
No. 12345.
7) Ratified by Faye Brooks to include “all accretions thereto to the
low watermark of the of the [sic] described lands, regardless of the
quantity of the interest owned, the acreage actually covered, and the
amount of consideration paid[,]” at Reception No. 12345.
8) Ratified by Irene Lee to include “all accretions thereto to the
low watermark of the of the [sic] described lands, regardless of the
quantity of the interest owned, the acreage actually covered, and the
amount of consideration paid[,]” at Reception No. 12345.
9) Ratified by Christina Taylor to include “all accretions thereto
to the low watermark of the of the [sic] described lands, regardless
of the quantity of the interest owned, the acreage actually covered,
and the amount of consideration paid[,]” at Reception No. 12345.
10) Ratified by Tammy L. Green to include “all accretions thereto
to the low watermark of the of the [sic] described lands, regardless
of the quantity of the interest owned, the acreage actually covered,
and the amount of consideration paid[,]” at Reception No. 12345.
August 9, 2013
Page v of Schedule I
Lease No. 5:

Original Lessor(s): Linda Wildman Trustee of the Dixie WashingtonTrust
Section 10: Lots 3(30.65), 6(13.50), 7(39.98)
Royalty: 3/16th (18.75%)
Pooling Clause: Yes
4) Ratified by Linda Wildman, Trustee of the Dixie Washington
Trust, to include “all accretions thereto to the low watermark of the
of the [sic] described lands, regardless of the quantity of the interest
owned, the acreage actually covered, and the amount of
consideration paid[,]” at Reception No. 12345.
Lease No. 6:

Original Lessor(s): Danyell Blanton, f/k/a Danyell F. Sandborn and Donald R. Blanton,
wife and husband
Section 11: Lot 1(30.60), NE/4NW/4
Tract(s) Covered: A portion of Tract No. 6
Mineral Interest: 2/3 (66.6666667%)
Royalty: 1/6th (16.666667%)
Pooling Clause: Yes
August 9, 2013
Page vi of Schedule I

Pugh Clause: No
Notes: Option to extend lease an additional two years for $250.00 per net
mineral acre.
Ratified by Danyell Blanton, as Administratrix of the Estate of John
Sandborn, deceased as to a portion of Tract No. 6 as described
above, at Reception No. 12345.
Lease No. 7:78
Execution Date: December 14, 2009

Recording Information: January 21, 2010, Reception No. 12345
Original Lessor(s): Roberta Watson, a widow
Section 2: Lots 4(35.10), 6(21.40), SE/4SW/4
Section 11: Lot 1(30.60), NE/4NW/4
Tract(s) Covered: 4 and 6
Tract No. 6: 25.000000%
Royalty: 1/6th (16.666667%)
Pooling Clause: Yes
Pugh Clause: No
78
The mineral interest indicated for Lots 4 and 6 of Section 2 has been tabulated directly from the information
provided in Prior DDOTO 3, while the mineral interest for the SE/4SW/4 of Section 2 has been tabulated directly
from the information provided in Prior DDOTO 6. Although in some instances we have reformatted or summarized
data, we have conducted no independent examination of the same. Accordingly, we cannot warrant the accuracy of
the same and accept no liability for errors or omissions therein.
August 9, 2013
Page vii of Schedule I
Notes: Ratified by Mona M. Watson as to Tract Nos. 4 and 6 at Reception

No. 12345.
Ratified by Virgil D. Watson as to Tract Nos. 4 and 6 at Reception
No. 12345.
Ratified by Kelley A. Crane as to Tract Nos. 4 and 6 at Reception
No. 12345.
Ratified by Louanne I. Deal as to Tract Nos. 4 and 6 at Reception
No. 12345.
Ratified by Melodi J. Calvin as to Tract Nos. 4 and 6 at Reception
No. 12345.
Ratified by Caroline L. McKenzie as to Tract Nos. 4 and 6 at
Reception No. 12345.
Ratified by Kendra R. Quinn as to Tract Nos. 4 and 6 at Reception
No. 12345.
Lease No. 8:79

Effective Date: April 16, 2010
Original Lessor(s): Matt P. Frayser and Rosie Flora Frayser, husband and wife
Section 6: Lot 7(37.15)
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70)
Section 12: NE/4NE/4
Tract(s) Covered: 1
Primary Term: 1) Six (6) years, as extended, as to Sections 2 and 12, Township
180 North, Range 104 West, 5th P.M.; and
2) Three (3) years, as to Sections 6 and 7, Township 180 North,
Range 103 West, 5 th P.M.
Royalty: (a) 20.00%, as amended as to the 98.00% working interest owned
by Company A; and
(b) 17.50% as to the 2.00% working interest owned by Sub-Zero
Natural Resources, LLC.
Shut-In Royalty: See Lease
Pooling Clause: Yes
Unitization Clause: Unknown
79
Lease Nos. 8-10 and 13-16 have been tabulated directly from the information provided in Prior DDOTO 1.
August 9, 2013
Page viii of Schedule I
Pugh Clause: No
Notes: (a) Top Lease.
(b) Extension and Amendment of Oil and Gas Lease dated
January 29, 2013, recorded February 21, 2013, Reception No.
12345, extending the primary term of the lease for an additional
three (3) years and amending the royalty to 20.00%, but limited to
the lands in Sections 2 and 12, Township 180 North, Range 104
West, 5th P.M. See Comment and Requirement No. 38.
Lease No. 9:

Original Lessor(s): Agnes M. Granovsky Trust Agreement dated August 9, 1984 by
Agnes M. Granovsky, Trustee
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70)
Tract(s) Covered: 1
by Company A; and
(b) 17.50% as to the 2.00% working interest owned by Sub-
Zero Natural Resources, LLC.
Pooling Clause: Yes
Pugh Clause: No
August 9, 2013
Page ix of Schedule I

(b) Extension and Amendment of Oil and Gas Lease dated
January 29, 2013, recorded February 21, 2013, Reception No.
12345, extending the primary term of the lease for an additional
three (3) years and amending the royalty to 20.00%, but limited to
the lands in Sections 2 and 12, Township 180 North, Range 104
West, 5th P.M. See Comment and Requirement No. 38.
Lease No. 10:

Original Lessor(s): Geraldine Granovsky, a widow
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70)
Tract(s) Covered: 1
by Company A; and
(b) 17.50% as to the 2.00% working interest owned by Sub-Zero
Natural Resources, LLC.
Pooling Clause: Yes
Pugh Clause: No
August 9, 2013
Page x of Schedule I

(b) Ratified by Christy A. Klein as to Tract No. 1 (Section 2, Lots
1 and 2 and other lands) at Reception No. 12345.
Ratified by Lucia F. Granovsky as to Tract No. 1 (Section 2, Lots 1
and 2 and other lands) at Reception No. 12345.
(c) Extension and Amendment of Oil and Gas Lease dated January
29, 2013, recorded February 21, 2013, Reception No. 12345,
extending the primary term of the lease for an additional three (3)
years and amending the royalty to 20.00%, but limited to the lands
in Sections 2 and 12, Township 180 North, Range 104 West, 5 th
P.M. See Comment and Requirement No. 38.
Lease No. 11:80

Original Lessor(s): Robert Granovsky and Tracie Granovsky Trust, by Angela
Granovsky, Successor Trustee
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70), 3(30.62)
Tract(s) Covered: 1, 3
Tract No. 3: 25.000000%
Royalty: 17.50%
Pooling Clause: Yes
Pugh Clause: No
Notes: Top Lease
Lease No. 12:

80
Lease Nos. 11 and 12 have been tabulated directly from the information provided in Prior DDOTO 1 and 3.
August 9, 2013
Page xi of Schedule I

Original Lessor(s): Robert Granovsky and Tracie Granovsky Trust, by Angela
Granovsky, Successor Trustee
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70), 3(30.62)
Tract(s) Covered: 1, 3
Tract No. 3: 25.000000%
Royalty: 17.50%
Pooling Clause: Yes
Pugh Clause: No
Notes: Top Lease
Lease No. 13:

Original Lessor(s): Christina Becker, a married woman dealing in her sole and separate
property
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70)
Tract(s) Covered: 1
August 9, 2013
Page xii of Schedule I
by Company A; and
Pooling Clause: Yes
Pugh Clause: No
(b) Extension and Amendment of Oil and Gas Lease dated January
P.M. See Comment and Requirement Nos. 38 and 39.
Lease No. 14:

Original Lessor(s): Kevin T. Morris, a married man dealing in his sole and separate
property
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70)
Tract(s) Covered: 1
by Company A; and
Pooling Clause: Yes
August 9, 2013
Page xiii of Schedule I
Pugh Clause: No
Lease No. 15:

Original Lessor(s): Billy E. Morris, a married man dealing in his sole and separate
property
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70)
Tract(s) Covered: 1
Royalty: (a) 20.00%, as amended as to the 98.00% working interest
owned by Company A; and
Pooling Clause: Yes
Pugh Clause: No
August 9, 2013
Page xiv of Schedule I

29, 2013 and recorded February 21, 2013, Reception No. 12345,
Lease No. 16:

Recording Information: March 30, 2010, Reception No. 12345
Original Lessor(s): Elvira R. Parks, a married woman dealing in her sole and separate
property
Section 7: Lots 1(37.21), 2(37.23)

Section 2: Lots 1(39.90), 2(39.70)
Tract(s) Covered: 1
Royalty: (a) 20.00%, as amended as to the 98.00% working interest
owned by Company A; and
Pooling Clause: Yes
Pugh Clause: No
P.M. See Comment and Requirement No. 38.
August 9, 2013
Page xv of Schedule I
Lease No. 17:81
Execution Date: February 12, 1980

Effective Date: February 12, 1980
Recording Information: September 8, 1982, Reception No. 12345
Original Lessor(s): State of North Dakota, acting by and through the Board of
University and School Lands and its agent, the Commissioner of
University and School Lands
Original Lessee(s): Craig Wise
Section 2: All riverbed of Missouri River
Section 3: All riverbed of Missouri River
Tract(s) Covered: 7
Primary Term: Five (5) years
Royalty: 1/6 (16.666667%)
Delay Rentals: $173.00 per year
Shut-In Royalty: See Paragraph 10 of Lease
Pooling Clause: No
Pugh Clause: No
Notes: Subject to all rules and regulations of the Board of University and
School Lands in effect on the date of the leases; such rules and
regulations incorporated in the lease by reference. See Lease.
Lease No. 18:
Execution Date: April 27, 2010

Effective Date: August 17, 2010
Recording Information: June 1, 2010, Reception No. 12345
Original Lessor(s): Alicia C. Meacham, a widow
Original Lessee(s): MicroX Company
Section 2: Lot 3

Section 35: Lots 4 and 5 including all accretions and riparian
rights appurtenant thereto.
Tract(s) Covered: 3
Primary Term: Four (4) years
81
Lease Nos. 17-20 have been tabulated directly from the information provided in Prior DDOTO 3.
August 9, 2013
Page xvi of Schedule I
Royalty: 18.75%
Pooling Clause: Yes
Pugh Clause: Yes. Notwithstanding the provisions of this lease to the contrary,
this lease shall terminate at the end of the primary term as to all the
leased land except those lands within a production or spacing unit
prescribed by law or administrative authority on which is located a
well producing or capable of producing oil and/or gas or on which
Lessee is engaged in drilling or reworking operations. If during the
primary term of this leases, operations for the drilling of a well for
oil and/or gas are commenced and continuously prosecuted to
completion, whether such well be dry or capable of producing oil or
gas, the primary term of this lease shall then be extended for an
additional 180 days beyond the expiration of the primary term
stated in the lease, whether such well be located on lands covered
by this lease or on lands pooled with this lease in a governmental
production or spacing unit. Similarly, the primary term of this lease
shall again be extended for an additional 180 days for each
additional well drilled and continuously prosecuted to completion,
whether such well be located on the lands covered by this lease or
on lands pooled with this lease in a governmental production or
spacing unit, and whether such well be dry or be capable of
production.
Notes: Top Lease.
Right of First Refusal. If during the primary term hereof Lessor, her
heirs, legal representatives, successors or assigns, desires to lease
the above described property for a term commencing at the
expiration of the primary term hereof (Top Lease), Lessor agrees to
first offer to lease the same to Lessee herein, his heirs, legal
representatives, successors or assigns for the same consideration
and upon the same terms, covenants and conditions contained in
any bona fide offer by any legitimate third party. Additionally, any
such “Top Lease” shall be subject and inferior to the terms,
covenants and conditions of this leases of the same be extended
beyond the primary term hereof by any provision hereof. See Lease.
Lease No. 19:
Execution Date: May 5, 2010

Original Lessor(s): Arden Durand, Attorney-in-fact for Barbara R. Hopkins, a widow
August 9, 2013
Page xvii of Schedule I

Section 2: Lot 3

rights appurtenant thereto
Tract(s) Covered: 3
Royalty: 18.75%
Pooling Clause: Yes
production.
Notes: Top Lease.
August 9, 2013
Page xviii of Schedule I

Lease No. 20:

Original Lessor(s): LaVerne Lopez, a widow
Section 2: Lot 3

rights appurtenant thereto.
Tract(s) Covered: 3
Royalty: 18.75%
Pooling Clause: Yes
production.
Notes: Top Lease.
August 9, 2013
Page xix of Schedule I
Ratified by Kevin Lopez as to Tract No. 3 at Reception No. 12345.

Ratified by Douglas Paul Broyles as to Tract No. 3 at Reception
No. 12345.
Ratified by Cheryl L. Van Brand as to Tract No. 3 at Reception No.
12345.
Ratified by Rita Michelle Agnew as to Tract No. 3 at Reception No.
12345.
Ratified by Varyl Wayne Broyles as to Tract No. 3 at Reception
No. 12345.
Lease No. 21:82

Original Lessor(s): Danyell Blanton, f/k/a Danyell F. Sandborn and Donald R. Blanton,
wife and husband
Section 2: Lots 5(17.00), 6(21.40), N/2SE/4, NE/4SW/4,
SE/4SW/4
Tract(s) Covered: 5 and 6
Tract No. 6: 2/3 (66.666667%)
Royalty: 1/6 (16.666667%)
Pooling Clause: Yes
Pugh Clause: No
82
Lease No. 21 has been tabulated directly from the information provided in Prior DDOTO 3, 5 and 6.
August 9, 2013
Page xx of Schedule I
Notes: Top Lease.

January 2013 Examiner’s Note: Ratified by Danyell Blanton, f/k/a
Danyell F. Sandborn, as Administratrix of the Estate of John
Sandborn, a/k/a Clarence Carl Sandborn, deceased, as to Tract Nos.
5 and 6 at Reception No. 12345.
Lease No. 22:83

Recording Information: November 22, 1985, Reception No. 12345
Original Lessor(s): Johanna L. Howell and Belinda I. Howell, husband and wife
Original Lessee(s): Wise Exploration Company
Section 1: Lots 3, 4, S/2NW/4
Section 2: S/2NE/4
Tract(s) Covered: 2
Mineral Interest: ¼ (25.00%)
Royalty: 1/6 (16.666667%)
Pooling Clause: Yes
Pugh Clause: No
Notes: None
Lease No. 23:

Original Lessor(s): Marie Sandborn, a widow
Original Lessee(s): Wise Exploration Company
Section 1: Lots 3, 4, S/2NW/4
Section 2: S/2NE/4
Tract(s) Covered: 2
Royalty: 1/6 (16.666667%)
83
Lease Nos. 22 and 23 have been tabulated directly from the information provided in Prior DDOTO 4. Although
in some instances we have reformatted or summarized data, we have conducted no independent examination of the
same. Accordingly, we cannot warrant the accuracy of the same and accept no liability for errors or omissions
therein.
August 9, 2013
Page xxi of Schedule I

Pooling Clause: Yes
Pugh Clause: No
Notes: None
Lease No. 24:

Recording Information: April 18, 1988, Reception No. 12345 (BLM Serial No. NDM-
95000, segregated from Lease No. 1 (BLM Serial No: NDM-
99000)
Original Lessor(s): United States of America Department of the Interior Bureau of
Land Management
Original Lessee(s): Ryan Greer
Section 11: E/2
Section 14: S/2
Tract(s) Covered: 9
Primary Term: Ten (10) years
Royalty: 1/8th (12.50%)
Delay Rentals: $1.00 per year – See lease
Shut-In Royalty: None
Pooling Clause: No
Pugh Clause: No
Notes: Minimal surface impact stipulation.
All exploration work, other than test drilling, will be done during
dry soil periods or after the ground has frozen, unless a site specific
approval has been obtained.
No surface occupancy within the Upland Breaks ecosystem.
Lease No. 25:

Recording Information: May 1, 2013, Reception No. 12345; State Lease No. OG-13-08452
Original Lessor(s): State of North Dakota, acting by and through the Board of
University and School Lands and its agent, the Commissioner of
University and School Lands
Original Lessee(s): Bakken Tornado, LLC
August 9, 2013
Page xxii of Schedule I
Section 11: Missouri River in NW/4
Primary Term: Five (5) years
Royalty: 3/16 (18.75%)
Delay Rentals: An initial delay rental of $13.77 per year; however, the lease
indicates that rentals have been paid through the primary term
Shut-In Royalty: See Paragraph 10 of Lease
Pooling Clause: No
Pugh Clause: No
Notes: 1) If, at the expiration of the primary term, production is not
obtained in commercial quantities, Lessee may file a written
application with the Commissioner of University and School Lands
for a one hundred eighty (180) day extension.
2) The lease contains an oil and gas lease addendum, being
Exhibit “I” attached thereto, which notes that the land covered by
this lease lies beneath an area identified as essential wildlife habitat
and development and may be subject to additional procedures as
part of an Application to Drill.
3) The lease contains an oil and gas lease addendum, being
Exhibit “R” attached thereto, which contains numerous unique
provisions, including the following:
a) Notwithstanding any other provisions of this lease to
the contrary, it is agreed that lessee has no right, without first
obtaining the written consent of lessor, to drill any well from
the surface of said riverbed or lakebed or to use the surface of
the riverbed or lakebed for any purpose;
b) Lessor does not warrant its title to the acreage leased
by this lease;
c) If, during any time prior to expiration of the lease, it
is determined by a court or by lessor that the acreage is more
than that set forth in this lease, then lessee will pay lessor an
additional bonus for each additional acre. Such bonus will be
the same per acre bonus as that paid by lessee to obtain this
lease; and
d) If, during any time prior to expiration of the lease, it
is determined by a court or by lessor that the lessor owns less
acreage than that set forth in this lease, then lessor will refund
to lessee the proportionate per acre bonus paid for this lease.
August 9, 2013
Page xxiii of Schedule I
ASSIGNMENTS OF SUBJECT LEASES:
Assignment Nos. 28, 39, and 31-44 have been tabulated directly from the Prior DDOTO
1-6. Although in some instances we have reformatted or summarized data, we have conducted
no independent examination of the same. Accordingly, we cannot warrant the accuracy of the
same and accept no liability for errors or omissions therein.
In addition to those listed in the prior opinions, the Materials Examined for this Opinion
contain Assignment Nos. 46-48.
Assignment No. 1:
Execution Date: September 16, 1976

Recording Information: February 27, 1979, Reception No. 12345
Assignor(s): Ryan Greer
Assignee(s): Forrest Francis
Interest(s) Owned: 100.00%
Interest(s) Assigned: All right, title and interest, less overriding royalty
Leases Covered: Lease Nos. 1 and 24
Lands Covered: Tract Nos. 8 and 9
Interest(s) Retained: ½ of 1% overriding royalty
Notes: Waiver and Acceptance of assignment by Dorothy M. Greer, wife of
Ryan Greer at Reception No. 12345.
[I]t is agreed that the obligation to pay any overriding royalties or

payments out of production of oil created herein which, when added
to overriding royalties or payments out of production previously
created and to the royalty payable to the United States, aggregate in
excess of 17½ percent, shall be suspended when the average
production of oil per well per day averaged on the monthly basis is
15 barrels or less . . . .
BLM File Data: Title of Document: Assignment Affecting Record Title to Oil and
Gas Lease
Executed: September 16, 1976
Filed: September 27, 1976
Approved: November 1, 1976
BLM Approved Effective: November 1, 1976
Assignment No. 2:

Effective Date: December 1, 1976
Assignor(s): Forrest Francis
August 9, 2013
Page xxiv of Schedule I
Assignee(s): Target Co. Oil Company

Interest(s) Retained: 4.5% overriding royalty.
Notes: Waiver and Acceptance of assignment by Sarah Francis, wife of
Forrest Francis at Reception No. 12345.
[I]t is agreed that the obligation to pay any overriding royalties or

Gas Lease
Executed: November 4, 1976
Filed: November 18, 1976
Approved: December 7, 1976
BLM Approved Effective: December 1, 1976
Assignment No. 3:

Recording Information: Unrecorded
Assignor(s): Target Co. Oil Company
Assignee(s): Target Co. Onshore Partnership
Interest(s) Assigned: 100.00% from the surface down to a depth of 13,100 feet below the
surface
Leases Covered: A portion of the lands contained within Lease Nos. 1 and 24
Lands Covered: Tract No. 9, and the SE/4NW/4 of Section 11, being a portion of
Tract No. 8
Interest(s) Retained: 100% below 13,100 feet
Notes: [I]t is agreed that the obligation to pay any overriding royalties or
August 9, 2013
Page xxv of Schedule I
BLM File Data: Title of Document: Transfer, Assignment, or Sublease of Operating

Rights In Oil and Gas Lease
Filed: October 7, 1982
Approved: July 30, 1984
Assignment No. 4:

Effective Date: January 1, 1984
Assignor(s): Target Co. Oil Company
Assignee(s): Target Co. Western E&P Inc.
Interest(s) Owned: Operating Rights lying below the depth of 13,100 feet, as well as All
Record Title Interest
Interest(s) Assigned: All right, title and interest
Interest(s) Retained: None
Gas Lease
Executed: December 5, 1983
Filed: December 14, 1983
BLM Approved Effective: January 1, 1984
Title of Document: Transfer, Assignment, or Sublease of Operating

Assignment No. 5:
Execution Date: July 31, 1984

August 9, 2013
Page xxvi of Schedule I
Recording Information: August 27, 1984, Reception No. 12345

Assignor(s): Target Co. Western E&P Inc., and Target Co. Onshore Partnership,
by Target Co. Western E&P its General Partner
Assignee(s): ClearTex Company
Lands Covered: Tract No. 8 and 9
BLM File Data: Title of Document: Transfer, Assignment, or Sublease of Operating
Executed: July 19, 1984
Filed: August 16, 1984
Approved: April 1, 1985
BLM Approved Effective: September 1, 1984
Title of Document: Transfer, Assignment, or Sublease of Operating

Title of Document: Assignment Affecting Record Title to Oil and

Gas Lease
Assignment No. 6:

Assignor(s): ClearTex Company
August 9, 2013
Page xxvii of Schedule I
Assignee(s): New York Exploration Corporation84

Interest(s) Assigned: 20.00%
Interest(s) Retained: 80.00%
Gas Lease
Executed: August 20, 1985
Assignment No. 7:

Assignee(s): Orange Production Company
84
We note that the BLM Corporate Name Change and Merger Index indicates that New York Exploration
Corporation changed its name to Longhorn Oil & Gas Corporation.
August 9, 2013
Page xxviii of Schedule I
Gas Lease
Assignment No. 8:

Assignee(s): Sundown Minerals, Inc.,
Only Federal Lease Case File, Serial Number, NDM-95000 contains

the corollary conveyance.
Gas Lease
Approved: August 1, 1988
BLM Approved Effective: Illegible
Assignment No. 9:

Assignee(s): TEAEnergy Inc.
August 9, 2013
Page xxix of Schedule I

Notes: None
BLM File Data: Not Filed
Assignment No. 10:

Assignee(s): Super Energy Corporation
Gas Lease
Assignment No. 11:

Assignor(s): TEAEnergy Inc.
Assignee(s): Forcenergy Inc.
August 9, 2013
Page xxx of Schedule I
Notes: None
BLM File Data: Not Filed
Assignment No. 12:

Assignor(s): TEAEnergy Inc. and Forcenergy Inc.
Assignee(s): Super Income Program 2
Notes: None
BLM File Data: Not Filed.
However this conveyance below filed with the BLM, coupled with
Assignment No. 18 below, effectively creates the same interest in
Lease Nos. 1 and 24 as the Assignment Nos. 9, 11, 12 and 18 taken
as a whole.85
Title of Document: Assignment of Record Title Interest in a Lease

For Oil and Gas or Geothermal Resources
From: ClearTex Company to Super Energy Corporation
Filed: November, 17 1988
Assignment No. 13:

Assignor(s): Super Energy Corporation
Assignee(s): Super Production Company
85
See Comment and Requirement No. 7.
August 9, 2013
Page xxxi of Schedule I
Gas Lease
Filed: September 3, 1985
BLM Approved Effective: April 1, 1986
Assignment No. 14:

Recording Information: April 18, 1988, Reception No. 12345
Assignee(s): Evergreen Corporation – 52.10%
Longhorn Oil & Gas Corporation – 47.90%
Interest(s) Assigned: All right, title and interest, in percentages shown above
Notes: None
BLM File Data: Title of Document: Assignment of Record Title Interest in a Lease
Executed: April 15, 1988
Filed: July 11, 1988
Assignment No. 15:

Assignor(s): Evergreen Corporation
August 9, 2013
Page xxxii of Schedule I

Notes: None
Filed: July 11, 1988
Assignment No. 16:
Execution Date: June 30, 1988

Recording Information: July 19, 1988, Reception No. 12345
Assignor(s): Sundown Minerals Inc. and Lehndorfff-Western Partnership
Notes: None
Filed: April 12, 1989
Approved: May 2, 1989
BLM AppTworoved Effective: May 1, 1989
Assignment No. 17:

Effective Date: June 1, 1991
Assignor(s): Total Wreck Corporation, successor in interest to Longhorn Oil &
Gas Corporation (f/k/a New York Exploration Corporation)
Assignee(s): Apache Petroleum, Incorporation
Notes: None
August 9, 2013
Page xxxiii of Schedule I
Assignment No. 18:

Assignor(s): Super Energy Corporation and Super Income Program 2
Assignee(s): Sky Venture
Notes: None
Filed: January 3, 1995
Approved: March 1, 1995
BLM Approved Effective: February 1, 1995
Assignment No. 19:

Effective Date: March 1, 1994 and as shown for each well listed in assignment
Assignor(s): Icetrans, Inc.
Leases Covered: Lease No. 24
Lands Covered: Tract No. 9
Notes: None
Executed: October 25, 1995
August 9, 2013
Page xxxiv of Schedule I
Approved: January 16, 1996

Assignment No. 20:

Assignor(s): Sky Venture
Assignee(s): Icetrans, Inc.
Notes: None
Approved: September 20, 1996
BLM Approved Effective: October 1, 1996
Assignment No. 21:

Recording Information: December 1, 1997 Reception No. 12345
Assignor(s): Orange Production Company
Assignee(s): Coastal Corporation
Interest(s) Owned: 80.00% in Tract No. 9, and 57.605% in Tract No. 8
Notes: None
Approved: June 24, 1998
BLM Approved Effective: June 1, 1999
August 9, 2013
Page xxxv of Schedule I
Assignment No. 22:

Recording Information: December 8, 1997 Reception No. 12345
Assignor(s): Coastal Corporation
Assignee(s): Hexity Company
Notes: None
Approved: June 24, 1998
Assignment No. 23:

Assignor(s): Hexity Corp., formerly named Hexity Company, and Hexity
Resources, Inc., formerly named Alcalde Energy Corp.
Assignee(s): Hexity, Limited Partnership
Notes: BLM File Data:
Executed: October 5, 1998
Approved: February 16, 1999
BLM Approved Effective: March 1, 1999
Assignment No. 24:
Execution Date: January 1, 1998

Effective Date: Unknown
August 9, 2013
Page xxxvi of Schedule I
Recording Information: August 7, 1998 Reception No. 12345

Assignee(s): Hexity Limited Partnership
Notes: Incomplete file: See Comment and Requirement No. 6
BLM File Data: Title of Document: Transfer of Operating Rights (Sublease) In a
Lease For Oil and Gas or Geothermal Resources
Lands: E/2 of Section 11 being Tract No. 9
Approved: October 21, 1998

Lands: E/2 of Section 11 being Tract No. 9
Assignment No. 25:
Execution Date: August 22, 2000

Recording Information: October 24, 2000, Reception No. 12345
Assignor(s): Hexity, Limited Partnership
Assignee(s): Inlane Production Partnership
Notes: None
Filed: March 13, 2000
Approved: May 18, 2000
August 9, 2013
Page xxxvii of Schedule I
Assignment No. 26:

Assignee(s): XO Production Company
Notes: None
Approved: March 5, 2003
Assignment No. 27:

Effective Date: May 1, 2007
Assignor(s): XO Corporation, XO Production Company, XO Properties, Inc.
Assignee(s): Hidden Bench Oil, LLC
Notes: None
Executed: June 22, 2007
Filed: June 25, 2007
Assignment No. 28:

August 9, 2013
Page xxxviii of Schedule I
Assignor(s): Bigline Energy, LLC

Assignee(s): Y-Oil Corporation – 94.00%
Voyager Exploration, LLC – 3.00%
Sub-Zero Natural Resources, LLC – 2.00%
Magnetic, LLC – 1.00%
Interest(s) Assigned: All right, title and interest, in the percentages above
Lands Covered: Tract Nos. 1, 4 and 6
Assignment No. 29:

Interest(s) Assigned: All right, title and interest, in the percentages above
Leases Covered: Lease Nos. 2-6, 8-14 and 21
Lands Covered: Tract Nos. 1, 3, 4, 5, 6 and 11
Assignment No. 3086:

86
Assignment No. 30 has been tabulated directly from the information provided in Prior DDOTO 1.
August 9, 2013
Page xxxix of Schedule I

Assignor(s): Craig Wise
Assignee(s): Denver Company
Interest(s) Assigned: All of Assignor’s right, title, and interest
Assignment No. 32:

Assignor(s): Denver Company
Assignee(s): WaltMark Producing Inc.
Notes: Issued pursuant to General Assignment, Conveyance, Bill of Sale or
Transfer dated, executed and delivered on December 31, 1984. See
Assignment.
Assignment No. 33:

Assignor(s): WaltMark Exploration and Producing Inc.
Assignee(s): Stokes, LLC
Leases Covered: Lease Nos. 17
Lands Covered: Tract Nos. 7
Notes: Subject to the terms and conditions of that certain Purchase and Sale
Agreement dated January 11, 1985. See Assignment.
87
Assignment Nos. 31-35 have been tabulated directly from the information provided in Prior DDOTO 3.
August 9, 2013
Page xl of Schedule I
Assignment No. 34:

Assignor(s): Stokes, LLC
Assignee(s): Redoil, L.L.C.
Leases Covered: Lease Nos. 17
Notes: Subject to the terms and conditions of that certain Purchase and Sale
Agreement dated effective April 15, 1998. See Assignment.
Assignment No. 35:

Effective Date: October 19, 2010
Recording Information: October 26, 2010 Reception No. 12345
Assignor(s): MicroX Company
Assignee(s): Doubledrill, Inc.
Leases Covered: Lease Nos. 18-20
Notes: None

Assignor(s): Wise Exploration Company
Assignee(s): TWO Oil & Gas Partners (U.S.A.) – 50%
Oscar T. Wise – 22.50%
Bear Oil & Gas, Ltd. – 15.00%
Shawn Wise, Jr. – 12.50%
Interest(s) Assigned: All of Assignor’s right, title, and interest, in the proportions shown
above
88
Assignment Nos. 36-44 have been tabulated directly from the information provided in Prior DDOTO 4.
August 9, 2013
Page xli of Schedule I

Notes: None
Assignment No. 37:

Assignor(s): Oscar T. Wise and State Street Inc. a/k/a Wise Enterprises Inc. (the
successor by merger to Wise Enterprises, Inc.)
Assignee(s): Franklin Resources Company
Notes: None
Assignment No. 38:

Effective Date: March 11, 1993
Assignor(s): Shawn Wise, Jr. and Production Properties, an Oklahoma Limited
Partnership
Assignee(s): Oscar Wise Oil, a Limited Partnership
Notes: None
Assignment No. 39:

Assignor(s): True Exploration, Inc., True Resources, Inc., TWO Oil & Gas
Partners (U.S.A.), Energy Partners Nominee Company
Assignee(s): Northern Supply, Inc.
August 9, 2013
Page xlii of Schedule I

Notes: None
Assignment No. 40:

Assignor(s): Northern Supply, Inc.
Assignee(s): Great Rockies, Inc.
Notes: None
Assignment No. 41:

Recording Information: May 24, 1999, Reception No. 12345
Assignor(s): HD Properties, Inc. (formerly named Great Rockies, Inc.)
Assignee(s): Sand Lot Properties, Inc.
Notes: None
Assignment No. 42:

Assignor(s): Franklin Resources Company
Assignee(s): Magic Energy – 50.00%
Colosses Acquisition, LLLP – 50.00%
above
August 9, 2013
Page xliii of Schedule I

Notes: None
Assignment No. 43:

Assignor(s): Bear Oil & Gas, Ltd., Oscar Wise Oil, a limited partnership
Assignee(s): Diamond Petroleum Inc.
Notes: None
Assignment No. 44:
Execution Date: March 22, 2005

Assignor(s): Diamond Petroleum Inc.
Assignee(s): Quiethouse Corporation
Notes: Hays Holding Company is successor by name change to Hay
Development Company, as evidenced by an Affidavit of Name
Change, dated July 12, 2010, recorded July 23, 2010, Reception No.
12345.
Assignment No. 45:

Effective Date: May 1, 2012
Assignor(s): Y-Oil Corporation, Voyager Exploration LLC, Magnetic, LLC, Ruth
Oil & Gas, LLC, and Green Tree Resources LLC
Assignee(s): 1) Company A Corporation.
2) Robot Royalty Company (ORRI only of; (i) 0.00% if the
existing lease burdens of record are 20.00% or 19.00%; (ii) 0.5% if
August 9, 2013
Page xliv of Schedule I
the existing lease burdens of record are 18.75 or 17.50%; (iii) 1% if

the existing lease burdens of record are 17.00%; and (iv) 2.00% if
the exiting lease burdens are 16.67% or 16.00%
above, from the surface to the top of the Birdbear Formation
Leases Covered: Lease Nos. 2-16 and 21
Lands Covered: Tract Nos. 1, 3-6 and 11
Notes: 1) Subject to a Lease Acquisition Agreement dated May 1, 2012.
2) Applies to any extension and renewals of existing leases
obtained with one year of the termination or expiration of the
existing lease.
3) Proportionate reduction provision.
Assignment No. 46:

Assignor(s): Hays Holding Company
Assignee(s): Turning Energy Fund A, LP (48.72182%)
Turning Energy Fund B, LP (6.01533%)
Turning Energy Fund C, LP (45.26285%)
above
Notes: 1) Hays Holding Company is successor by name change to Hay
Development Company, as evidenced by an Affidavit of Name
Change, dated July 12, 2010, recorded July 23, 2010, Reception No.
12345.
2) This assignment is made subject to an unrecorded Purchase
Agreement dated July 10, 2012, between Hays Holding Company;
Turning Energy Fund A, L.P.; Turning Energy Fund B, L.P.; and
Turning Energy Fund C, L.P.
Assignment No. 47:

Assignor(s): Hidden Bench Oil, LLC
August 9, 2013
Page xlv of Schedule I
Assignee(s): Company A Corporation

Interest(s) Assigned: All of Assignor’s right, title, less overriding royalty, from the
surface to the top of the base of the Three Forks Formation
Interest(s) Retained: Overriding royalty interest equal to the positive difference between
20.00% and existing lease burdens
Notes: Subject to unrecorded Lease Acquisition Agreement dated
November 14, 2012, by and between Hidden Bench Oil, LLC,
Assignor, and Company A Corporation, Assignee.
BLM Date File: Title of Document: Transfer of Operating Rights (Sublease) In a
Lease for Oil and Gas or Geothermal Resources
Approved: February 20, 2013
Assignment No. 48:
Execution Date: March 18, 2013

Assignor(s): 1) Magic Energy, LLC
2) Colosses Acquisitions LLLP
Assignee(s): City Energy, LLC
Interest(s) Assigned: All of Assignor’s right, title, and interest in the Leases Covered, less
overriding royalty and excluding the Madison Formation
Interest(s) Retained: Overriding royalty interest equal to the difference between 21.50%
and the existing burdens, proportionately reduced. Assignors each
shall receive 50.00% of the Overriding royalty interest.
Notes: Override applies to any new lease or any extension, renewal or
replacement of the Leases Covered
ASSIGNMENTS OF OVERRIDING ROYALTY:
Overriding Royalty Assignment Nos. 16-18 have been tabulated directly from the Prior
DDOTO 1-6. Although in some instances we have reformatted or summarized data, we have
conducted no independent examination of the same. Accordingly, we cannot warrant the
accuracy of the same and accept no liability for errors or omissions therein.
August 9, 2013
Page xlvi of Schedule I
The Materials Examined for this Opinion contain no additional assignments of overriding
royalty.
Overriding Royalty Assignment No. 1:

Assignee(s): Mark R. Rock
Interest(s) Owned: 4.50% ORRI
Interest(s) Assigned: 2.00% ORRI
Notes: None
BLM File Data: Title of Document: Assignment of Overriding Royalty Interest
Affecting United States Oil and Gas Lease

Assignee(s): Stat Oil Company
Notes: None
Executed: February 12, 1979
Filed: May 21, 1979

Assignor(s): Mark R. Rock
Assignee(s): B. A. Neel
August 9, 2013
Page xlvii of Schedule I
Interest(s) Assigned: 1.00% ORRI

Notes: None

Assignor(s): Ryan Greer
Assignee(s): Krysta L. Shields
Interest(s) Owned: ½ of 1.00% ORRI
Notes: None

Assignor(s): B. A. Neel
Assignee(s): John J. Smith
Interest(s) Owned: 2% ORRI
Interest(s) Assigned: 1/10 of 1.00% of 8/8ths ORRI
Notes: None

August 9, 2013
Page xlviii of Schedule I

Assignor(s): Beth Neel and William B. Collister, as Personal Representatives of
the Estate of Brett Neel, deceased
Assignee(s): Chance N. Neel
Interest(s) Owned: 9/10 of 1.00% ORRI
Notes: Not recorded in BLM File
[C]onveyed subject to the imposition of a burden of ½ of any
overriding royalty owed by Brett Neel to any employees, including
but not by way of limitation, any obligations that may be owned to
John Smith. . . .

Assignor(s): John J. Smith
Assignee(s): Jacob L. Mott

Effective Date: Date of first runs
Recording Information: May 7, 1984, Reception Nos. 261529
the Estate of Brett Neel, a/k/a Brett A. Neel, a/k/a B. A. Neel, a/k/a
Art Neel, deceased
Assignee(s): Kim Neel – 2/15ths
Savanna Z. Neel – 2/15ths
Wally Neel – 2/15ths
Mike Neel – 1/5th
Porter Neel – 1/5 th
Lime Co. 16.7% of 1/5th
WSC, LP – 83.5% of 1/5th
August 9, 2013
Page xlix of Schedule I
Interest(s) Assigned: 9/20 of 1.00% of 8/8ths ORRI, in the proportions shown above
John Smith. . .

Effective Date: Date of first runs
Recording Information: May 7, 1984, Reception Nos. 12345
the Estate of Brett Neel, a/k/a Brett A. Neel, a/k/a B. A. Neel, a/k/a
Art Neel, deceased
Assignee(s): Kim Neel – 2/15ths
Savanna Z. Neel – 2/15ths
Wally Neel – 2/15ths
Mike Neel – 1/5th
Porter Neel – 1/5 th
Lime Co. 16.7% of 1/5th

WSC, LP – 83.5% of 1/5th
Interest(s) Owned: 9/20 of 1.00% ORRI89
Interest(s) Assigned: 9/20 of 1.00% of 8/8ths ORRI, in the proportions shown above
John Smith. . . .

Effective Date: September 1, 1996
Recording Information: October 17 1996, Reception No. 12345
Assignor(s): Kim Lisa Klien, a/k/a Kim L. Klien, a/k/a Kim Klien, f/k/a Kim
89
We note that in Overriding Royalty Assignment No. 8, Beth Neel and William B. Collister, as Personal
Representatives of the Estate of Brett Neel, a/k/a Brett A. Neel, a/k/a B.A. Neel, a/k/a Art Neel, deceased, had
previously conveyed all of the estate’s interest in Tract No. 9. Therefore, we have not given effect to Overriding
Royalty Assignment No. 9 for the Tract No. 9 interest.
August 9, 2013
Page l of Schedule I
Neel, a single woman

Assignee(s): Tom O. Wing
Interest(s) Owned: 2/15ths of 9/20 of 1.00% ORRI

Effective Date: September 1, 1996
Recording Information: October 17 1996, Reception No. 12345
Assignor(s): Tom O. Wing
Assignee(s): Mineral Hitch, LLC - 47.50%
ROCK Resources LLC - 47.50%
Tom O. Wing and Marnie M. Wing, JTWRS – 5.00%
Interest(s) Owned: 2/15ths of 9/20 of 1.00% ORRI
Interest(s) Assigned: All right, title and interest, in the proportions shown above

Assignor(s): Jeffrey L. Hill, Chapter 7 Trustee of the Bankruptcy Estate of Porter
Neel, Case No. 00-120 SBB, in the United States Bankruptcy Court
for the District Court of Colorado
Assignee(s): Grant M. Busby and Joleen Busby, Trustees of the Grant M. and

Assignor(s): Joleen Busby, Trustee of the Grant M. and Joleen Busby Revocable
August 9, 2013
Page li of Schedule I
Living Trust, dated February 22, 2000

Assignee(s): Joleen Busby, Trustee of the Grant M. and Joleen Busby Revocable
Living Trust Survivor’s Trust

Assignee(s): Porter G. Iverson, a married man dealing in his sole and separate
property
for Oil and Gas or Geothermal Resources

Assignee(s): Porter G. Iverson, a married man dealing in his sole and separate
property
Notes: None
for Oil and Gas or Geothermal Resources
August 9, 2013
Page lii of Schedule I
Overriding Royalty Assignment No. 16:90

Assignor(s): Wise Exploration Company
Assignee(s): Boogie Holdings, Inc.
Interest(s) Owned: 3.0% of 8/8ths ORRI
Notes: None
Overriding Royalty Assignment No. 17:91

Assignor(s): BIG TOM Oil & Gas Partners (U.S.A.)
Assignee(s): Joshua L. Hawkins – 0.5%
Kirk E. Austin and Sonia E. Austin, as joint tenants – 0.5%
Interest(s) Assigned: All right, title and interest, in the proportions shown above,
proportionately reduced by actual mineral interest owned and by
actual working interest owned
Notes: None

Recording Information: June 6, 2005 Reception No. 12345
Assignor(s): Kirk E. Austin, individually, and Kirk E. Austin and Sonia E.
Austin, as joint tenants
Assignee(s): Lucid, LLC
90
Overriding Royalty Assignment Nos. 16 and 18 have been tabulated directly from the information provided in
Prior DDOTO 4.
91
We note that Prior DDOTO 4 did not indicate that Overriding Royalty Assignment No. 17 contained
proportionate reduction language. However, in calculating the overriding royalty burdens, we reviewed Overriding
Royalty Assignment No. 17 and discovered that such proportionate reduction language was included in the
assignment. Accordingly, we have amended the tabulation of Overriding Royalty Assignment No. 17 to reflect the
inclusion of such language.
August 9, 2013
Page liii of Schedule I

Notes: None
August 9, 2013
Page i of Schedule II
SCHEDULE II
UNRELEASED OIL AND GAS LEASES:
(1) Oil and Gas Lease dated March 1, 1952, recorded January 19, 1954, Book 4 of
Misc., Page 533, from the United States of America to Ben Hersh, covering Township 180N,
Range 104W: Section 1: SW/4, Section 2: S/2SE/4, Section 11: E/2, SE/4NW/4, Section 12:
W/2, W/2NE/4, SE/4NE/4, NW/4SE/4, Section 13: S/2, SW/4NW/4, SE/4NE/4, Section 14: All,
Section 15: S/2S/2, and Section 21: Lot 1, NE/4NE/4, S/2NE/4, N/2SE/4 for a primary term of
five (5) years;
(2) Oil and Gas Lease dated March 10, 1977, recorded June 6, 1977, Book 5, Page
445, from Steven Lutz and Lisa Lutz to Tenneco Oil Company, covering Township 180N, Range
104W: Section 10: Lots 3, 6 and 7, and Section 11: SW/4, SW/4NW/4 with a primary term
ending on October 25, 1982;
(3) Oil and Gas Lease dated July 29, 1980, recorded October 3, 1980, Book 28 of
Misc., Page 71, from Danyell Blanton, Administratrix of the Estate of John Sandborn, deceased,
to The N.R.G. Company, covering Township 180N, Range 104W: Section 2: Lots 5, 6,
E/2SW/4, N/2SE/4, and Section 11: Lot 1, NE/4NW/4, for a primary term of five (5) years from
March 9, 1982;
(4) Oil and Gas Lease dated April 23, 1981, recorded May 19, 1981, Book 24 of
Misc., Page 461, from Johanna L. Howell and Belinda I. Howell, to Energy Resources Inc.,
covering Township 180N, Range 104W: Section 1: Lots 3, 4, S/2NW/4, Section 2: Lots 4, 6,
S/2NE/4, SE/4SW/4 and Section 11: Lot 1, NE/4NW/4, for a primary term of three (3) years;
(5) Oil and Gas Lease dated April 12, 1981, recorded May 19, 1981, Book 24 of
Misc., Page 560, from Marie Sandborn, a/k/a Marie A. Sandborn, to Energy Resources Inc.,
covering Township 180N, Range 104W: Section 1: Lots 3, 4, S/2NW/4, Section 2: Lots 4, 6,
S/2NE/4, SE/4SW/4 and Section 11: Lot 1, NE/4NW/4, for a primary term of three (3) years;
(6) Oil and Gas Lease dated February 12, 1980, recorded September 8, 1982,
Reception No. 12345, from the State of North Dakota acting by and through the Board of
University and School Lands and its agent, the Commissioner of University and School Lands, to
Craig Wise, covering Township 180N, Range 104W: All river bed of Missouri River in Sections
10 and 11, for a primary term of five (5) years;
(7) Oil and Gas Lease dated August 17, 1996, recorded August 28, 1996, Reception
No. 12345, from Steven R. Lutz and Lisa Lutz, to Ben K. Webb, Inc., covering Township 180N,
Range 104W: Section 11: Lot 2 and the SW/4, including all accretion and riparian rights thereto,
for a primary term of five (5) years;
(8) Oil and Gas Lease dated August 16, 1996, recorded October 10, 1996, Reception
No. 12345, from Belinda I. Howell a/k/a Belinda Howell, to Ben K. Webb, Inc., covering
August 9, 2013
Page ii of Schedule II
Township 180N, Range 104W: Section 11: Lot 2 and the SW/4, including all accretion and
riparian rights thereto, for a primary term of five (5) years;
No. 12345, from Johanna L. Howell and Belinda I. Howell, Trustees of the Johanna L. and
Belinda I. Howell Mineral Trust dated March 28, 1991, to Ben K. Webb, Inc., covering
Township 180N, Range 104W: Section 11: Lot 1 and the NE/4NW/4, including all accretion and
No. 12345, from Mary I. Kellogg, a widow, to Ben K. Webb, Inc., covering Township 180N,
Range 104W: Section 11: Lot 2 and the SW/4, including all accretion and riparian rights thereto,
for a primary term of five (5) years;
No. 12345, from Dixie W. Washington, a/k/a Dixie Washington, to Ben K. Webb, Inc., covering
Township 180N, Range 104W: Section 11: Lot 2 and the SW/4, including all accretion and
(12) Oil and Gas Lease dated August 22, 1996, recorded November 1, 1996, Reception
No. 12345, from Danyell Blanton, Indv. and Administratrix Est. John Sandborn, a/k/a Clarence
Carl Sandborn, dec’d, to Ben K. Webb, Inc., covering Township 180N, Range 104W: Section
11: Lot 1 and the NE/4NW/4, including all accretion and riparian rights thereto, for a primary
term of five (5) years;
(13) Oil and Gas Lease dated November 5, 1996, recorded December 2, 1996,
Reception No. 12345, from Virgil Watson and Roberta Watson, to Ben K. Webb, Inc., covering
Township 180N, Range 104W: Section 11: Lot 1 and the NE/4NW/4, including all accretion and
(14) Oil and Gas Lease dated July 14, 2004, recorded August 9, 2004, Reception
No. 12345, from Steven R. Lutz, to W. R. Everett, covering Township 180N, Range 104W:
Section 10: Lots 3, 6 and 7, and Section 11: Lot 2, SW/4, for a primary term of four (4) years;
No. 12345, from Faye Brooks, to W. R. Everett, covering Township 180N, Range 104W:
Section 10: Lots 3, 6 and 7, and Section 11: Lot 2, SW/4, for a primary term of four (4) years;
the Johanna L. and Belinda I. Howell Mineral Trust, to W. R. Everett, covering Township 180N,
Range 104W: Section 2: Lots 4 & 6 and SE/4SW/4, Section 10: Lots 3, 6 and 7, Section 11: Lots
1, 2, NE/4NW/4, and SW/4, for a primary term of four (4) years;
August 9, 2013
Page iii of Schedule II
No. 12345, from Linda Wildman, Trustee of the Dixie Washington Trust, to W. R. Everett,
covering Township 180N, Range 104W: Section 10: Lots 3, 6 and 7, and Section 11: Lot 2,
SW/4, for a primary term of four (4) years;
No. 12345, from Danyell Blanton and Donald R. Blanton, to W. R. Everett, covering Township
180N, Range 104W: Section 11: Lot 1 and NE/4NW/4, for a primary term of four (4) years;
No. 12345, from Roberta Watson, to W. R. Everett, covering Township 180N, Range 104W:
Section 2: Lots 4, 6, SE/4SW/4, and Section 11: Lot 1, NE/4NW/4, for a primary term of four (4)
years;
Township 180N, Range 104W: Section 11: Lot 1 and NE/4NW/4, for a primary term of two (2)
the Johanna L. and Belinda I. Howell Mineral Trust, to Freshfind Company, covering Township
180N, Range 104W: Section 2: Lots 4 & 6, SE/4SW/4, Section 10: Lots 3, 6 and 7, and Section
11: Lots 1, 2, NE/4NW/4, SW/4, for a primary term of two (2) years from July 14, 2008;
No. 12345, from Faye Brooks, to Freshfind Company, covering Township 180N, Range 104W:
Section 10: Lots 3, 6 and 7, and Section 11: Lot 2, SW/4, for a primary term of two (2) years
from July 14, 2008;
No. 12345, from Steven R. Lutz, to Freshfind Company, covering Township 180N, Range
104W: Section 10: Lots 3, 6 and 7, and Section 11: Lot 2, SW/4, for a primary term of two (2)
No. 12345, from Linda Wildman, Trustee of the Dixie Washington Trust, to Freshfind Company,
covering Township 180N, Range 104W: Section 10: Lots 3, 6 and 7, and Section 11: Lot 2,
SW/4, for a primary term of two (2) years from July 14, 2008;
104W: Section 2: Lots 4, 6 SE/4SW/4, and Section 11: Lot 1, NE/4NW/4, for a primary term of
two (2) years from July 20, 2008. (Ratified by Virgil D. Watson, Louanne I. Deal, Kendra R.
August 9, 2013
Page iv of Schedule II
Quinn, Melodi J. Calvin, Mona M. Watson, Kelley A. Crane, and Caroline L. McKenzie, at
Reception Nos. 12345-12341, respectively);
(26) Oil and Gas Lease dated April 16, 2004, recorded June 15, 2004, Reception
No. 12345, from Geraldine Granovsky, covering Township 180N, Range 104W: Section 2: Lots
1, 2, Section 12: NE/4NE/4, and Township 180N, Range 103W: Section 6: Lot 7, Section 7: Lots
1 and 2, for a primary term of 3 years;
No. 12345, from Matt P. Frayser and Rosie Flora Frayser, covering Township 180N, Range
104W: Section 2: Lots 1, 2, Section 12: NE/4NE/4, and Township 180N, Range 103W: Section
6: Lot 7, Section 7: Lots 1 and 2, for a primary term of 3 years;
No. 12345, from Karen J. Morris, covering Township 180N, Range 104W: Section 2: Lots 1, 2,
Section 12: NE/4NE/4, and Township 180N, Range 103W: Section 6: Lot 7, Section 7: Lots 1
and 2, for a primary term of 3 years;
No. 12345, from Agnes M. Granovsky, as Trustee of the Agnes M. Granovsky Trust Agreement
dated August 9, 1984 as amended July 1, 1990, covering Township 180N, Range 104W: Section
7: Lots 1 and 2, for a primary term of 3 years;
No. 12345, from Robert and Tracie Granovsky, as Trustees of the Robert and Tracie Granovsky
Revocable Trust dated July 18, 2000, covering Township 180N, Range 104W: Section 2: Lots 1,
2, Section 12: NE/4NE/4, Township 180N, Range 103W: Section 6: Lot 7, Section 7: Lots 1 and
2, and Township 189N, Range 104W: Section 35: Lot 5, for a primary term of 3 years;
Reception No. 12345, from Geraldine Granovsky, covering Township 180N, Range 104W:
Section 2: Lots 1, 2, Section 12: NE/4NE/4, and Township 180N, Range 103W: Section 6: Lot 7,
Section 7: Lots 1 and 2, for a primary term of 3 years, from April 16, 2007;
Section 6: Lot 7, Section 7: Lots 1 and 2, for a primary term of 3 years, from April 16, 2007;
Lots 1 and 2, for a primary term of 3 years, from April 16, 2007;
August 9, 2013
Page v of Schedule II
Reception No. 12345, from Agnes M. Granovsky, as Trustee of the Agnes M. Granovsky Trust
Agreement dated August 9, 1984, as amended June 1, 1990, covering Township 180N, Range
104W: Section 2: Lots 1, 2, Section 12: NE/4NE/4, and Township 180N, Range 103W: Section
6: Lot 7, Section 7: Lots 1 and 2, for a primary term of 3 years, from April 16, 2007;
Reception No. 12345, from Robert and Tracie Granovsky, as Trustees of the Robert and Tracie
Granovsky Revocable Trust dated July 18, 2000, covering Township 180N, Range 104W:
Section 2; Lots 1, 2, Section 12; NE/4NE/4, Township 180N, Range 103W: Section 6: Lot 7,
Section 7: Lots 1 and 2, and Township 189N, Range 104W: Section 35: Lot 5, for a primary term
of 3 years, from April 16, 2007;
No. 12345, from Danyell Blanton and Donald R. Blanton, to W. R. Everett, covering Township
180N, Range 104W: Section 2: Lots 5, 6, E/2SW/4, N/2SE/4, for a primary term of 3 years;
(38) Oil and Gas Lease dated July 2, 2004, recorded September 27, 2004, Reception
No. 12345, from B. LaVerne Lopez, to Springfield Oil Company, covering Township 180N,
Range 104W: Section 2: Lot 3 and, Township 189N, Range 104W: Section 35: Lots 4, 5,
No. 12345, from Barbara R. Hopkins, to Springfield Oil Company, covering Township 180N,
Range 104W: Section 2: Lot 3 and, Township 189N, Range 104W: Section 35: Lots 4, 5,
No. 12345, from Alicia C. Meacham, to Springfield Oil Company, covering Township 180N,
Range 104W: Section 2; Lot 3 and, Township 189N, Range 104W: Section 35: Lots 4, 5,
Reception No. 12345, from B. LaVerne Lopez, to Quiethouse Corporation, covering Township
Reception No. 12345, from Alicia C. Meacham, to Quiethouse Corporation, covering Township
August 9, 2013
Page vi of Schedule II
including all accretions and riparian rights appurtenant thereto for a primary term of 3 years; and
No. 12345, from Barbara R. Hopkins, to Quiethouse Corporation, covering Township 180N,
Range 104W: Section 2: Lot 3, and Township 189N, Range 104W: Section 35: Lots 4, 5,
including all accretions and riparian rights appurtenant thereto for a primary term of 3 years.
August 9, 2013
Page i of Exhibit A
EXHIBIT A
The materials examined for the March 2013 Prior Opinion consist of the following:
1. Abstract of Title, compiled by Abstract Title Company (“ATC”), including:
(a) Abstract Report covering the records of Black Gold County, North
Dakota, insofar as the same cover Section 2, Township 180 North, Range 104 West, 5th P.M.,
from June 17, 2010 at 12:00 AM CST to August 17, 2012 at 12:00 AM CST, consisting of four
(4) volumes;
(b) Section 11, Township 180 North, Range 104 West, 5th P.M., from
inception of records to August 29, 2012 at 12:00 AM CST, consisting of fifteen (15) volumes;
(c) Federal Lease Case File, Serial Number NDM-99000, from inception of
records to September 1, 2012, consisting of two (2) volumes;
(d) Federal Lease Case File, Serial Number NDM-95000, from inception of
records to September 1, 2012, consisting of one (1) volume;
(e) State of North Dakota Oil and Gas Lease File for the NW/4 of Section 2,
from June 17, 2010 to August 30, 2012, consisting of one (1) volume;
(f) State of North Dakota Oil and Gas Lease File for the SW/4 of Section 2,
from June 17, 2010 to August 30, 2012, consisting of one (1) volume; and
(g) State of North Dakota Oil and Gas Lease File for the NW/4 of Section 11,
from inception of records to September 15, 2012, consisting of one (1) volume.
All containing a book, page, reception number, document type, document date, filing
date, grantor, grantee, description, and comments, prepared from an examination of the
numerical indices of the county records of Black Gold County, North Dakota affecting the
Subject Lands (“Index”):
(h) Complete or partial copies of some, but not all, of the documents
referenced on the Indexes;
(i) A United States Department of the Interior, Bureau of Land Management

(“BLM”) MT Plat for the Subject Lands dated April 3, 2012;
(j) A United States Department of the Interior, BLM OG Plat for the Subject
Lands dated April 3, 2012;
August 9, 2013
Page ii of Exhibit A
(k) Summaries of computer research conducted by ATC: (i) covering Section

2, Township 180 North, Range 104 West, 5th P.M. for the period of time from June 17, 2010
through August 17, 2012; (ii) covering the S/2SE/4 of Section 2 and the SE/4NW/4 of Section
11, Township 180 North, Range 104 West, 5th P.M. for the period of time from
September 1, 2002 through September, 2012; (iii) covering the E/2 of Section 11, Township 180
North, Range 104 West, 5th P.M. for the period of time from September 1, 2002 through
September, 2012; (iv) covering Section 11, Township 180 North, Range 104 West, 5th P.M. for
the period of time from August 29, 2002 through August 29, 2012, based upon a search of the
records of District Court of Black Gold County, North Dakota regarding all liens and judgments
of record as indexed against parties purportedly appearing in the record chain of title to the
Subject Lands (“Liens and Judgments Report”);
(l) Summaries of computer research conducted by ATC: (i) covering Section

the period of time from August 29, 2002 through August 29, 2012, based upon a search of the
Miscellaneous records of Black Gold County, North Dakota as indexed against parties
purportedly appearing in the record chain of title to the Subject Lands (“Miscellaneous Records
Report”);
(m) A summary of computer research conducted by ATC (i) covering Section

the period of time from August 29, 2002 through August 29, 2012, based upon a search of
unknown origin in North Dakota regarding financing statements filed in North Dakota and
indexed against parties purportedly appearing in the record chain of title to the Subject Lands
(“UCC Report”);
(n) Summaries of computer research conducted by ATC: (i) covering Section

11, Township 180 North, Range 104 West, 5th P.M. and dated September 26, 2012; (ii) covering
Section 2, Township 180 North, Range 104 West, 5th P.M., dated September 30, 2012, based
upon a search of online records of the North Dakota Industrial Commission (“NDIC”), available
at: https://www.dmr.nd.gov/oilgas/ regarding all well file information affecting the Subject
Lands; and
(o) Summaries of computer research conducted by ATC on an unknown date

and covering an unknown time period, based upon the records of the Black Gold County, North
August 9, 2013
Page iii of Exhibit A
Dakota Assessor’s Office regarding taxes due with respect to the Subject Lands (“Real Property
Tax Search”).
2. The following Drilling and Division Order Title Opinions (collectively and
respectively, “Prior DDOTO 1-6”):
(a) Drilling and Division Order Title Opinion dated May 31, 2011, prepared
by Law, PLLP, for Y-Oil Corporation, covering the records of Black Gold County, North
Dakota, insofar as those records pertain to Lots 1 and 2 of Section 2, Township 180 North,
Range 104 West, 5th P.M., from inception of records through June 17, 2010 at 7:30 AM (“Prior
DDOTO 1”);
(b) Two Drilling and Division Order Title Opinions dated July 25, 2011,
prepared by Law, PLLP, for Y-Oil Corporation, covering the records of Black Gold County,
North Dakota, insofar as those records pertain to the S/2SE/4 of Section 2, Township 180 North,
Range 104 West, 5th P.M., from inception of records through June 17, 2010 at 7:30 AM, labeled
“Tract 2” and “Tract 5” respectively (“Prior DDOTO 2”);92
(c) Drilling and Division Order Title Opinion dated August 31, 2011,
prepared by Law, PLLP, for Y-Oil Corporation, covering the records of Black Gold County,
North Dakota, insofar as those records pertain to the riverbed of the Missouri River; Lots 3-6,
and all accretions thereto of Section 2, Township 180 North, Range 104 West, 5th P.M., from
inception of records through June 17, 2010 at 7:30 AM (“Prior DDOTO 3”);
(d) Drilling and Division Order Title Opinion dated June 30, 2011, prepared
Dakota, insofar as those records pertain to the S/2NE/4 of Section 2, Township 180 North, Range
104 West, 5th P.M., from inception of records through June 17, 2010 at 7:30 AM (“Prior
DDOTO 4”);
(e) Drilling and Division Order Title Opinion dated June 30, 2011, prepared
Dakota, insofar as those records pertain to the N/2SE/4 and NE/4SW/4 of Section 2, Township
180 North, Range 104 West, 5th P.M., from inception of records through June 17, 2010 at 7:30
AM (“Prior DDOTO 5”); and
(f) Drilling and Division Order Title Opinion dated June 30, 2011, prepared
Dakota, insofar as those records pertain to the SE/4SW/4 of Section 2, Township 180 North,
92
We have assumed that the Drilling and Division Order Title Opinions dated July 25, 2011, prepared by Law,
PLLP, for Y-Oil Corporation, covering the records of Black Gold County, North Dakota, insofar as those records
pertain to the S/2SE/4 of Section 2, Township 180 North, Range 104 West, 5th P.M., from inception of records
through June 17, 2010 at 7:30 AM, labeled “Tract 2” and “Tract 5” are one and the same Drilling and Division
Order Title Opinion.
August 9, 2013
Page iv of Exhibit A
Range 104 West, 5th P.M., from inception of records through June 17, 2010 at 7:30 AM (“Prior
DDOTO 6”).
3. Online United States Land Patent records maintained by the BLM General Land
Patent Office, available at: http://www.glorecords.blm.gov/, insofar as the same cover the
Subject Lands, as obtained on December 12, 2012.
4. Online records of the NDIC, as obtained on January 17, 2013 at:

https://www.dmr.nd.gov/oilgas/, insofar as such records relate to well location, well spacing, and
the rules and regulations of the NDIC.
5. Online Name Change and Merger Index maintained by the BLM, available at:
http://www.blm.gov/wy/st/en/resources/public_room/corporate_list.html, insofar as the same
relate to name changes and corporate mergers concerning parties in the record chain of title to
the Subject Lands, as obtained on December 17, 2012.
6. Online records of North Dakota Courts, available at:

http://publicsearch.ndcourts.gov/default.aspx, insofar as they relate to probate records, and as
exclusively limited to the existence and title of records found, expressly excluding the contents
of documents found therein, as reviewed on December 20, 2012.
7. The Social Security Administration’s Death Master File, available at:

http://www.genealogybank.com/gbnk/ssdi/, insofar as they concern certain owners of record title
interests in the Subject Lands, as obtained on December 17, 2012.
8. A copy of a Notification of Name Change dated April 5, 2002, recorded

September 23, 2002, Reception No. 12345, evidencing that Pipeline Company changed its name
to BP Pipelines (North America) Inc., as obtained on January 15, 2013, available at:
http://www.ndrin.com/records.
9. A copy of an Assignment dated November 1, 2001, recorded July 25, 2003,

Reception No. 12345, evidencing that BP Pipelines (North America) Inc., assigned all of its
interest in easements (h), (n), (o) and (w), as tabulated in Easements and Rights-of-Way below,
to Pipeline Company as obtained on January 15, 2013, available at:
10. A copy of a Trustees Deed dated May 1, 2001, recorded May 29, 2001, Reception
No. 12345, evidencing that Jeffrey L. Hill, Chapter 7 Trustee of the Bankruptcy Estate of Porter
Neel, Case No. 00-120 SBB, in the United States Bankruptcy Court for the District Court of
Colorado, assigned all of its interest in Lease Nos. 1 and 24, to Grant M. Busby and Joleen
Busby, Trustees of the Grant M. and Joleen Busby Revocable Living Trust, tabulated as
Overriding Royalty Assignment No. 12, obtained on January 20, 2013, available at:
August 9, 2013
Page v of Exhibit A
11. A copy of an Assignment and Conveyance dated May 1, 2012, recorded

September 18, 2012, Reception No. 12345, Y-Oil Corporation, Voyager Exploration LLC,
Magnetic, LLC, Ruth Oil & Gas, LLC and Green Tree Resources LLC, to Company A
Corporation, tabulated as Assignment No. 45, as obtained on January 20, 2013, available at:
12. A copy of a Certificate of Name Change dated April 23, 1999, and not recorded
evidencing Sand Lot Properties Inc., changed its name to HighMountain Company, as provided
by Company A.
13. A copy of a Certificate of Name Change dated January 9, 2012, and not recorded
evidencing High Mountain Company, changed its name to Blackteck Energy Company, as
provided by Company A.
4831-7735-2472, v. 1
EFFFECTIVE WRITTEN COMMUNICATION:
E-MAIL √
TRANSMITTAL LETTERS √
MEMOS √
240
The ingredients for successful writing
are…
• a stronger reader focus

• a strong organizational pattern
• a clear, concise writing style
• attention to grammar and spelling
• a tone that is appropriate for the readers and the
message
• a visually appealing presentation
241
When writing to your
readers…
Answer their questions
Get straight to the point
Be brief and concise
242
Five Step Process to
Effective Writing…
Brainstorm
Outline
Rough Draft
Evaluation
Final Draft
243
HOW TO WRITE A PERFECT
PROFESSIONAL EMAIL
• Begin with a greeting

(eg. “Dear Mrs. Price”)
• Thank the recipient

(Thank you for contacting ABC
Company”).
• State the purpose of the email

(I am writing to enquire about …” or “I am writing in reference to …)
• Add your closing remarks

(Thank you for your patience and cooperation” or “Thank you for your
consideration” and then follow up with,“If you have any questions or
concerns, don’t hesitate to let me know” and “I look forward to hearing from
you”
• End with a closing
Best regards”, “Sincerely”, and “Thank you
244
PROFESSIONAL EMAIL
• Be informal, but not sloppy.
• Keep messages brief and to the point
• Use sentence case.
• Use the blind copy and courtesy copy appropriately.
245
PROFESSIONAL EMAIL
• Don’t use e-mail to avoid personal contact.
• Remember that e-mail isn’t private.
• Be sparing with group e-mail.
• Use the subject field to indicate content and purpose.
246
PROFESSIONAL EMAIL
• Your tone cannot be heard in an e-mail.
• Use a signature that includes contact information.
• Summarize long discussions (replies).
247
PROFESSIONAL TRANSMITTAL
LETTER
• Begin with a greeting
(eg. “Dear Mrs. Price”)
• State the purpose of the email

(e.g. here is the marketing report you requested)
• The main findings of the report
• Any important considerations
• Acknowledgement of any particular help
• Thanks
Best regards”, “Sincerely”, and “Thank you
248
EXAMPLE: PROFESSIONAL
TRANSMITTAL LETTER
Dear Mr. Landry,
Enclosed is the report you commissioned on 12 May 2009 on the Tourism Industry on Peacock Island,
NSW. The
main findings of the report are:
1. that the growth of the industry has been substantial (35% since 01 January 2009) due to the increased
awareness of and interest in the peacock population of the island;
2. that the peacocks' nesting habits are beginning to be disrupted by tourism;

that tourism on the island needs to be carefully managed so the peacocks are no longer disturbed by the
increase in human activity, and
3. that the government should consider placing some restrictions on tourist numbers and designating
appropriate peacock viewing areas.
It should be considered that the Mayor of Peacock Island, Ms Annabelle Devereaux, was unavailable for
comment throughout the period in which this report was being researched, so her input should be sought
before any further decisions are made.
I would like to acknowledge the assistance of the Peacock Island Tourism Board, and particularly its Chief
Administrator, Jan Stevenson, in writing this report.
Finally, I would like to thank you for the opportunity this report gave me to familiarise myself with the Peacock
Island environment and its inhabitants, and to develop my research skills, which will be invaluable for future
projects.
Regards,
249
Dr. Santoshia Oggs

PROFESSIONAL MEMORANDUM
• Use a Microsoft Word document and block style paragraphs, headings,

bullets or numbering.
• To: State whom the memo is to

From: Who is writing it?
Date: The date that it was written,
Re: Create an informative subject (labeled “Re:” in this memo).
• Begin the text of your memo by stating the precise purpose of the memo
(why you are writing). Then write a brief but informative summary of your
message.
• Write the discussion section of the memo by explaining details and examples
that will be essential for your reader to know. It may be helpful to remember
to answer the questions who, what, when, where, why, and how.
• Finish the text of your memo with a call for action or a statement about
action you will take. Politely state what you want your reader to do after
reading the memo.
250
PROFESSIONAL MEMORANDUM
251
TAKE AWAY’S FOR PROFESSIONAL
MEMORANDUM
• Be clear about objectives in your writings.
• Address your audience appropriately.
• State the goals you want to achieve
• Get to the point quickly.
• Focus on what’s relevant.
252
• Use a tone that fits your audience.

MEMORANDUM
• Paragraph structure - The topic of a paragraph is stated in one

sentence. This is called the topic sentence. The rest of the
paragraph consists of sentences that develop or explain the main
idea. Every sentence in a paragraph should support the main
idea expressed in the topic sentence.
253
MEMORANDUM
• Capitalize the first word of a quoted sentence.

He said, "Treat her as you would your own daughter."
"Look out!" she screamed. "You almost ran into my child.“
• Capitalize a proper noun.
• Capitalize a person’s title when it precedes the name. (e.g.
Chairperson Smith )
• Capitalize the person's title when it follows the name on the
address or signature line. Sincerely,
Ms. Haines, Chairperson
254
MEMORANDUM
• Capitalize the titles of high-ranking government officials when

used before their names. Do not capitalize the civil title if it is used
instead of the name.
The president will address Congress.
The speaker is Governor Terry McAuliffe.
255
MEMORANDUM
• Capitalize any title when used as a direct address.

Will you take my temperature, Doctor?
• Capitalize points of the compass only when they refer to specific
regions.
We have had three relatives visit from the South.
Go south three blocks and then turn left.
256
MEMORANDUM
• Always capitalize the first and last words of titles of publications

regardless of their parts of speech.
• Capitalize other words within titles, including the short verb forms
Is, Are, and Be. Exception: Do not capitalize little words within
titles such as a, an, the, but, as, if, and, or, nor, or prepositions,
regardless of their length.
The Day of the Jackal

What Color Is Your Parachute?
257
MEMORANDUM
• Capitalize federal or state when used as part of an official agency

name or in government documents where these terms represent
an official name. If they are being used as general terms, you may
use lowercase letters.
• The state has evidence to the contrary.
• That is a federal offense.
• The State Board of Equalization collects sales taxes.
• The Federal Bureau of Investigation has been subject to much
scrutiny.
258
MEMORANDUM
• You may capitalize words such as department, bureau, and office

if you have prepared your text in the following way:
Example:
The Bureau of Land Management (Bureau) has some jurisdiction
over Indian lands. The Bureau is finding its administrative role to
be challenging.
259
MEMORANDUM
• Capitalize words derived from proper nouns.

Example:
I must take English and math.
English is capitalized because it comes from the proper noun
England, but math does not come from Mathland.
• Capitalize the names of specific course titles.
Example:
I must take history and Algebra 2.
260
• Use the he/him method to decide which word is correct.
he = who
him = whom
Who/Whom wrote the letter?

He wrote the letter. Therefore, who is correct.
For who/whom should I vote?
Should I vote for him? Therefore, whom is correct.
261
MEMORANDUM
• We all know who/whom pulled that prank.

This sentence contains two clauses: We all know and who/whom
pulled that prank. We are interested in the second clause because
it contains the who/whom. He pulled that prank. Therefore, who is
correct. (Are you starting to sound like a hooting owl yet?)
262
POLISHING
YOUR
BUSINESS
COMMUNICATION
IMAGE
263
NADOA 2017 INSTITUTE
Yolanda “Yoli” Bazan, CDOA & CPLTA
Senior Division Order Analyst
Hilcorp Energy
1201 Louisiana Drive, Suite 1200
Houston, TX 77008
O: 713.289.2853 F: 281-203-5701
ybazan@hilcorp.com
The Prize!!
“The price of success is hard work, dedication to the

job at hand, and the determination that whether we
win or lose, we have applied the best of ourselves to
the task at hand.”
~Vince Lombardi
The Prize!!
Studying for the CDOA How long has the CDOA
exam provides the
following: Exam been in existence?
 an opportunity for an
Analyst to increase their  30 years
knowledge of the oil & gas
 In 1987,NADOA created
industry
the Voluntary
 an opportunity for an Certification Program
Analyst to sharpen their policy.
skill set
How many analyst have
 an occasion where an
passed the CDOA exam?
Analyst can excel
 679
 an opportunity to Certified Analysts
enhance/promote an
Analyst’s career
How many analyst are
 an opportunity for an
Analyst to obtain currently ACTIVE
recognition as an CDOA’S?
accomplished professional  286
Division Order Analyst
 Certified Analysts
~Linda Barry, CDOA
NADOA 1st Qtr. 2012 Newsletter
CDOA Requirements
Work Experience:
 The applicant will have achieved a
minimum of five (5) years experience in the
job discipline referred to as Division Order
analysis who have completed the
application process, have passed the
certification exam, and have completed the
publication process.
Academic Experience:
 Note that there is a two (2) years credit for
holding a bachelor’s degree that will be
allowed toward the requirement of five (5)
years experience.
Details regarding the policies associated with these

requirements can be found in the certification policy at the
link below:
http://www.nadoa.org/forms/certification/Certification_Pr
ogram_Policy_Legal.pdf
Application Form
Requirements
Sponsors:
 The application must be accompanied by three (3)
sponsor forms completed by three (3) CDOAs
who confirm that the applicant’s technical
competency and depth of experience in Division
Order analysis satisfies the applicable requirements
based on personal knowledge.
IMPORTANT- The policy allows for sponsorship by non-CDOAs when

none are available when you provide a letter with your application
explaining why you do not have CDOA sponsors.
Committee Review:
 After receipt of the completed application, the
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.
 Upon completion of the application review &

published notice, the applicant will receive written
notice of the final approval, or denial, of his
application by the Committee. The applicant will be
notified by Certified Mail should the Committee deny
the application.
Application
Procedure Forms
Application packet forms are available on-line by

clicking the link shown below:
http://www.nadoa.org/forms/certification/cdoa_app.pdf
CDOA Certification
Notification:
 Certification will be granted to each applicant who
pays all necessary fees and successfully completes
the CDOA exam. The CDOA designation is granted
for an initial period of five years, unless revoked.
Recertification:
 Application for recertification must be made
every five (5) years. Such application must
establish that the applicant continues to
meet the criteria to maintain CDOA status
including the minimum requirement for one-
hundred (100) credits during the five (5) years.
 A minimum 25 out of the 100 are required to be CORE
CREDITS
 All CDOA STATUS’ expire on December 31st so the
recertification documentation & payment must be
received prior to January 31st of the next year.
 Credits for work in Division Order analysis,

administration or related duties after initial
certification will be cumulative up to a
maximum of fifty (50) credits based on ten (10)
credits per calendar year.
CDOA Exam
After the Exam:

 After passing the exam the applicant will need to
send in a $100 (member) to obtain their certificate
at this PO Box address.
 If the applicant fails all or two sections they will

have up to a year from the date that the CDOA
Committee Chair emailed results to retake the
entire exam.
 If the applicant fails one section they will have up

to a year from the date that the CDOA Committee
Chair emailed results to retake the entire exam.
 There is not a limit (at this time) for how many times
an analyst can take re-take the exam (after passing
two sections) within the allotted year.
CDOA Certification
Committee
9
Chair-
Brenda Dickey, CDOA
brenda.dickey@bp.com
Recertification Credits- Forms-

Eli Murray, CDOA Lewis Box, CDOA
emurray@rsppermian.com Lewis_Box@xtoenergy.com
Recertification Policies-
Applications- Heidi Davis, CDOA
Darryn McGee, CDOA hddavis@cvrenergy.com
dmcgee@newfield.com
Testing-
Applications & Candidate Sherry Werth, CDOA
Publications- SWerth@linnenergy.com
Stephanie Franklin, CDOA
stephanie.franklin@anadarko
.com
CDOA Exam
The Facts:
 There are 4 different exams.
 The analyst has 4 hours (240 minutes) to answer 200
questions– Note the time crunch below:
Total: 1 min & 20 seconds per question

 All three sections of the exam will be given to the
analyst up front so the exam/sections can be taken
in any order.
 The analyst is not allowed to use scratch paper but
can write on the test.
 The exam has Multiple Choice; True/ False, &
Calculations.
 It is highly likely that the analyst will encounter a
few BPO & APO calculations on their exam. There
are also a few section/township range questions.
(ex. plotting & calculations)
IMPORTANT: Calculation Examples

 Review Chapter 3- pages 15- 34
 Review the Addendum- pages 1-30
CDOA Exam
Section I
Chapter 1: An Overview of the Oil and Gas Industry
Chapter 2: Elements of the Lease
Chapter 3: An Overview of the Division Order Process
Chapter 4: Contracts Affecting the Division Order Analyst
o Chapters- 1 thru 4 -65 Questions
Pass Section I with 49 correct answers
Section II : Division Order Creation & Maintenance

Chapter 5: Analyze This, Calculate That
Chapter 6: Calculations From Your Title Opinion to Your Computer
Chapter 7: Review of Pooling and Unitization
Chapter 8: Issues Affecting Ownership
o Chapters- 5 thru 8 -65 Questions
Pass Section II with 49 correct answers

CDOA Exam
Section III: Special Topics

Chapter 9: Basic Overview of Texas Laws & Regulations Affecting Oil & Gas
Chapter 10: Kansas Issues Affecting Land Title & The Division Order Analyst
Chapter 11: Arkansas Land Titles
Chapter 12: California Legal & Practice Summary
Chapter 13: Overview of New Mexico Oil and Gas Law
Chapter 14a: Frequently Encountered Title Problems In Oklahoma
Chapter 14b: Oklahoma Indian Land Titles
Chapter 14c: Senate Bill 168
Chapter 15: Louisiana Succession Law
Chapter 16: Hot Title Curative Issues Facing PA Oil & Gas Operators
Chapter 17: Rockies (Federal Units) Division Order Overview
Chapter 18: How a Federal Unit is Formed
Chapter 19: Michigan Oil and Gas Title
Chapter 20: Fundamentals of Federal OCS Title
Chapter 21: Title Issues With Respect to Corp. & Partnerships In TX & NM
Chapter 22: An Introduction To Escheat And Unclaimed Property
Chapter 23: Acquisitions, Divestitures, and Trades
Chapter 24: Coalbed Methane-Review Of An Import Domestic Energy Resource
o Chapters-9 thru 24 -70 Questions
Pass Section III with 53 correct answers

CDOA Exam
Tips for Exam Day

 Bring:
 Pens or Pencils
 Block Eraser
 Map Color Pencils
 Recommend (1) map color pencil to mark
what test taker believes to be the "correct”
questions.
 Calculator
 Recommend bringing an 8-digit calculator.
Note: Phones are restricted
 Clock
 Recommend tracking time during the exam
 Each section of the Exam must be completed
within 1 hour & 33 minutes to complete in 4
hours.
 Snacks & Water
 Recommend that that test taker bring a
snack and water for the 4 hour exam
CDOA Manual
Study Guide:
CDOA Study Guide is provided free of charge to NADOA
members.
Link: http://www.nadoa.org/index-3.html
Chapter 1
An Overview of the Oil and Gas Industry
Note:
Link to the “Pre-2015” NADOA Chapter 1 Power Point:
Contains pictures and illustrations pertaining to the
information in Chapter 1 of the CDOA Manual
http://nadoa.wildapricot.org/Resources/CDOA/Chapter%201%
20Overview%20of%20Oil%20and%20Gas%20Industry.ppt.pdf
Chapter 1
Key Points for Exam:

 Know the most important functions of the lease records
department
 Seven out of 8 wildcats ( a well drilled outside a known

producing area) are dry
 The operator contracts with a drilling company to actually drill

the well. This will be the largest expenditure.
 Also, a wireline survey is run at approximately each 500' of

hole to verify that the hole is straight.
 When the well is at the total projected (or planned) depth, the
most important log is run.
 If the well is a gas well, the Christmas tree, the final well
head, which controls pressure and the flow of gas from the
well is set.
 Condensate
 Casinghead Gas
 Point of Gas Sales
 Drilling title Opinion
 Secondary recovery Unit

Chapter 1
Note:
Link to marked up NADOA Chapter 1 Manual-
Created by presenter and should be used with caution.
http://hadoa.memberlodge.org/resources/Documents/0
1_CDOA/Chapter%201_YB%202017.pdf
Chapter 2
Elements of The Lease
Note:
NADOA Chapter 2 Power Point –
pay special attention to colored bullet points
http://nadoa.wildapricot.org/Resources/CDOA/C
hapter%202%20Elements%20of%20the%20lease.pdf
Link to YouTube video:

https://www.youtube.com/watch?v=5pCjgXrs-Kw
Chapter 2

 Early oil leases were modeled on instruments that permitted
exploration and drilling for salt water
 Fagg v. Texas Co
 Producers 88
 Lease Provisions:
 Undated lease is not void
 Controlling Date, for any lease, is the one written on the instrument
 Consideration
 Granting Clause
 Depth Limitations included in Description
 Mother Hubbard
 Habendum Clause
 Royalty Clause
 Note that Gas royalties are usually paid in money.
 Shut in Royalty Clause
 Pooling & Unitization Clause

Chapter 2
Note:
Linked to marked up NADOA Chapter 2 Manual-
http://www.hadoa.memberlodge.org/resources/Docume
nts/01_CDOA/Chapter%202_YB%202017.pdf
Chapter 3
An Overview of the Division Order Process
Note:
http://nadoa.wildapricot.org/Resources/CDOA/Chapter%
203%20Overview%20of%20DO.pdf

https://www.youtube.com/watch?v=aA2FXDslCrk
Chapter 3

 According to the webinar, several test takes had problems
with legal descriptions on the exam. It is highly
recommended learn how to use the Jeffersonian Survey
System.
 Recognize the differences

between Metes & Bounds
System and the
Jeffersonian Survey System.
(page 7 thru page 13)
Learn “KOTT”
 Metes and Bounds. The metes and bounds system was
originally used in surveying land in the thirteen colonies,
Kentucky, Tennessee, parts of Ohio and Texas
Chapter 3
Note:
http://hadoa.memberlodge.org/resources/Documents/01_C
DOA/Chapter%203_YB%202017.pdf
Chapter 4
Contracts Affecting the Division Order Analyst
Note:
NADOA Chapter 4 Power Point
pay special attention to RED bullet points
http://www.nadoa.wildapricot.org/resources/C
DOA/Chapter%204.pdf
Chapter 4

 Duhig Rule
 The assignments and the leases to which they are

attached in the chain of title are examples of
contracts that become conveyances by virtue of being
recorded in the real estate recordings of the county or
parish in which the producing oil or gas well is
located.
 Leasehold Estate
 Consideration is a mutual exchange between or among

the parties to the agreement of something of value
“Joint Operating Agreement”
 Know the various Exhibits
 Whoever takes on the distribution of production proceeds

also takes on the responsibility and the overhead
associated with identifying, finding, and paying the
individual owners in an oil and gas well
 Define the operator’s lien provision

 The outcome of the Oklahoma Supreme Court ruling
Chapter 4
Note:
As created in Plano
http://hadoa.memberlodge.org/resources/Documents/01_CDOA/C
hapter%2004%20Manual%20Plano%20Review.pdf
Chapter 5
Analyze This, Calculate That
Note:
http://hadoa.memberlodge.org/resources/Documents/
01_CDOA/Ch%205_Analyze%20calculate.pdf
Chapter 5

 The Division Order Analyst should – Be Detail Oriented;
Possess Patience; Be a Good Communicator and Listener
 Types of Mineral Interest
 Types of Royalty Interest
 Title Opinions/ Curative
 There should be no gaps in dates of abstracts examined and

the title should be certified to the date of first production
 Responsibilities of the Operator

Become Familiar with the following Agreements:
 Pooling
 Farmin/Farmout
 JOA’s
 Exhibits & Articles
 “AMI” Areas of Mutual Interest
 Marketing Agreements
Chapter 5
Note:
As created in Plano
http://hadoa.memberlodge.org/resources/Documents/01_
CDOA/Chapter%2005_Manual%20Plano%20Review.pdf
Chapter 6
Calculations From Title Opinion to Computer
Note:
pay special attention to italicized & bolded fonts
http://nadoa.wildapricot.org/Resources/CDOA/Chapter%206%20Calculatio
ns%20from%20your%20Title%20Opinion%20to%20your%20Computer.ppt%20%
5BCompatibility%20Mode%5D.pdf
Chapter 6
Chapter 6
Note:
As created in Plano
Chapter 7
Review of Pooling & Unitization
Note:
pay special attention to colored fonts
http://nadoa.wildapricot.org/Resources/CDOA/Chapter%207%
20-%20Review%20of%20Pooling%20and%20Unitizing.pdf
Chapter 7

 What are the reasons for operators to pool?
 What is the purpose of pooling or unitization?
 Pooled Units
 The most common ways to create voluntary & involuntary
pooling
 Pooling Provisions & their powers
 Approximately 32 of the 50 states have some type of

forced pooling statute.
 Texas Involuntary Pooling
 Texas Mineral Pooling Act,1 which became effective
August 30, 1965
 State of Texas lands, or lands in which the state owns an

interest, cannot be forced pooled without the State's
consent.
 Oil & Gas spacing sizes

 Three Types of Federal Units
 Effective Date
Chapter 7
Note:
As created in Plano
Chapter 8
Issues Affecting Ownership
Note:
pay special attention to colored fonts
01_CDOA/Chapter%208%20-%20L.Barry.pdf
Chapter 8

 In Kansas, a royalty interest may not be suspended for
any reason including the death of an owner
 Difference between Decree of Distribution and Decree of
Descent
 Know which states are community property (note the

error in the manual)
 Know the difference between community property and
separate property
 Dower and Curtesy
 Oklahoma Transfer-on-Death Deeds
 Bankruptcy
 Chapter 7
 Chapter 11
 Chapter 13
Unsecured debt not exceed $100k & 2nd debts not exceed $350k
 Trusts
 Kansas Statue 5a-1013
Chapter 8
Note:Link to marked up NADOA Chapter 8 Manual-

01_CDOA/Chapter%208_2017.pdf
Chapter 9
Texas Laws & Regulations
Note:
pay special attention to the notes
http://nadoa.wildapricot.org/Resources/CDOA/Chapter%209%20-
%20Overview%20of%20Texas%20Oil%20and%20Gas%20Law.pdf
Chapter 9

 Railroad Commission – Regulatory Body for Texas
 Open Mine Doctrine
 Rule of Capture
 Note that in Texas, homestead rights do not extend to
severed minerals
 Life Estate: The proceeds from the corpus are
suspended by the accounting department and placed
in an interest-bearing account, and the life tenant
receives the interest.
 One saving grace in the oil and gas industry is that
only one cotenant—no matter how big or how small—
can sign an oil, gas and mineral lease (OGML) to access
the whole property and all of the minerals.
 What are the 3 rules of Adverse Possession?
 Know the difference between Warranty and Quitclaim
Deeds
 What is a Vara?
 Know the elements of a Deed
Chapter 9
Note:
CDOA/Chapter%209__2017.pdf
Chapter 10
Kansas Issues
Note:
pay special attention to the colored fonts
http://nadoa.wildapricot.org/Resources/CDOA/Chapter
%2010%20-%20Kansas%20NADOA%202013.pdf

https://www.youtube.com/watch?v=dMlJD6hI7KA
Chapter 10
Kansas Issues

 Real Property can be held in which three ways?
 What is the process for Affidavit of Heirships?
 Holographic Wills
 Deeds creating life estates are common
 Guardianships and Conservatorships
 A person making a demand for the Trust Agreement in

addition to a Certification of Trust and/or excerpts in the
Trust agreement is liable for damages
 KCC “Kansas Corporation Commission”

 No Spacing Rules
 Allows Noncontagious Units
 Affidavit of Production
 Intestate Laws
 Laughing Heirs
Chapter 10
Kansas Issues
Note:
 Link to marked up NADOA Chapter 10 Manual-
 As created in Plano
Chapter 11
Arkansas Issues
 In Arkansas, when dealing with real property; both

spouse must always execute conveyance
 A divorce however, may destroy the tenancy,

depending on date (be familiar with the dates & the
repercussions
 The affects of dower & curtsey on mineral interest

(be familiar with the dates & the repercussions)
 Heritable Estate
 Uniform Partnership Act
 Uniform Transfer of Minors Act
 Grantor & Custodian can not be the same person
 Integration Orders
 Beneficiary Deed
Chapter 11
Arkansas Issues

As created in Plano
DOA/Chapter%2011_Manual%20Plano%20Review.pdf
Chapter 12
California Legal & Practice Summary
 Constitution or laws of this State, is the rule of

decision in all the courts of this State.
 Difference between Several Ownership & Ownership of

Several Persons
 Community Property defined
 Define “freehold”
 Implied Covenants
 Know the differences between ground water, oil, &

gas as recognized by the state
 Callahan case
 Meaning of “reasonableness”
 Meaning of “Prior tempore, potior est in jure“

Chapter 12
California Legal & Practice Summary

As created in Plano
Chapter 13
New Mexico
The “Pre-2015” NADOA Chapter 13 - pay special

attention to the bullet points
http://nadoa.wildapricot.org/Resources/CDOA/Chapter%2013-
%20Overview%20of%20New%20Mexico%20Oil%20and%20Gas%20Laws.pdf

https://www.youtube.com/watch?v=xVaLn3sekBk&feature=youtube
Chapter 13
New Mexico

 New Mexico Oil Conservation Commission
 Why is there a lack of Case Law?
 Attributes of Mineral Estate in New Mexico
 There is no standard oil and gas lease form in New Mexico.
 Unless Lease Forms: This is the most common form & derives
its name from how the lease is perpetuated. Form creates
determinable fee estate
 Why do New Mexico lease forms do not generally contain a

"Mother Hubbard" clauses
 The New Mexico Proceeds Payment Act requires timely

proceeds production to all persons entitled thereto.
 Therefore royalty should be paid on the production to the

lessor even though the lessee is not actually marketing
his or her share of the gas.
 Payment of Royalty- six months after the first day of the

month following the date of first sale and thereafter not
later than forty-five days after the end of the calendar
month within which payment is received by the payor
 Payments not timely made accrue interest at the rate

of 18%
Chapter 13
New Mexico

As created in Plano
http://hadoa.memberlodge.org/resources/Documents/01_CD
OA/Chapter%2013_Manual%20Plano%20Review.pdf
Chapter 14
Oklahoma

pay special attention to the bullet points
http://nadoa.wildapricot.org/Resources/CDOA/CH
APTER%2014%20-%20Oklahoma.pdf

https://www.youtube.com/watch?v=VVJQHTQnYVM
Chapter 14
Title Problems in Oklahoma
Part I YouTube Video

starts @ 0:00 ends @ 43:29 minutes
 Rebuttable Presumptions Statute time frame with
Trusts
 Difference between General POA and a durable power
of attorney
 Affidavit of Death and Termination of Joint Tenancy
 How having only "Trustee" in a conveyance affects title
 Identification of the real property by street address is
not sufficient; an accurate legal description must be
provided.
 Divorce decree terminates any joint tenancy
 Mortgages are no longer a valid encumbrance (7) years
after their due date. If no due date is specified,
enforceable thirty (30) years.
 Constructive Notices
Chapter 14
Title Problems in Oklahoma - Part I
Link to marked up NADOA Chapter 14 Part I Manual-

As created in Plano
http://hadoa.memberlodge.org/resources/Documents/01_CDOA/Ch
apter%2014%20-%20Part%201_%20Manual%20Plano%20Review.pdf
Chapter 14
Oklahoma Indian Land Titles – Part II
Part II YouTube Video

starts @ 43:29 ends @ 1:28:30
 Five Civilized Tribes: the Cherokee, Choctaw, Chickasaw,
Creek and Seminole
 Osage Nation
 General Allotment Act
 The purpose of the Dawes Commission

 The degree of blood of the allottee is determined by
reference to the Dawes Commission roll.
 Secretary of Interior or the district court can remove

restrictions
 Headrights & prorata share of income
 Because many companies do not seek approval of the

assignment of operating rights, it is very important to
review company files as well as Bureau of Indian Affairs
and county records
Chapter 14
Oklahoma Indian Land Titles – Part II
Link to marked up NADOA Chapter 14 Part II Manual-

As created in Plano
http://hadoa.memberlodge.org/resources/Documents/01_CDOA/Cha
pter%2014%20-%20Part%202_Manual%20Plano%20Review.pdf
Chapter 14
Senate Bill 168 – Part III
Part II YouTube Video

starts @ 1:28:55 ends@ 2:02
 In 1963, the Oklahoma Supreme Court handed down
the “Blanchard” Decision”
 Osage Nation
 Senate Bill 160
 Senate Bill 168 Production Revenue Standards Act
(PRSA)
 Formula for Proportionate Production Interest “PPI”
 Formula for Proportionate Royalty Share “PRI”
 The share of proceeds or other revenue derived from
or attributable to any production of oil and gas
attributable to the royalty share
 State of Oklahoma does not have jurisdiction over the
Office of Natural Resources Revenue (ONRR) formerly
known as Minerals Management Service (MMS) or Indian
lands located within the state.
Chapter 14
Senate Bill 168 – Part III
Link to marked up NADOA Chapter 14 Part III Manual-

As created in Plano
http://hadoa.memberlodge.org/resources/Documents/01_CDOA/Ch
apter%2014%20-%20Part%203_Manual%20Plano%20Review.pdf
Chapter 15:
Louisiana Succession Law

 The process for Succession
 The process for Judgement of Possession “JOP”
 Differences between the Descendants; Ascendants; &

Collaterals
 Representation is a matter of law in intestate

succession and takes place ad infinitum with respect to
descendants of the deceased.
 Rules of Intestacy of Community Property (changes

depending on the date of the death)
 Special Rules and Exceptions for Intestate
 What is an usufruct?
 What is servitude?
 How long is servitude good for?

https://www.youtube.com/watch?v=oBKDYWlFie0
Chapter 15:
Louisiana Succession Law
Note:
http://www.hadoa.memberlodge.org/resources/Docu
ments/01_CDOA/CHAPTER%2015_2017.pdf
Chapter 16:
Pennsylvania Hot Curative

 Purpose of the Pennsylvania Dormant Act
 Who can Petition to the Court?
 To have standing to petition the court, an oil and

gas operator must have a lease with at least one
fractional owner of the oil and gas underlying the
property
 Appointment of Trustee
 Administration and Duration of Trust
 Adverse Possession in Pennsylvania
 As to who owns fee simple title to a cemetery plot,

the law is well settled in Pennsylvania: the grantor
retains fee simple title to the plot, and the grantee
receives only a privilege/easement/license to use the
plot for burial purposes. Thus, the grantor of the
cemetery plots retains the oil and gas.
Chapter 16
Pennsylvania Hot Curative
Note:
http://www.hadoa.memberlodge.org/resources/Do
cuments/01_CDOA/CHAPTER%2016_2017.pdf
Chapter 17:
Rockies (Federal Units)
Note:
pay special attention to the bullet points
http://hadoa.memberlodge.org/resources/Docume
nts/01_CDOA/Chapter%2017%20Rockies.pdf

 https://www.youtube.com/watch?v=XJaAnqHz_M8
Chapter 17:

 Administration of federal lands is handled by the
Department of the Interior and is split into two
agencies:
 The Bureau of Land Management (BLM) oversees leasing,
surface use, and development of the minerals owned by
the US with the exception of forest lands.
 The office of Natural Resources Revenue (ONNR) accounts

for the revenues from oil and gas.
 Royalty Rates
 Sliding Scale (know the details)
 The ONRR has increasingly been concerned about the

pricing of royalty payments. The concern was that
the royalty owner should receive payment based on a
fair price for the product, not based on some reduced
price received by the producer.
 Another issue addressed in BLM leases is
compensatory royalties for a well drilled too close to
the lease line or where draining of oil or gas from a
lease not included in the spacing unit may cause
damage.
Chapter 17
Note:
http://www.hadoa.memberlodge.org/resources/Document
s/01_CDOA/CHAPTER%2017_2017.pdf
Chapter 18:
Federal Units
 Oil and gas operations in the Rocky Mountain states

are primarily governed by each state’s oil and gas
conservation act.
 What are the purposes of the conservation acts?
 If federal leases are involved, pooling must be

accomplished by means of a communitization
agreement.
 While pooling or communitizing leasehold of up to 640

acres is a common practice, serious consideration
should be given to federal unitization when the pooled
area covers an entire oil and gas field involving at
least 10% or more federal leasehold
 The purpose of unitization is to conserve natural

resources, prevent waste, and secure other benefits
only obtainable through exploration, development and
operations under a unified plan.
Chapter 18
Federal Units
Note:
http://www.hadoa.memberlodge.org/resources/Document
s/01_CDOA/CHAPTER%2018_2017.pdf
Chapter 19:
Michigan Oil & Gas title
Note:
pay special attention to colored fonts & bullet points
http://nadoa.wildapricot.org/Resources/CDOA/Chapter%20
19%20-%20Michigan%20Oil%20%20Gas%20Title.pdf

https://www.youtube.com/watch?v=g9U0HFi15TQ
Chapter 19:

 The State of Michigan has established 40-acre/spacing
(quarter-quarter) for all wells in Michigan. However,
the state allows numerous exceptions to this general
spacing rule.
 the Antrim Shale was originally spaced at one well per
40 acres
 The lessee needs a performance bond according to the
number of acres under lease. The minimum amount is
$2,000.00
 Certificate of Deposit
 Compulsory Pooling
 The State of Michigan will not sign division orders
 Michigan Dormant Mineral Act
 Comben v. State lawsuit
 Title differences when title held by Married Women or
Married Men
 How can title be held in Michigan? “JT”; “TBE”; “TIC”
Chapter 19
Note:
http://www.hadoa.memberlodge.org/resources/Docum
ents/01_CDOA/CHAPTER%2019_2017.pdf
Chapter 20:
Federal Fundamentals
Note:
pay special attention to colored fonts & bullet points
http://nadoa.wildapricot.org/Resources/CDOA/Chapt
er%2020%20-%20OCS%20Title%20Issues.pdf
Chapter 20:

 OSCLA Act & Submerged Lands Act
 While there were early disputes between several of the
states and the federal government about the boundary'
between their respective spheres of jurisdiction over the
United States' outer continental shelf, these were
eventually resolved, and the delineation has now been
well established.
 The OCS is divided into 4 regions for administrative
purpose:
 Atlantic – No Production; Gulf of Mexico – Most Prolific;
Pacific; & Alaska
 Know the OCS Planning, Secretary of State’s role, Sale,
Bidding Process, the Process for Bidders
 The record title owner alone has the right to relinquish
the entirety of a lease, notwithstanding the existence of
operating rights in the lease.
 An assignment must be approved by the regional director
of the BOE/MMS; this approval remains with the
discretion of the regional director even after the
apparent satisfaction of the filing requirements.
Chapter 20
Note:
http://www.hadoa.memberlodge.org/resources/Doc
uments/01_CDOA/CHAPTER%2020_2017.pdf
Chapter 21:
Texas & New Mexico Partnership
Note:
pay special attention to bullet points
http://nadoa.wildapricot.org/Resources/CDOA/Chapter%2021%20CDO
A%20Certification%20Textbook%20webinar-5-18-13docx%20(2).pdf

https://www.youtube.com/watch?v=dw9yo_Vz1DU
Chapter 21:

 In Texas prior to August 28, 1989, a conveyance had to
be executed by the President or Vice President of the
corporation to constitute prima facie evidence
 What does the Texas Business Corporation Act provides

what?
 Learn about the New Mexico statue involving

Limitation of Actions and how many years before
action can be brought
 Note that Texas has statue of limitation which

prevents a corporation from filling an action against
grantee for recovery of real property. Note that the
Texas statue provides that no action can be brought
after two years after the day the instrument was filed
of record.
 What are implications if document was recorded on or after
September 1, 2007?
 If recorded between 9/1/1993 to 9/1/2007?
 If recorded prior 9/1/1993?

Chapter 21
Note:
http://www.hadoa.memberlodge.org/resources/Doc
uments/01_CDOA/CHAPTER%2021_2017.pdf
Chapter 22:
Escheat & Unclaimed Property

 In general, the property becomes unclaimed when
there is neither communication between the entity
holding the property (the holder) and its owner, nor
owner activity for a statutorily specified period of time.
 What are some of the most common reasons for the
lack of activity or communication?
 When does a property become unclaimed?
 The underlining purpose to escheat
 Most states now have abandonment periods (the length
of time during which there has been no owner activity)
of three to five years.
 What part does a holder have in the escheat process?
 Kentucky exempts reporting royalties entirely.
 In Ok., mineral proceeds arising from forced pooled
units are placed in the custody of the OCC.
 Wyoming requires production proceeds that cannot be
paid within a prescribed time period to be placed in a
Wyoming bank or saving and loan escrow account
Chapter 22:
Escheat & Unclaimed Property

As created in Plano
Chapter 23:
Acquisition, Divestiture, & Trades

 An acquisition, divestiture, or trade can be a means of
managing company assets and improving on processes
and business decisions
 Trades are simply a combination of both acquisitions

and divestitures, each occurring at the same time
 Steps to be completed by each team must be clearly

defined. If this is not done, duplicated effort is almost
guaranteed. The most common area of concern is
verification of title.
 Know the general pitfalls that commonly affect A&D

activities
 Closing Date ; Property Management Cut-off Date; Post
Closing Date
 Well status is a very important element in a

divestiture
Chapter 23:
Acquisition, Divestiture, & Trades

As created in Plano
http://hadoa.memberlodge.org/resources/Documents/01_CD
OA/Chapter%2023_Manual%20Plano%20Review.pdf
Chapter 24:
Coalbed Methane
 The only type of gas that would be generated from

coal would be methane
 CBM is comprised of methane, ethane, butane,

pentane, and higher hydrocarbons, as 'well as carbon
dioxide and nitrogen, rather than simply methane
 More than 80 percent of which is located in the

western United States
 Over 50 percent of current coal gas production is

derived from the San Juan Basin
 What is the argument for coal owners about CBM
 What is the argument for oil & gas owners about CBM
 Know the different types of coal seams & the different

levels
Chapter 24:
Coalbed Methane

As created in Plano
Practice CDOA Questions
“Test Your Knowledge Questions”

These question have been published and collected
from the NADOA Quarterly Newsletter
Link for Updated Questions:

DOA/Test%20Your%20Knowledge-%20Handout.pdf
Practice CDOA Questions
“Test Your Knowledge Strategies”

These Strategies were created and administered
courtesy of Marsha Breazeale, M.Ed., CDOA, CPLTA
Link for Questions and Strategies:

http://hadoa.memberlodge.org/resources/Documen
ts/01_CDOA/Marsha%20Review%20Questions.pdf
Pre-2008 CDOA Quizzes
“Pre-2008 CDOA Review Quizzes”

These review questions were created & administered
courtesy of Linda Barry, CDOA
Pre-2008 CDOA Quizzes
Fundamentals Quiz:
_CDOA/CDOA%20REVIEW%20QUIZ%20PART%201.pdf
Legal Section Quiz

DOA/CDOA%20REVIEW%20QUIZ%20PART%202.pdf
Specialty Section Quiz:
_CDOA/CDOA%20REVIEW%20QUIZ%20PART%203.pdf
Quizlet
STUDY-- Track progress with these 6 powerful study and

game modes!
Flashcards—Review your material, shuffle/randomize, or
listen with audio.
Learn—Track your correct/incorrect answers and retest the
ones you've missed.
Speller—Type what you hear in this audio-powered study
mode.
Test—Randomly generate tests based on your flashcard set.
Scatter—Race against the clock to drag and match
terms/definitions.
Space Race—Type in the answer as terms/definitions scroll
across the screen.
To find the CDOA virtual flash cards- search in the

top box for the desktop version & type “CDOA”
Instructional Video
Check out this video on YouTube:

http://youtu.be/dHUOvqhvPY4
Quizlet provides the ability to study anywhere by using

Quizlet’s mobile apps for iPhone, iPad and Android devices.
Note that Quizlet is also available for desktop usage
Want to Download
NADOA Webinars?
Instructional Video
Download NADOA YouTube videos to your personal device
to avoid using Wi-Fi Connection.
http://www.pcadvisor.co.uk/how-to/photo-
video/how-download-youtube-videos-3492830/
Special Thanks
Marsha Breazeale Judy Moreland Linda Barry Luanne Johnson

M.Ed., CDOA, CPLTA CDOA, CPLTA CDOA CDOA, CPLTA
Material Disclaimer
This material was created based on the presenter's

personal experience with taking the CDOA exam.
The opinions/ suggestions expressed here
represent my own. Also, my thoughts and opinions
change from time to time. I consider this a
necessary consequence of having an open mind and
being an analyst by profession.
How to Study for the
FOR QUESTIONS OR
ASSISTANCE PLEASE
CONTACT:
Hilcorp Energy
1111 Travis
Houston, TX 77002
O: 713.289.2853 F: 281-203-5701
ybazan@hilcorp.com
CDOA SECTION 3 REVIEW
Presented by: Judy Moreland, CDOA & CPLTA is Land
Administration Manager at Concho Resources
Basic Overview of Texas Laws & Regulations Affecting O&G

Kansas Issues Affecting Land Title & D/O Analyst:
California Legal and Practice Summary
Overview of New Mexico Oil & Gas Law
Oklahoma:
i. Frequent Title Problems
ii. Indian Lands Titles
iii. Senate Bill 168
Louisiana Succession & Unique Laws
Pennsylvania Hot Title Curative Issues
Rockies Federal Units D/O Overview
How a Federal Unit is Formed
Michigan O&G Title
Fundamentals of Federal OCS Title
Corporations & Partnerships in TX & NM Title Issues
Intro to Escheat & Unclaimed Property
Acquisitions, Divestitures, Trades
Coalbed Methane Review
CHAPTER 9
BASIC OVERVIEW OF TEXAS LAWS AND REGULATIONS

AFFECTING OIL AND GAS
1. Introduction ~ The Texas Railroad Commission
is the governmental regulatory body of
the oil and gas production industry in Texas.
a. The other two state agencies regularly involved
in the development of oil and gas
are the Texas General Land Office (($11)) and the
Texas Comptroller.
a. The (21.0 is responsible for leasing state property
(approximately 20. l million
acres) for oil and gas development.
b. The Comptroller is responsible for collecting severance
taxes on the production
of oil and gas.
a. Severance taxes in Texas are [-15% on oil and condensate
and 7.5% on
natural gas.
I). Severance taxes are due the 20'“ day ofthe 2“" month
lollowing the
production month.
c. Out of 25 1- Texas counties, only about 35 do not have any
recent oil and gas
production.
(I. Texas is often thought to have the largest and best
development body ofoil and
gas jurisprudence in the world.
2, 'l‘ypes of ( )wuership of Real l’rop_ei_ly

a. The Rule of Capture originated from English lnmting law but
ended up as the basic
rule allowing for the taking ofoil and gas from beneath the surface
even though it
may have originated under some else’s land and migrated to another
owner’s laud.
i. The biggest modification to the Rule of Capture is the correlative
rights
doctrine.
ii. The correlative rights doctrine allows equal rights between adjacent
land or
mineral owners.
I). Ownership of minerals in Texas is often analogized as a bundle
of sticks with each
stick being a specific ownership right able to be conveyed or held. Some
of the
rights or “sticks” belonging to the mineral owner are:
i. Right of ingress and egress
ii. The right to sign a lease
iii. The right to receive bonus payments
iv. The right to receive delay rentals
v. The right to produce the minerals
vi. The right to receive royalty owner
c. The right to lease is usually referred to as the Mr; or executive right.
(1. Bonus is compensation for granting a lease.
e. DelayleutaLs are compensation for deferring (lrillings
M is a share of production which is free of the cost ofproduction.
owner
Each of these “sticks” is alienable, divisible and inheritable. The mineral
or transfer
can transfer a portion of the mineral estate, thereby creating a cotenancy,
any individual incident of mineral ownership such as the executory right, the
royalty, etc. ( p 3)
11. Fee simple ownership is ownership of the property in total.
MWIH ownership of property only when a certain event
happens. like a future date or event or after a specific death.
Life estates are fee simple determinable ownerships. The life tenant is given the
property for his life and upon that person’s death it automatically passes to a
remainderman.
lg. The remainderman holds a future interest that will become a current interest only
at the death ofthe life estate holder.
Life estates are usually created by testament, intestacy, or by a conveyance.
111. Texas intestacy law may create a statutory life estate for the benefit of a surviving
spouse under certain conditions.
Life tenants can live on and use the land but cannot commit waste. \V'aste is an act
which decreases the value or which uses up something that cannot be replaced,
such as oil and gas production, unless the ()pen Mine Doctrine applies.
i. The ()pen Mine Doctrine holds that if a life estate is created while waste is
already being committed the life tenant is entitled to continue that same
waste to his or her benefit.
ii. The life tenant gets the revenue and does not share it with the
remain<lerman
iii. If the life estate is created by will or deed, then the rules for waste and
income can be determined by the testator/grantt)r. (p. l)
0. Leas“:gIssues - Because the rcmaindcrman has no present right of possession
and the life tenant is obliged not to commit waste, both must execute the lease.
p. The life tenant cannot commit the remainder interest. If a lease is taken only from
the life tenant and not the remaimlermen, the interest would be considered
unleased at the death of the life tenant.
Accountl_1_1'g issues - \Vlio receives money hinges on whether the distribution is from
the corpus, which goes to the remaindermen (although held in suspense until the
life tenant dies) or from current income and interest on the proceeds from the
corpus, which goes to the life tenant.
i. Delay rentals are considered current income and paid to the life tenant
ii. Royalty and bonus are considered corpus.
iii. The proceeds from the corpus are suspended and placed in an interest
bearing account. The life tenmu is entitled to the interest and the
remaindermen will receive the proceeds upon the death of the life tenant.
iv. The life tenant and remainderman can amend
the way the distributions are
made by written agreement or application of the ()pen
Mine Doctrine.
A revcrsmnary interest is similar to a fee simple determinable
except that with a
reversionary interest, upon the occurrence of the specified
event, the interest reverts
to the grantor. \Vith a fee simple determinable the
interest could revert to any
third party. (p 5)
(‘oleuancv is the ownership or possession ol'property by
two or more entities.
They [requently own equally, but it could be owned in
any ratio.
Only one cotenant — no matter how big or small — can sign
an oil and gas lease to
access all ol‘the minerals.
U. The operating cotenaut (aka the developing cotenaut) bears
the entire cost and risk
ol'drilling a well, and they must account to the other
cotenants (aka non-consenting
co-tenant) for their share olithe net prolits.
Cotenants and foreign pipelines - \Vhen an oil lease pipeline carries
gas not
associated with a lease across their tract, it requires the approval
of all cotenants,
although in practice many companies obtain the approval of as many
cotenants as
possible and go ahead and lay the pipeline. The courts generally
just require
damages (or the trespass against the unsigned cotenaut, although
they could require
that the company remove the pipeline. (p (i)
\V. Many pipeline companies become registered as public utilities and theretore
acquire the right of condemnation, which can be used against unsigned
or
uncooperative cotenants.
In Texas, a cotenaut has an absolute right to partition property, regardless
of any
inequities caused by the partition to other cotenants.
i. Partition is a judicial proceeding and partitions can be granted either in kind
by dividing the property or by forced sale and dividing the proceeds.
ii. The right to partition does not extend to non-possessory interests, such
as
royalty interest.
iii. The judicial costs to bring a partition action are borne among all eotenauts
in their proportionate share based on ownership regardless ol‘which
cotenaut brings the action.
Texas is a community property state. Property acquired during marriage is
presumed to be community property but property inherited, acquired as settlement
[or personal injuries, or acquired exclusively with separate funds will be considered
separate property.
i. Normally, both spouses execute oil and gas leasesjointly, whether the
mineral interest is community or separate property.
ii. Il'the mineral interest is separate property, the owning spouse alone can
execute a binding oil and gas lease, unless the lease is upon homestead
property where joinder of both spouses is required.
both
7.. The ’l‘exas Property Code defines two types ofhomesteads: urban and rural,
of which are determined at the time they are designated.
i. It is possible for a rural homestead to exist in a municipality if it was created
prior to meeting the rules for an urban homestead.
ii. An urban homestead must be serviced by at least three of these services:
electric, gas, sewer. storm sewer and water.
iii. Between 1983 and 1999 the urban homestead was limited to one acre, but
in 1999 it was amended to ten acres. Multiple lots can make up an urban
homestead as long as all the lots‘are adjacent and total no more than an
aggregate of ten acres.(p7)
iv. Rural homesteads, which is any homestead not qualifying as urban, may
consist of no more than 200 acres for a family and 100 acres for a single
person. A tract containing tnore than that can still qualify as homestead, but
the acreage in excess of the allowed amount will not qualify.
v. IIomestead rigltts do not extend to severed minerals.
8. Types of ownership interests itnportaut in oil and gas —

a. Net revenue interest — The fraction of production that the lessee gets to keep once
all other interests are deducted
b. (herriding Royalty Interests — Interest carved out ofthe lessee’s interest, usually
created by the lessee in return for something of value provided in direct relation to
the prospective development of an oil or gas well. This type of interest is generally
tied to a specific lease.
c. Niiii-Participating Royalty Interests — A NPR] is an interest conveyed or reserved
by a mineral or royalty owner. It can be perpetual or limited to a specific term. It
is carved out of the lessor’s interest, but unlike an ()RRI it is not tied to a lease and
does not expire with the lease.
(1. NI’RI’s do not generally have an executory right unless that right has specifically
been granted. The executory owner has an obligation to execute a lease with
utmost good faith and fair dealing with respect to the NI’RI.
1.. The importance of legal descriptions - \Vithout a proper legal description, a conveyance is
void for vagueness. It must be specific enough to tell where the property is located.
a. “All my property in Denton County” is a sullicient description but “all my property
in Texas” is not. (p 8)
l). The Texas statute does not mention the requirement of a legal description, but the
Texas Supreme Court has ruled that a sales contract must contain or at least
reference an existing document that describes the land with reasonable certainty. (p
10)
c. Most of Texas uses metes and bounds descriptions for property descriptions in
Texas. Metes and bounds can be any shape or size.
11. \\’est Texas does have several counties which 111) subscribe
to township and range
descriptions.
C. Measurement terms — Early Texas 111eas11rements were
of Spanish ori11i11 such as
the vara. Vara is Spanish 1111' 3'ard T11c e\\act 111eas11re111e11t
in eastern 1e.\as was
sli11htl3' dille1e11t than that used111 western 1e\ as, but111
1919 the 111eas11re111e11t was
set at 33.3333 inches.
Iiabors and leagues were common 111easu1'e1ne11ts in early Texas.
i. A labor is 177.1 1. acres or 1 million square varas
ii. A league is 25 labors or 1 128 acres.
Mineral severance - 111 Te.\\‘I1s, once the 111inerals are se1e1ed
they me always
se1e1e1l unless I1 melgel o1cu1s. Seve1ance (an be I11co111plished
111 se1e1al ways
but it is most olten 11catc1l111 a con1c3ance with I1 1cser1'ation ol
the 111ine1als to the
g1I111to1
11. Dominant estate - 111 most states, including Texas, the mineral
estate is the
dominant estate.
i. ll1e minei I11 ownei can use as much ()1 the land as reasonabl3
necessIuy to
p11)1l11ce the 111ine1als.
ii. The 111111eral owner does not have to compensate the surlace owner
11'l1atsoever, although most operators chose to pay surlace 11I1111ag'es 1111‘ the
lair use 111' the surlace I1 show of good will.
Surface estate vs. mineral estate -( )11ce severed how deep down do the 111i11e1'als
sta1t? (p 11)
i. Comts 11111 look at the intent 110111 the 111111 111111e1so11 the inst1un1eut 11
tl1e1e1s I111 Innbiguity. 11 tl1e1e1s no delining language the aunt will
one 01 two tests. apply
ii. 11 the severance occurred beliore‘lune 3, 1983 the courts applied the surlace
destruction test, which meant that the surlace did not include substances
which cause substantial destruction to the surface estate to be removed.
iii. 11‘ I1 severance occun‘ed on or alter‘lune 3, 1983 the courts have applied the
“natural and ordinary 111ea11i11gtest” to define what is I1 mineral. “A
substance 11111 be cousuued as a mine1al 11 it is 11e11e1all3 1e11qded as I1
111ine1al111 the conununit3 at the time and place where the severance took
place."
Warranty deed vs. quitclaim - Generally deeds to real property come in three types:
general111I11rI1nt3 deed, special 1va11anty deed, quitclIum deed.
i. 11 I1 pe1son o1er-c'o111eys p111pe1[3 with I1 deed other than a quitclaim, and
that pe1son late1ac11uiies more ownership ()1 the same property that was
over—conveyed, that new acquisition, by rule 01‘ law, automatically transfers
to the person who was conveyed less than originally purported. (p 12)
ii. IirI'unp/e: “1'11 '1' brothers and 51311-111; 111/zen? 10()I'1('1‘e5/1‘0111 [/11'1'1'1110l/1er.
7711' 51711111513 eac/I believe they mm 20 undivided net Iza'cs out 0/100. 0111'
oft/1e siblingshloe sells his 2();1ereslo_ aelt'. However, "11a! d1esi/1/ings did
not know is [11:11 [/1cir1noI/1er l1ad aclually sold ten acres 011! o/ the 1 ()0 to
Harold a longtime :go. So, wl1al eael1 sibling inherited was 1145'" (1/190
acres, or 16’ undivided net acres. As a Jesull, the conveyance 0/20 acres
Iroinjoe Io]ack ()11[;’('()11(;11i1('(l 18 acres because that is ally/(1c owned.
Now, lire years later, _ [oe decides that he would really/die to (1117) some of
(he lanniy land, so he buys live undivided acres Iron) his sister. Instantly at
the lime olzloe ’s ;1c(/111siu}111 ol'll1e live acres, two oft/1e live acres
1111111('(11}1(1'[I'[lowed flour/(1e tofaek lo 111akeJack ’s aequisuion (1/20 acres
”
whole a11d_[oe1s/eli wit/1 Il1e 1'('111;1111111g‘ (111cc acres.
ls. The Reasonable Accommodation Doctn'ne states that when a pre-existing surface
use can be easily acconnnodated by the oil and gas company. then the oil and gas
company must accommodate. (p 13)
i. 111 Getty Oil Co. vs._Iones (1971) a farmer who had been using a rolling,
circular irrigation system to water his crops would have been prevented
from watering his crops by the height of the production equipment on his
surface estate. The court ruled that the oil company had to dig down a few
feet and locate the production equipment in the lowered area so the circular
irrigation system could pass without obstruction.
ii. This doctrine requires the use to exist prior to the lease.
l. Fraction of a fraction (or double fraction) problem - \Vhen a royalty owner conveys
a one-half royalty to another person, it is critical to read carefully for the word “of”.
I
i. A one-half royalty is a llat 50% royalty.
ii. One half ofthe royalty is half of whatever the royalty is or will be in the
future.
111. Dylngjltilg - An <)ver-conveyaiIce can occur when prior fractional mineral
reservations occurred in the title, yet the existing reservations are not recited in a
current conveyance where the grantor is also reserving a fractional mineral interest.
Iivanzple: _ [0/111 comers B/ackacre lo .‘lndrew but resen'es one-lourd1 (1/1) oft/1e
unnerals. Andrew/alerconveys lilac/{acre lo Brent, but reserves (111e-I1z1/1111'tl1e
111i11erals without reciting an) dung about prior contemnces. Apply 'ing' the Dulng'
Rule, -(l1e court would leave/(11111 wit/1 one-quarter, Andrew wit/1 one-quarter, and
Brent nil/1 one—hall: (1) l I)
i. Duhig applies to warranty deeds but not to quitclaim deeds.
ii. Duhig applies to both minerals and royalty but does not apply to oil and gas
leases. The proportionate reduction clause effectively eliminates the need
for the Duhig Rule in an oil and gas lease.
ll. Duties of the mineral estate holder to the surface estate - There is no implied duty
of an oil and gas lessee or owner to restore the surface to its original condition so
long as the production activities were conducted
in a non-negligent manner. The
duties of the mineral estate holder can be summarized
as being required to:
i. Exercise its implied easements over the surface non-negligently
ii. l’se only as much ol‘the surface as is reasonably necessary
iii. ()perate with due regard to the rights of the surface
owner in cases where
reasonable alternatives are available on the leased premises.
o. It is possible to get legal title to land in Texas by adverse
possession. Texas has
several dillerent terms required for adverse possession,
based on how good the
possessor could have believed the title to be.
i. l'nder color ol'title, where the title on its lace is good and
is not a quitclaim,
adversepossession can be had alter only 3 years. (1) 15)
ii. The maximum adverse possession period in Texas is 25
years. An owner
must bring suit within 25 years ol~ the adverse possession even
il‘ the
disability exists or existed by the rightful owner.
p. The time periods lor adverse possession do not require the same
person to
physically occupy the land the entire period. Successive possessors
can tack
periods of occupancy together to meet the adverse possession
time requirements,
but successive possessors must take immediate possession with no gaps
01‘
possession between.
q. Possession must adhere to these rules:
i. It must be open
ii. It must be hostile (adverse to the interest ol‘others, not necessarily violent)
iii. Continuous (can even include time periods 01‘ subsequent possessors)
iv. Peaceable (no one trying to lorce the possessor ollthe land
v. \Vhen one adversely possesses property, he or she can adversely possess
what he or she is using, not necessarily the entire property. l’nder the
statute il‘the land is not enclosed, the claim is limited to 160 acres.
vi. Adverse possession oliuiinerals requires adherence to the above rules, but it
also requires the actual production ol‘the minerals.
i. Adverse possession of a severed mineral interest is accomplished by
drilling a well and producing it continuously, openly, and visibly.
ii. Adverse possession ol‘minerals generally involves the production ol'
minerals alter a lease has expired due to cessation 01‘ production
where the operator began producing again without obtaining a new
lease. (1) 16)
iii. To adversely possess a property interest against a eotenant, one
must also give actual or constructive notice to the other cotenants ol‘
his or her intent to adversely possess.
5. The oil, gas, and mineral lease in Texas is actually a let: smug determinable with
possibility ofreverter. They are considered executory contracts, meaning that only the
lessor needs to sign it for it to be effective.
a. The payment and acceptmice of consideration by the lessor, delivery ofthe
instrument to the lessee without rejection, and further actions upon it by the lessee
make it mutual.
b. ()nce an oil and gas lease has been signed and accepted, to change it technically
requires the signature of both lessor 2111(1 lessee, even to correct a simple
typographical error. (1). I 7)
c. Conditions which are breached can terminate the lease.
(1. Covenants that are breached simply allow for an action for damages and generally
will not cause a lease to terminate.
i. In Texas failure to pay royalties normally does not result in termination of
the lease, but rather, merely an action for damages. (covenant)
ii. Failure to properly pay delay rentals is a condition resulting in forfeiture.
(i. Canons of construction are not rules of law, but rather statements ofjudicial preference.
Some canons applied to leases include:
a. Instruments are construed against the party preparing the instrument
I). 'l‘ypewritten or handwritten provisions prevail over inconsistent printed provisions
c. In the event of conllict between provisions, specific provisions prevail over general
provisions.
(1. The Four Corners canon is the primary canon of construction. Courts look to the
four corners of the instrument to determine the intent of the parties.
i. The Greatest Estate canon states that a deed not specifically limit the size or
nature of the interest conveyed will be interpreted as conveying everything
that the grantor owns, except for those things specifically reserved.
ii. The In Sequence canon allows the court to interpret the language reciting
what was granted before they interpret the language telling what was
reserved. \Vhen a clash between the language in the granting clause and
reservation clause exists, then using positioning the granting clause will
trump the reservation clause. (p. I8)
iii. The Literal Interpretation canon requires that the words of a conveyance be
given their literal, technical meaning.
7. Parts ol the 'l‘exas ( )il, Gas & Mineral Lease luxplaincd (Basics covered in Elements of a
Lease)
a. In Texas alter being more than (30 days late for oil or 90 days for gas, the lessor is
entitled to interest if there is no dispute as to ownership.
1). Drafting of an instrument is usually construed against the drafter. (p. 2 I)
Top Lease Prevention/Notification/Right of First
Refusal would require the lessor
to give notice ol'top lease offers and a right
ol'lirst refusal to match any offers. (1).
25)
8. Additional lune Provisions: (p. 26)

21. A common rider is a royalty substitution clause
which substitutes a higher royally
for what is printed in the lease ~
l). An option to extend allows you to extend
the primary term for a specified term for
a tee, usually tied to the bonus amount.
A horizontal pugh Clauses provides that operations or production
will only preserve
that portion ol‘the lease within a pooled unit or proration
unit. (p. 27)
d. A vertical pugh clause severs depths below a
specilied limitation, usually so many
feet below the deepest depth drilled or completed.
L‘. A depth limitation limits the depths a lease will cover. (p. 28)
Consents to assign are sometimes included in a lease
so the lessor knows or has
some control over who the lease is conveyed to.
A pugh clause is also known as a freestone rider. (1). 29)
Many leases in Texas are never released ol‘ record unless there
is a requirement in
the lease that it he released.
Some leases have provisions that require payment of royalty
in a specilied time
lrame or pay a specilied interest. (p. 30)
Free royalty provides that the lessee shall not deduct the cost of
treating, gathering.
transporting. dehydrating. compressing, extracting, processing.
manulacturing.
marketing. or any other cost.
k. An in kind clause gives the lessor the ability to take oil or gas in
kind based on
royalty provided instead ol‘money.
A favored nations clause provides that the lessee must offer the lessor
the same deal
as owners on adjacent properties.
9. Top leasing allows a lessee to take a lease on lands already covered

by an oil and gas lease.
llpon expiration ol‘ the bottom lease, the top lease takes ellcct. Ill the bottom
lease is
perpetuated the top lease does not take effect.
10. The rule against perpetuities requires that a future interest must vest, il‘ at all.
within 21
years of a lile in being. (1). 33)
1 1. There are many implied covenants to an oil and gas lease:

a. Implied covenant to protect; against drainage. . The reasonahly prudent operator
may he required to drill replacement wells. rework existing wells, drill additional
wells or oil—set wells. seek Rule 37 exceptions from the RRC. A lessor is entitled to
recover damages from a lessee [or lield-wide drainage upon proofol‘suhstantial
drainage of the lessor’s land with additional facts that support the reasoning that a
‘
reasonably prudent operator would hav acted to prevent substantial drainage from
the lessor’s land.
the
b. Texas does not recognize any implied covenantto drill but it does recognize
implied covenant to dcvelop._'l‘his covenant requires that once the lessee has
drilled a well and the lease is held by production, the lessee must continue to
develop as a reasonably prudent operator would under the circumstam‘es.
c. The implied covenant to market requires a lessee to market the production
obtained within a reasonable time and at a reasonable price.
(1. The implied covenant to operate diligently and properly_ requires_every operator to
industriously explore for minerals and diligently operate any producing well.
12. Recording statutes Texas is a notice states which means that the statute protects a
subsequent purchaser who has paid value and has no notice of the prior grant. That
purchase is known as a MELLleJLurcbasel.
a. To gain benefit of the recording statute in a notice jurisdiction, a grantee must
record before the completion ol‘ the conveyance to a subsequent 15191). (p. 3|)
1). Formalities of recording statutes -
i. An instrument to be recorded obviously must be in writing.
ii. Recording an instrument in the wrong county has the same ellect as not‘
tiling it at all.
iii. There are a few things that affect title that are not recorded:
i. Adverse possession
ii. Community property interest of a spouse who is not the grantee of a
deed
iii. Resulting and constructive trust deeds
iv. Property inherited by intestacy
V. Easement by prescription or necessity
Vi. Vendor’s liens
iv. Right ol‘relormation or rescission
c. In Texas for an instrument to be properly recorded , it must be eligible for
recording which means it must be authorized by statute to be recorded, and it must
be properly acknowledged.
i. An instrument that is not authorized by statute to be recorded, but
nonetheless gets recorded is void and does not give constructive notice to
anyone.
ii. To be protected by the Texas recording statutes, a buyer must be a bona
lide purchaser. A BFP is a buyer who, in regard to a certain property, has
paid valuable consideration, had no actual knowledge ol~ a prior unrecorded
deed, and had no constructive notice ol‘another’s interest.
i. A gilt deed grantee cannot be a BFP
because no consideration is
paid
ii. A quitclaim deed grantee cannot
be considered a 131:1).
1. The Statute ol Frauds usually has lrequiremerrts
when it corrres to contracts: A
contract rnrrst contain:
a. the rrarues ol' the parties,
1). the important terrrrs ol the agreement.
c. a reasonably certain description ol‘ the
subject matter, and
d. the signature ol‘the granting party. (1).
35)
13. The essential elements ol'a deed are that:

a. It rrrust be in writing
1). It must contain words ol‘grant
c. It nrust involve a competent grantor
(1. It must idenlily the grantee
c. It rnust provide [or consideration
1'. It must contain an adequate 1e 1:11 description
g. It rurrst be signed by the grantor. and
11. It rnrrst be delivered to the grantee.
l 1-. 'l‘ypes ol'records - Maintenance of certain types

01‘ records is mandated by law, but most
county clerks have used considerable discretion in how ‘
records are organized and
maintained.
a. Belore 1980 county clerks were required to rrraintairr
separate volrrnres ol'books
with corresponding indices [or things like deed
records and oil and gas lease
records.
1). Beginning in 1980 most county clerks started microlihning
records and
consolidated books into an ()liicml Public Records ol'lr’eal
I’m/wry:
c. The jurisdiction to litigate title to land is in the hands
ol'the district court, so is
[gem/eligrect)rds and the District Clerk’s index ()1 litigation
slronld be reviewed for
records related to property titles.
15. laws and tax I‘L‘t nnls - 'l‘ax assessors or collector of each
county maintain a current list 01‘
all surlace owners and owners ol'producirrg oil and gas interest
a. '1‘e.\'as does not tax minerals which we not being prodrrced
1). ()i1 and gas production is taxed Lita/(111711 (according to value)
(p. 3(5)
c. \Vhen oil and gas production does occur. the operator rrnrst pay his lair
share ()1
taxes and pass on royalty owner inlornration to the taxing district.
(1. Out of county records - Patents do not rcllect slate ownership so to lind out
whether the state owns any minerals it is best to look at the patent date.
i. 011 patents issued belore 9/1/1895 the state did not reserve
any minerals
ii. For lands patented on or after 9/1/1895 and before 8/21/1931 the surface
and the slate shared equally in all economic benelil.
iii. Between 8/21/1931 and (5/19/1983 the state reserved a not1-parlicipating
royally of 1/ 16 of all minerals including oil and gas.
16. General rule on well 1)()1C assignments is that the lessee can recomplete up hole but cannot
deepen the well.
a. In Texas, an unleased mineral owner may be left out of a voluntary unit, but the
unleased colenanl’s properly can be included in a unit as long as one colenanl is
included.
i. As long as the unleased colenanls are not in the drillsile tract, they can elect
to participate in the (lrilling of the well and become a working interest
owner, or they can sit back and wail for the well to pay out and then get
their full share of production. (p. 37)
ii. If the operator were to drill on a tract with an unleased mineral interest
owner, the unleased owner is entitled to his or her actual share of
production from the beginning of production.
1). \Vhen an owner cannot be found. a judicial procedure can be started to obtain a
receiver’s lease.
i. The court appoints an attorney ad litem (for the purposes ofthe suit) who
represents the missing person.
ii. Proceeds from the lease are put into the registry with the county clerk and if
no one claims these funds after a period of time, the monies escheal to the
state.
17. Succession -
a. \Vhen a mineral owner dies with a will, whether or not an executor or administrator
can convey and bind real property without court intervention depends on if the
process is independent or independent.
1). A small estate may be probated with a simple form ofprobate called a Munimenl
of Title. (1). 38)
i. Decedent’s Community Property.

i. Dies with no children
a. All to surviving spouse
ii. Dies with spouse and children
a. If decedent died before September 1, 1993
i. The decedent’s share ofthe community to
the
decedent’s children per stirpes.
b. Ifdecedent died on or after September l, 1993
i. If all children are ofdecedent’s marriage to surviving
spouse — all of decedent’s share goes to the surviving
spouse
c. If at least one ofdecedent’s children are not born ofthe
decedent and current spouse then the decedent’s share
of
the connnunity goes to all the decedent’s children,
per
stirpes.
iii. Decedent’s Separate Property
a. If survived by spouse and children, 1/3 life estate to spouse
with remainder in children; 1/3 to children in fee
iv. Survived by spouse and no children then 1/2 spouse and
V2 to heirs at
law.
a.
lleirs at law
i. Surviving parents — '/2 each
ii. Only one surviving parent, ‘/2 to parent and V2 to
brothers and sisters, per stirpes.
b. Ifno parents, brothers, sisters, nieces or nephews, then all to
surviving spouse.
v. IIalfblooded collaterals receive halfshares of intestate property
vi. Stepchildren may not inherit from their stepparent under Texas
intestacy law.
vii. If a person dies intestate in another state. the intestacy laws of the
sitns (place where the property is) decides what happens to the
property.
viii. Per stirpes means devised equally based on surviving lineage. ( p.
35))
(I. Affidavits of heirship are frequently used to determine facts when an owner dies
intestate.
i. These are frequently relied on as a business risk.
ii. The affidavit should be a statement ofthe decedent’s family history,
genealogy, marital status, and identify any heirs.
iii. The aflidavit’s validity is premised upon it being executed by the
maker, acknowledged before a notary public, and having been of
record for .5 years. The legislature has provided a statutory form of
an Affidavit oflleirship. (p. 10)
18. The Railroad Commission handles the regulatory side 01' oil and gas permitting and was
set in place with a mission to protect correlative rights and to assure that production
activities continue in an organized, sale manner.
a. The Texas RRC is broken up into 12 districts. ( p. 112)
b. The Texas Commission on Envirc)nmental Quality ('l‘Cl‘lQ), lormerly known as
the Texas Natural Resource Conservation Commission determines what is
necessary to protect water. (p. 15)
c. Monthly production reports must he liled with the Railroad Commission on both
oil and gas wells. (1). 16)
d. A permit must be obtained from the RRC prior to drilling a well or plugging a well.
A plugging report must he liled within 30 days 01‘ plugging. including the \\'-15
cementing report. (1). 17)
19. Railroad Commission rules -

a. Rule 37 establishes the general minimum well spacing rules in the absence ()1
special lields.
i. Currently under Rule 37 wells must he at least 167’ lrom any lease, property
or subdivision line, and 1200’ between each other in the same reservoir
ii. An exception to a Rule 37 requires a hearing belore the RRC.
iii. The main reasons why the RRC would grant a Rule 37 exception are:
i. To allow the operator to locate his or her well bore directly above
the reservoir
ii. To prevent drainage .
iii. To allow small tracts to produce. albeit on a reduced allowable
proportionate to its size.
1). Rule 38 sets the minimum spacing density per well at 10.
c. Rule 11 requires that all wells be drilled as nearly as vertical as possible by normal,
prudent, practical drilling operations.
20. Pooling and unitimtion

a. in Texas is usually accomplished voluntarily due to pooling language in the lease.
1). Although pooling and unitization are distinct concepts these terms are ol’ten used
intercllangeably. The live types ol'common units in Texas are:
i. Drilling unit — the acreage area shown on the Form “'1 application 101‘ the
permit to drill.
ii. Proration unit — the acreage designated on lorm 1’15 with an attached plat
showing the acreage assigned to the well [or proration purposes where lield
rules provide [or the setting 01‘ allowables on an acreage basis. The
proration (1111'! 1:9 (lav/guard] zllier the we]! is drilled and (Tulip/eta] and only
productive acreage can be assigned to :1 proration (11117. (p. 18)
iii. The most connnon form 01' pooling in Texas is a voluntary pooled unit
lormed by the voluntary joinder of separate ownership interest. A voluntary
pooled unit is created by the community lease (where more than one tract is
shown on the lease).
iv. Pooling and cooperative agreements are RRC approved units necessary to
el‘l‘ect secondary or tertiary recovery operations Tor oil or gas. usually [or
water llooding.
v. The force pooled unit under the Mineral Interest
Pooling Act
c. The purpose ol~ lorming a unit is two fold:
i. To protect the operator from claims for violating
correlative rights and anti—
trust claims
ii. To allow a unit operation to form an area large
enough to properly drain
the oil and gas with several wells.
A l.
Holding a unit with a single or a few wells helps operators
develop Pl ’1)S (proven
undeveloped well locations) which the operator
can sell for a prolit without
expending any money to develop them.
e. Most units are allowed to be (i 10 acres (plus 10 percent
tolerance, bringing the total
to 70 1- acres); however. units can be other maximum
sixes based on RRC
regulation.
1‘. Forty acre oil units are common as well as tract wells. The
RRC allows production
for a single tract even if it is not large enough to meet minimize
size requirements,
but the well will he given a reduced allowable.
g. Normally the RRC requires that at least (5506 01‘ the royalty
interest and 85% 01' the
working interest commit to the unit agreement belore a hearing
on approval will be
granted.
h. Drilling and proration units have no effect on title. 'l‘hese
are simply regulatory
depictions.
21. Texas has a [breed pooling act, the Mineral lnlerest Pooling
Act, but it is so rarely used
that it might as well not exist. The rules required for application olthe
MIPA are: (p. [-9)
i. The field must have been discovered alter March 8, 1961
ii. 11 is not a wildcat Well, which do not qualily for forced pooling.
iii. Special lield rules applicable to the lield in which the tract lies must
be in
place
iv. There must be two or more separately owned tracts; these cannot be
used
merely to pool separate interests in the same tract
v. ()ne of the interest owners with the right to drill must have drilled or
proposed to drill a well on the existing or proposed proration unit
vi. The units are limited to 160 acres for oil, and (510 acres [or gas, both with a
10% tolerance
vii. State owned lands are not included
viii. Pooling must result in the avoidance of the drilling of unnecessary wells, the
protection of correlative rights. or the prevention o1 waste
ix. Prior to applying for forced pooling. there must have been a lair and
reasonable offer to pool as determined by the RRC.
22. Division orders and cahulaling royalties and interests — ()ne of the most important tasks of
the division order analyst is to create the net revenue interest.
a. A NR1 o1 75% or greater is the usual desire of a lessee and could be considered a
minimum industry standard. (1). 50)
b. The generally accepted rule of thumb is to use eight decimal places when
determining interest.
c. Calculating royalties on pooled units - An individual tract may be covered by one or
more leases. A pooled unit always involves more than one lease.
i. Production from a unit maybe sold under more than one contract.
ii. Texas uses the tract allocation rule to separate gas sales~produced from
pooled units. The tract allocation method requires royalty owners to be
paid on the basis of the amount received by their individual lessee from the
sale by their lessee of production of gas li‘om the unit allocated to the tract
in which the royalty owner owns an interest.
iii. The language in the oil and gas lease usually provides lor royalty allocation
on a surface acreage basis.
courts
d. \Vithout express language in an oil and gas lease indicating otherwise, Texas
allow lessees to deduct post production expenses regardless if the lease has a
market value royalties clause or proceeds royalty clauses.
i. Case law in Texas permits the lollowing 1)ost-production expenses to be
deducted lrom royalties:
i. Gross production and severance taxes; transportation charges
ii. Expenses ol~ treatment to make the gas marketable, such as
hydrogen sullide removal;
iii. Expenses ol‘ compressing the gas to make delivery into a pipeline
(p.51)
iv. Processing costs incurred in extracting liquids (dehydration) and
other value adding costs.
ii. The Texas State Comptroller allows operators to deduct many expenses
when determining the taxable value of gas for severance purposes, including
some marketing expenses. Normally, the deductible expenses the state
allows for severance tax purposes include compression, dehydration,
sweetening, and delivering the gas to the purchaser.
23. Relevant statutory laws as applicable to division orders - The 'l‘exas Natural Resources
Code contains the law requiring timely payment ol‘proceeds from the sale of oil or gas.
a. The proceeds must be paid to the proper party on or beliore 120 days alter the end
of the month ol‘lirst sale ol production [tom the well. Alter that payments must be
paid as specilied in the lease or other mitten agreement
i. ll. the lease or other agreement does not specify the time for payment,
subsequent proceeds must be paid no later than 60 days alter the end ol‘ the
calendar month in which subsequent oil production is sold
ii. Payment must be made 90 days alter the end of the calendar month in
which gas production is sold.
b. Payments may be withheld without interest beyond the time limits above when:
i. There is a dispute concerning title that would all‘ect distribution ol payments
ii. A reasonable doubt exists that:
i. The payee has sold or authorized the sale of its share of the oil or
gas to the purchaser ol‘sueh production
it. The payee has clear title to the interest in the proceeds of
production
iii. A requirement in a title opinion places in issue the title. identity, or
whereabouts of the payee and that has not been satislied by the payee alter
a reasonable request for curative information
has been made by the payor. (
p. 51) i
c. In Texas, a division order may not amend
any lease or operating agreement
between the lessee or operator or any other contracts for
the purchase ofoil or gas.
(1. A payor shall be entitled to receive
a signed division order from the payee
containing only the following provisions:
i. The effective date of the division order, transfer
order, or other instrument
ii. A description of the property from which the
oil or gas is being produced
and the type ofproduction
iii. The fractional and/or decimal interest in production
claimed by payee, the
type of interest, the certilication of title to the share
of production claimed,
and unless otherwise agreed to by the parties, an agreement
to notify payor
at least one month in advance of the effective
date of any change in the
interest in production owned by payee and an agreement
to indemnify the
payor and reimburse the payor for payments made
if the payee does not
have merchantable title to the production sold.
iv. The authorization to suspend payment to payee
for production until the
resolution of any title dispute or adverse claim asserted
regarding the
interest in production claimed by payee '
v. The name, address, and taxpayer identification number
ofpayee
vi. Provisions for the valuation and timing of settlements
of oil and gas
production to the payee
vii. A nolilication to the payee that other statutory rights may
be available to a
payee with regard to payments. (1). 55)
e. If an owner in a producing property will not sign a division
order because it
contains provisions in addition to those provisions provided
for in the above
section, payor cannot withhold payment solely because of the refusal
to sign the
division order.
f. If an owner refuses to sign a division order which includes only
these provisions
specified in the statute, the payor may withhold payment without interest
until the
division order is signed.
g. Payment may be remitted annually for the aggregate of up to 12
months
accunnrlation of proceeds if the payor owns the payee a total 0115100 or less.
i. The payor may hold accumulated proceeds of less than
$10 until
production ceases or the payor’s responsibility for making payment for
production ceases, whichever comes first.
ii. 011 the written request of the payee, the payor must remit payment of
accumulated proceeds to the payee if the payee owes the payor less than
$10.
iii. ()n the written request of the payee, the payor must remit payment of
proceeds to the payee monthly if the payor owes the payee more than $25
but less than $100.
11. Division Orders are binding for the time and to the extent that they have been
acted on and made the basis of settlements and payments
i. From the time that notice is given that settlements will not be made on the
basis provided in them, they cease to be binding.
ii. Division orders are terminable by either party on 30 days written notice.
i. The execution of a division order between a royalty owner and a lessee or between
a royalty owner and a party other than the lessee does not change or relieve the
lessee’s specific, expressed, or implied obligations under an oil and gas lease,
including any obligation to market production as a reasonably prudent lessee. Any
provision of a division order between payee and its lessee which is in contradiction
with any provision of an oil and gas lease is invalid to the extent of the
contradiction.
j. The terms market value, market price, prevailing price in the field, or similar
language are defined as the amount realized at the mouth of the well by the seller of
the production in an arm’s length transaction.
2 l. ”71:11 must be reported nit/1 eacli pa} menu:

a. Property identification (name, number, or boy; and county and state)
1). Sales month and year
c. Volume sold
(1. Price per barrel or mcl
e. Severance or other taves deducted
1". Other deductions or adjustments
g. Net value
11. Owner decimal interest
i. ()wner gross value
j. ()wner net value
k. Address and phone number where additional inlormation can be obtained.
25. .-’lnnual notice to royalty oimers - At least once every 12 months, a payor must provide the
lollowing‘ statement to each royalty interest owner to whom the payor makes a payment:
a. .S'ection 91,501 oft/1e 'les'as Natural Resources Code, gives an owner o/‘a royalty
interest in oil or gas produced it) 'l‘eras [be 17gb! to request Irom a payor
m/ormation about itemized deductions, the beating value o/‘gas, ;u1d [be Railroad
Commission ol- ’lcvas Identification number [or the lease, property, or well (bat
may not bave been provided to (be rota/tr Interest owner: The request must be in
writing and must be made by certified mail. rl payor must respond to a request
regarding itemized deductions, the beating value of gas, and (be Railroad
Commission ol'Texas alenti/ication number by certilied mail not later [ban [be lid"
daya/ter [be date the request is received. (p. .50)
b. Royalty ()nner Requests - It a royalty owner notilies the payor in writing of lailure
to make timely payment, the payor must either make payment or respond in writing
within 30 days of receipt ol‘the notice.
1'. Requests sent by certified mail for information regarding itemized
deductions, adjustments, the heating value of gas, or the Railroad
Commission ol‘rl‘exas identification number for the lease, property, or well
must be responded to within 60 days of receipt ol‘the request.
ii. Additional requests sent by certified mail for inlormation not covered by
the statutes must be responded to within 30 days oi receipt of request.
c. Payment ol'lnterest on Late Payments - 11‘ payment has not been made for any
reason within the time limits specified, the payor must pay interest to a payee
beginning at the expiration of those time limits at two percentage points above the
percentage rate charged on loans to depository institutions by
the New York
Federal Reserve Bank. unless a different rate of interest is
spe cified in a written
agreement between payor and payee.
i
(I. i\'()11])ayment 0/ 017 and gas proceeds or interest - If a payee
seeks relief for the
failure of a payor to make timely payments ofproceeds from the
sale ofoil or gas as
required, the payee must give the payor written by mail
of the failure as a
prerequisite to beginningjudicial action against the payor for nonpayment.
i. The payor has 30 days after receipt of the required notice from the payee in
which to pay the proceeds due, or to respond by stating in writing a
reasonable cause for non-payment.
ii. A payee has cause of action for nonpayment of oil or gas proceeds or
interest on those proceeds in any court of competent jurisdiction in the
county in which the oil or gas is located.
iii. If the court finds in favor ofthe plaintiff, the final judgment must include an
award of reasonable attorney’s fees and a minimum of $200 in actual
damages.
e. Notice ()l'clrang'e i1) payor - Following a change in payor, the new payor must give
written notice to each payee to whom the payor is responsible for distributing oil or
gas proceeds. (p. 57)
i. This notice should include the payor’s phone number
ii. The notice may be given by any writing, including a division order, a check
stub, or attachment to a payment form.
iii. A payor that is obligated to pay interest to a payee and that does not give the
payee a notice required is liable to the payee for interest at a rate that is two
percent more than the rate provided by the Texas Natural Resources Code.
f. .S'pecinl in/éu‘mation required on production [ram trig/1t lormations - A payor of
proceeds from the sale of gas produced from a tight formation annually, but not
later than March 15, must furnish the payee a statement providing the information
necessary to compute the federal income tax credit provided by that section for the
gas for which payment was made in the preceding year, including the volume of the
gas measured in thousands of cubic and heating value; or millions of BTU for each
thousand cubic feet. \
CD( )A REVII‘RV — CllAP'l‘l‘lR 10
Kansas Issues Allecting Land Title and the Division
()rder Analyst
I. \Vhen 11'()1‘l§i11g11'illl title issues in Kansas, it is impo1t21nt

to keep111 mind that 21 mine1al
inte1est is 1eal pr0pe1t3 and a 103alt3 inte1est is personal
plope1ty.
[1. Real p1ope1t3 in Kansas can be held111 one ol tlnee 11213s:
a. sepaiate pr0pe1t3,
b. tenants in common, or
c. co—tenancy which is also known as joint tenancy.
Ill. An interest in property c2111 be transferred to another through dower.
Dower is defined as
that part of a husband’s property which his wile inherits [or life.
The manner in which the
property was held greatly allects the documentation required to pass
title when the mineral
or royalty owner dies.
21. The Division ()rder Analyst needs to determine il‘the property
was separate
property or as tenants in common.
b. “the property was held in joint tenancy, the analyst would need to
obtain adequate
prool'ol‘death and prool‘that all taxes have been paid.
c. lt‘the property was not held byjoint tenancy, the analyst needs to
determine il‘the
deceased had 21 valid will and il‘that will was probated in Kansas.
IV. It the1e1s no probated “ill, the heirs can rel3 on a plotedtue established
113 Kansas statute,
to dete1mine descent ‘
a. “hen a person has been dead 101‘11101‘e than (3 months and has lelt property
and
no petition has been tiled [or probate or administration commenced then any
person interested in the estate may petition the District Court for determination
of
descent in the county olithe decedent’s residence or any county where any property
or any interest in property is situated.
1). The district court will dete1‘111ine descent under Kansas laws of intestate succession
or under the. terms olia settlement aureement and then issue a Decree of Descent.
c. lhe heirs should then tile 21 complete t1ansc1ipt ol the I)t()(CL‘(lill”S with the dist1ict
cou1t in each count3 11he1e p1ope1t3 is located
(1. \\hen an analyst is notified that no will exists, he should request:
i. A11 ollicial copy of the death certilicate
ii. Letters ofadministration
iii. Decree of Descent tiled in the county where the property is located.
V. Any person of sound mind and possessing rights of majority may dispose of property by
will.
21. To be ell‘ectual. it must he admitted to probate in 21 district court in the State 01.
Kansas.
1). It must be written, signed by the testator, or by someone for him, in his presence
and at his express direction.
It must be attested and subscribed in the presence 01' the testator by 2 or more
witnesses, who say the testator subscribed or heard him acknowledge the same.
d. Holographic wills are not recognized.
C. E‘ther spouse may will away his or her separate property but can only will away his
hall ol‘ property subject to homestead.
Neither spouse may will away hour the other more than one-hall 01' his property
unless the other spouse consents to this in writing, executed in the presence ol‘ two
or more competent witnesses.
VI. An analyst should request the lollowing from a deceased owner:
21. ll the estate is still open
i. ()llicial copy 01' the death certilicate
ii. Copy ol‘ the will
iii. ()rder admitting the will to probate
iv. Letters 'l‘estamentary
1). II the estate is closed
i. An ollicial copy of the death certilicale
ii. Copy ol' the will
iii. Copy ol‘ the Journal Entry ol~ Final Settlement
iv. Receipt for payment 01‘ taves
VII. Requirements lor a deed are like most other states in general
21. It is not necessary in Kansas to have the signatures on the deed witnessed, even it
the grantor is signing with his or her mark.
b. A spouse does need to join, except for the conveyance ol~ a homestead.
Deeds creating Lile Estates are commonly used in Kansas. The only dillerence
between these deeds and other deeds is that they contain a reservation 01‘ an interest
lor the grantor’s tile.
i. The grantee can lurther convey subject to the I.il‘e Estate, but the grantor
(Lite Tenant) cannot.
VIII. Alter a petition [or divorce is liled, action may not be taken by the Kansas district court lor
(50 days. Alter the Decree ol~ Divorce is issued, it does not become linal until alter the time
lor appeal is passed. The time lor appeal is generally written in the decree.
IX. A guardian is any person who has been appointed by a court to act lor a disabled person.
A conservator is the same as a guardian except the conservator has control 01‘ an estate.
ll. Both are subject to the control and direction of the district court.
1). A consen'ator may, with court consent:
i. Sell, lease or mortgage real property including minerals
ii. Prosecute and defend suits
iii. Sell assets of the estate
iv. Invest lunds
v. Acquire title to real property and execute oil and gas division orders
c. rl‘ermination of a guardimtship or conservatorsltip of a minor
occurs upon the
death 01' the ward, attainment ol'legal age. or marriage.
(I. Guardianship or conservatorship of a disabled person
i terminates upon the death or
restoration to capacity of the ward.
X. To determine il a trustee has the authority to do a certain
act, the analyst should examine a
copy of the trust agreement.
a. Kansas law allows the trustee to furnish an inquirer with an
acknowledge
Certification oli'l‘rust containing the following inlormation:
i. That the trust exists and the date the trust instrument was exe
l-cuted
ii. The identity of the settlor
iii. The identity and address olithe currently acting trustee
iv. The powers ol'the trustee
v. The revocability or irrevocability ol‘the trust and the identity ol‘ any
person
who can revoke the trust
vi. The authority olico-trustees to sign or otherwise authenticate and
whether
all or less than all are required in order to exercise powers ol‘the trustee
vii. The trust's lax identification number
viii. The manner ol'taking title to trust property
I). A Certification ol"l‘rust may be signed or otherwise authenticated by any
trustee.
c.. The certification must state that the trust has not been revoked, modified
or
amended in any manner that would cause the representation contained in the
(.‘ertification ol‘Trusl to be incorrect.
d. The recipient of a Certification ol‘Trusl who acts in reliance upon a Certification 01‘
'l‘rust without knowledge that the representations contained in it are incorrect, is
not liable to any person lor so acting and may assume without inquiry the existence
of the lacts contained inthe certification. Aperson making demandfor Me Trust
Agreement and/or exempts fiom the Tmst Agreement is liable for damages 17the
court determines that the person did not actin gvod faith in demanding the Tmst
Agreement
XI. The Kansas Corporation Commission supervises and regulates the Kansas oil and gas
industry.
a. There are no spacing units, but field rules establish the norms for unit size
I). The KCC allows non-contiguous units.
XII. \Vhen a well begins producing, an Alfidavit of Production must he filed of record in order
to protect the producer’s unit and provide statutory notice ol‘production. It must he signed
by a company olficer and contain:
a. The exact description of the unit
.— ). Description oli leases contained in the unit
e. Location of the well
d. Statement of notice of production
e. Statement that the lease or leases perpetuated by production from the basic unit
XIII. Kansas Descent and Distribution is lairly normal:
21. Decedent leaves spouse but no descendents - spouse takes all
l). Decedent leaves spouse and descendents — spouse takes hall and descendents take
hall‘per stirpes
llall‘lflood - Inherit along maternal or paternal lines
(l. Leaving parents but no spouse or children — parents take all
C. Laughing heirs — No heir shall inherit, except by lineal descent, to a person more
than (5 degrees removed from the decedent
A murderer cannot inherit.
CDOA RICVII‘KV — CI IAI"I‘I£R l l
ARKANSAS LAND 'I‘I'I‘I .I‘ZS
I. In Arkansas, tl a grantor is married the

spouse must also sign the document in
release the spouse’s order to
dower or curtesy interest. rights of a
tenancy by the entireties. or to
waive homestead rights it the grantor lives '
on the property being conveyed.
a. A dower is a widow’s share lor lile
ol'her husband’s estate.
b. A curtesy right is a husband right, alter his
wile's death to certain kinds ol‘property
she inherited.
c. A tenancy by the entirety is a life estate between
a husband and wile.
_. Both spouses must always execute any document
conveying title for two reasons:
a. Any conveyance to a husband and wile creates a
tenancy by the entirety unless
otherwise stated. even ”the document does not specilically
state that the parties are
husband and wile.
l). liven ”the property is owned by only one spouse,
the other spouse must release is
or her dower or curtesy interest.
3. A tenancy by the entirety, unlike otherjoint tenancies.
is not destroyed by a conveyance by
only one spouse. Such a convevance merely conveys rights
to income and prolits from the
property. subject to the right ol'survivorship in the other spouse.
a. ”one spouse conveys his interest to a third party withoutjoinder
by the other
spouse and the granting spouse dies first, the third party gets
nothing.
I). Ilone spouse conveys his interest to a third party without
joinder by the other
spouse and the non-joining spouse dies tirst, the third party
gets everything.
I. \Vhether or not a divorce severs a tenancy by the entirety
depends on the date ol‘the
divorce.
a. Belore March 28, It) 1-7 the court could destroy the tenancy by
the entirety only
with the consent of the parties.
I). Between March ‘25), It) [-7 and March 7, 1975 the court had the right
to dissolve the
tenancy. but there was no dissolution unless the court specilically said so.
c. Alter March 8, 1975 a divorce decree automatically dissolves the tenancy
by the
entirety unless specilically stated otherwise.
.5. In Arkansas the portion olthe decedent’s estate that is subject to dower and
curtesy
depends on who the surviving heirs are.
a. II' a decedent leaves a surviving spouse and child or children, the dower or curtesy
interest is one third of all property for life. regardless how the lands were acquired.
b. It the decedent leaves a surviving spouse and no children. the surviving spouse
receives one hallolthe lands that were not ancestral in lee simple and hall as a lite
estate.
c. In 1969 Arkansas abolished the distinction between ancestral estates and new
acquisitions tor the purposes oldescent and distribution, but not as to dower and
curtesy.
d. The distinction between ancestral estates and new estates was only abolished as to
heritable estates, or that portion ofthe intestate’s estate that may pass by
inheritance, after providing for (lower or curtesy rights, homestead rights, any
statutory rights granted the surviving spouse and minor children and the cost of the
administration of the estate.
'l‘he distinction between ancestral property and new acquisitions for dower and
curlesy only affects the heritable estate when:
i. The decedent left no direct descendants
ii. The decedent and his or her spouse were married less than 3 years.
lfthe decedent and his or her surviving spouse have been married more than 3
years and there are no children, the surviving spouse receives his or her (lower and
all of the heritable estate.
lfthe decedent is survived by a wife and a child or children, the wife only receives
her (lower interest which is a one—third life estate. and all of the heritable interest
goes to the children.
Dower and curlesy may be released by execution of the same instrument or by
separate instrument, but they must be released. 'l‘hey cannot be conveyed.
(5. Once property has been designated as a homestead. it will not be considered abandoned if
the owner lives elsewhere. In Arkansas, homestead is defined as:
21. The domicile of an individual or family, not within any city, town, or village,
consisting ofnot more than 160 acres if the value is less than $2500 or 80 acres
without regard to value.
b. The domicile of an individual or family within the city, town, or village consisting of
not more than 1 acre ofland for value less than $2500 or 1/1 acres without regard to
value.
Any homestead outside any city, town or village owned and occupied as a
residence, which is annexed to or made part of an incorporated city or town,
located on land that is rural in nature and has a significant agricultural use.
7. If an entity is a corporation or 1.1.L‘ it can be assumed the corporation or LLC was in good
standing and the person or persons who executed the instrument were duly authorized to
do so.
21. A partnership is defined as the association of 2 or more persons to carry on as co-
owners a business for profit, whether or not they intended to form a partnership.
Joint tenancy, tenancy in common, tenancy by the entireties,joint property.
common property or partial ownership does not by itselfestablish partnership. even
if the co—owners share profits made by the use of the property.
Property is a partnership property if it is acquired in the name ofthe partnership or
in the name ofone or more partners with an indication in the instrument
transferring title to the property of the person’s capacity as a partner or of the
existence of a partnership but without an indication ofthe name of the partnership.
(1. Subject to a statement ol‘partnership
authority, any partner tnav
execute any
instrument in the partnership name, and it will
be binding, iii the transaction is
apparently in the ordinary course
ol'business tor the partnership.
e. “the act was not apparently in the
course ol‘the partnership business,
binding on the partnership “it was it is only
authorized by the other partners.
1‘. A partnership may lile a statement
ol'partnership authority, giving one
or more
partners authority to conduct certain acts.
g. A partner may lile a statement ol'denial
limiting or denying a person’s authority
act. to
h. liach partner has equal rights in the
management and conduct of the partnership
business unless changed by written agreement.
i. The spouse or a partner has no dower
or curtesy rights in partnership property.
8. Grantees — i
:1. Prior toluly 15, 1901 ”the intent of a
conveyance was to create a joint tenancy
with
right olsurvivorship, then one was created.
even without express wording.
b. Alter‘luly 15, 1991 a conveyance must contain
language expressly creating ajoint
tenancy or it will be tenancy in common.
c. l'nlike a tenancy by the entirely, a conveyance
by one joint tenant destroys the joint
tenancy and the two owners become tenants in common.
0. The l‘nilorm 'l‘ransl‘ers to Minors Act provides a
method to translcr property to a minor
without involve the court system. It eliminates the
need [or a guardian which must be
appointed by a court and have all ol‘their actions approved
by a court.
a. To transfer real property to a custodian tor a minor,
all it takes is a deed,
assignment or other instrument ol‘conveyance that
conveys to a party as custodian
for a named minor.
l). The grantor and the custodian cannot be the same
person or entity.
c. A custodian, acting in a custodial capacity, has all
the rights, powers, and authority
over custodial property that unmarried adults have over
their own property.
i. The custodian must keep records subject to inspection
by a parent or legal
representative ol‘the minor.
ii. The custodian is also liable for breach of his or her responsibilities.
10. It is unclear whether a trust can hold title to real property in Arkansas,
so the salest way to
convey title is to pill in to the trustee’s name, but including the trust name.
11. Ila legal description is indelinite. the document will not convey title.
a. The use ol‘ the word “part” invalidates a description unless the description
goes on
to specilically describes the part.
b. Adding a phrase that it is the grantor’s intention to convey everything he owns
has
been held to be sullicient, even it a portion of the legal description contains the
word or abbreviation for “part.”
c. It‘ttie description does not close, it is detective, making the instrument voidable.
d. It a description has an uncertain point ol'heginning it is void and cannot he
relormed.
e. A description ol “All property owned in Pope County” is valid.
1‘. An incorrect statement ol acreage does not allect the validity ol‘ the description.
g. A legal description does not have to contain the name ol'the county it it contains
the correct section, township and range.
12. \Vhen a right ol‘way is still in use, there is a presumption that a conveyance extends to the
center ol‘the right of way unless a contrary intention is clearly stated. A grantee talces to
the center (ii an ahandoued casement only when the grantor explicitly expresses that
intention.
. Lile estates may he created through operation olklower or curtesy. hy reservation, or hy
conveyance.
:1. Both the We tenant and the remaindermen should execute an oil and gas lease.
l). Bonus, delay rental, and interest on royalty are income and are payable to the lile
tenant.
c. \Vhere a [He estate is created by conveyance or reservation, the royalty itsell‘is
considered part ol‘the corpus and is reserved for the remaindermen unless the
()pen Mine Doctrine applies. A lease alone is enough to open the mine.
(I. It a life estate consists of the dower or curtesy ol' the surviving spouse, the lite tenant
is entitled to his or her traction ol‘the royalty.
c. It is not possible to create a me estate in a stranger to the title by reservation.
l 1-. The Strohacker Doctrine - “A reservation or grant ol‘ minerals or mineral rights without
specific reference to any specific mineral includes only those that were commonly known
and recognized hy legal or commercial usage in the area where the land is situation at the
time the instrument was executed.”
9‘! . Duhig Rule deals with interest conveyed.
a. A grantor may not purport to convey and warrant an interest and then reserve a
portion ol'that interest, thus breaching his or her warranty.
1). Il' lull ellect cannot he given to both the grant and the reservation, priority will he
accorded the grant prior to attempting to lullill the reservation.
c. It all of the lollowing items are present, Duhig applies. [1‘ any one item is not
present, it does not:
i. The instrument is a warranty or mineral deed that contains a warranty
clause.
ii. Less than the grantor’s entire mineral ownership is heing trauslerred (i.e.,
grantor is reserving part ol‘the mineral interest.)
iii. The grantor owns less than the entire mineral interest at the time of the
conveyance.
iv. Nowhere in the deed does the grantor indicate that he or she is also
excepting iron) the warranty any prior reservations or conveyances ol
record.
10. Arkansas acknt)wledgement
standards are pretty nntch like other
have curative statutes that states. Arkansas does
correct acknt)wledgement mistakes.
:1. Instruments in writing executed
alter August 13, 1993 are considered
cllective despite binding and
the lollowing errors:
i. Failure olithe ollicer to attach his
or her seal to the certilicate
ii. Attachment oll a seal to the certilicate
that does not bear the words and
devices required by law
iii. Failure ol' the ollicer to state the date
or the correct date ol'the expiration
his or her ‘ ol~
commission on the certilicate.
iv. liailure ol'the ollicer to correctly date
the certilicate ol'ackntuvletlgment or
state the cottuty wherein the ackm)wledg'einent
was taken.
v. Certilication in ally county UlilllC state
by a person holding an unexpired
commission as notary public who had,
at the time of the certilication,
ceased to be a resident olithe county within
and in which he or she was
commissioned.
b. Instruments in writing executed belore August
13. 10.03 are hiding and ellcctive
despite the errors listed above plus 3 additional
errors:
i. Failure ola spouse’s signature on an instrument
all‘ecting title to the
homestead to be properly acknowledged
ii. ()missiou ol‘ words required by law in the certilicate
ol'ackn<)wledg‘ement by
the ollicer certilying the acknowledgeiuent
iii. Certilicatiou by an ollicer who was:
1. A mayor ol‘ a city or an incorporated town
and was not authorized to
certily the acknowletlgemeut, or
2.
The deputy ol~ an ollicial authorized by law to
take
acknt)wledgiuents though the deputy was not so
authorized
l7. Most documents can be recorded at the Circuit
Clerk's ollicer in the county courthouse
located in the county seat.
a. 'l‘here are H) Arkansas counties that are divided into
Q‘judicial districts, meaning
there are 2 county seats, two courthouses and 2 sets ol‘ records.
b. A county judicial district is delined as that portion of the
specilied county in which
the real estate under examination is located and in which there
is maintained a
permanent set of records pertaining to such real estate.
c. Any instrument allecting title to real estate must be tiled in the
property county
judicial district. ll. it is not tiled in the correct county judicial district, there
is no
constructive notice and any statutory requirements, such as those dealing
with
l'oreclosure may not be satislied.
(1. Currently the 10 counties that have 2judicial districts are:
i. Arkansas
ii. Carroll
iii. Clay
.
.— ,4Craighead
v. Franklin
vi. Logan
vii. Mississippi
viii. l’rairie
ix. Sebastian
x. Yell
c. Sebastian County is the only county which has moved the recording duties from the
Circuit Clerk to the County Clerk
18. Arkansas has a statutory pngh clause for all oil and gas leases executed on or afteijluly 1.,
1983. It has generally been interpreted to mean that an oil and gas lease will hold lands
outside a producing unit for one year alter the end of the primary term.
15). Arkansas has a forced pooling procedure that grants the Arkansas Oil and (las
Commission the authority to integrate separately owned tracts emhraccd in a drillingunit
when the owners fail or refuse to do so voluntarily, provided that the persons who own at
least an undivided 50% interest in the right to drill and produce oil or gas from the total
proposed unit area agree.
a. Forced pooling in Arkansas is called forced integration.
I). An integration order may remain in force for a period of no longer than the later
of:
i. One year following the elfective date ofthe order, or
ii. One year following the cessation ofdrilling operations or production within
the unit.
e. An nnleased mineral owner will receive the equivalent of the hest terms given to
any leased party within the drilling unit.
» d. lfno election is made within a 15 day period of receipt of the order. the integrated
party is deemed to have leased at the option chosen by the operator in the order.
20. A drilling unit is generally comprised of regular governmental sections with an area of
approximately (5 1.0 acres.
a. ()n showing good cause, the unit may be split into the North half ofone section
and the South halfof another section.
1). Part of multiple sections may he comhined if the sections are h‘actional such as
along the Arkansas River, in order to create a unit of approximately (3 1-0 acres.
c. 'l‘hcre are 2 exceptions to the (i It) acre drilling unit:
i. In the Fayettcville shale and other nnctnn'entional sources ofsupply the
drilling unit may consist of ‘2. adjoining sections where a horizontal well
crosses unit houndarics. Costs and revenue are split based on acreage
allocation.
ii. 'l‘he unit for a well completed in the Lower Carpenter is the size and shape
of the lease it is drilled on unless there is a voluntary declaration of pooling
filed.
2l. Integration orders are ellectiye
for no longer than l year fi‘om
long as a well located within the date ol‘the order or as
the unit is capable olproducing’
oil or gas in paying quantities.
a. ()rders cover all depths and Iormations
b. An unleased mineral owner
may elect to:
i. Lease lor the best terms as established
at the hearing
ii. Participate in the well
iii. (lo non-consent in the well. in
which [/8 ol‘the interest is deemed
royalty. to be
e. An owner who makes no election
is deemed leased
(l. A non-conunitted working interest
order may elect to:
i. Participate in the well
ii. (lotion-consent
e. Non-consent terms are defined in the Order
and can either be permanent or
subjectto redemption alter a predeterminetl
penalty.
l'. l'nleased mineral owners that fail
to elect are subject to an oil and gas
lease that is
attached as an exhibit to the application.
22. Instruments in the chain olititle
that were executed by a stranger to
the title may be
disregarded as a stray instrument il‘the following~ conditions
are met:
a. 'l‘he instrument contains no recitals linking
it with record title
I). It is not linked by relerence to an unrecorded
instrument
A ~. It is older than 10 years
d. 'l‘be grantee has never attempted to
re-coiwey the land or any interest therein,
as of
record
e. The chain ()1. title is otherwise clear
__ It is not the last instrument ol record by date.
'l‘here is no indication ol‘ownership in or through
the grantee contained in the
current records ol' the tax assessor in the county
judicial district where the land is
situated.
23. A beneficiary deed conveys an interest in
real property, including any debt secured
by a
lien on real property, to a grantee designated
by the owner.
1. It expressly states that the deed is not to take ell‘ect
until the death ol' the owner.
I). No legal or equitable interest vests in the grantee
until the death ol. the owner prior
to the revocation of the beneficiary deed.
". A beneficiary deed translers the interest to the designated
grantee beneficiary upon
the death ol the owner, subject to any mortgages, oil and gas
leases, security
pledges. or other encumbrances made by the owner whether
the encumbrance was
made belore or alter the execution ol the beneficiary deed.
d. The owner may designate a successor grantee beneficiary.
e. The owner may place conditions that must occur before the successor
grantee is
rested with any interest.
A beneficiary deed may be used to transfer property to
a trust
.—
A beneficiary deed may be revoked by the owner at any time prior to his or her
death.
h. The revocation has to be executed and recorded before the death 01' the owner.
If an owner executes more than one beneficiary deed concerning the same real
property. the recorded beneficiary deed that is signed last is the one that is effective.
Any third party that owes an obligation to the grantee beneficiary may require that
person to provide reasonable evidence that the owner is deceased and that he or
she did not revoke the deed prior to his or her death.
CDOA Review - Chapter 12
California Legal and Practice Summary
1. Ownership ofproperty by a single person is designated

as sole or several ownership.
(Ownership "in severalty."
2. Ownership by more than one person may be owned as:

a. joint Interests
b Partnership Interests
c. Interests in Common
d Community Interest
3. Interests in Property is either absolute or qualified.

a. Absolute interest is when a single person hasabsolute dominion
over it, and may use
it or dispose ofit according to his pleasure, subject only to general laws.
b. Interest is qualified when:
i. When it is shared with one or more persons
ii. When the time ofenjoyment is deferred or limited
iii. When the use is restricted '
4. joint Tenancy may be created by will or by transfer, when expressly declared

in the will or
transfer to be joint tenancy.
a. A joint tenant may sever a joint tenancy in real property as to the joint tenant‘s
interest without the joinder or consent of the other joint tenants by any of the
following means:
i. Execution and delivery ofa deed that conveys legal title to the joint tenant's
interest to a third person
ii. Execution of a written instrument that evidences the intent to sever the joint
tenancy, including a deed that names the joint tenant as transferee, or ofa
written declaration that, as to the interest ofthe joint tenant, the joint tenancy
is severed.
iii. Severance ofa joint tenancy of record by deed, written declaration, or other
written instrument is not effective to terminate the right of survivorship of
the other joint tenants as to the severing joint tenant’s interest unless:
1. Before the death ofthe severing joint tenant, the deed, written
declaration, or other written instrument effecting the severance is
recorded in the county where the real property is located, OR
2. The deed, written declaration, or other written instrument effecting the
severance is executed and acknowledged before a notary public by the
severing joint tenant not earlier than three days before the death of
that joint tenant and is recorded in the county where the real property
is located not later than seven days after the death ofthe severing joint
tenant.
California 15 a community property state.
A transfer may be made without writing, in every case in which a writing is not expressly
required by statute.
a. A grant takes effect only upon its delivery by the grantor.
b. A grant duly executed is presumed to have been delivered at its date.
California follows the Rule of Capture. The owner ofoil and gas rights has the exclusive
rights to drill for oil and gas on his premises, and to retain as his property all substances
brought to the surface on his land.
California is a Notice-Race state. The first document recorded in good faith, or without
notice ofthe prior conveyance, will prevail.
In California, correct indexing is essential for a document to be notice. Therefore, ifyou

record a document and want to verify that it is on notice, you must follow up and make sure
it was properly indexed in the county records.
10. California has a curative statute that negates certain unused recorded instruments.
a. Old mortgages and deeds oftrust expire in 10 years after the maturity date or last
payment date ifthat is ascertainable. Otherwise it expires 60 years after recording.
b. It is possible to file an Intent to Preserve and maintain the instrument but only for
one 10 year period.
11. Within 30 days after demand following expiration or abandonment of an oil and gas lease,
the lessee must quitclaim the lease. lfjudicial action is required to enforce the quitclaim, the
lessee is liable for costs offiling suit plus $150 penalty.
12. The owner of real property subject to a mineral right may bring an action to terminate the
mineral right if the mineral right has been dormant for 20 years. The owner ofthe dormant
minerals can file as many notice of intent to preserves as they wish. Minerals are considered
dormant if:
a. There is no production and no exploration that affect the minerals.
b. No separate property tax assessment is made of the mineral right, or if made, no
taxes are paid on the assessment.
c. No instrument creating, reserving, transferring,
or otherwise evidencing the mineral
right is recorded.
13. Proceedings to establish death are necessary
iftitle to or an interest in rea l or personal
property is affected by the death.
a. Any person may record in the county in which the
property is located any of the
following documents establishing the fact of the death.
i. An affidavit ofdeath executed by a person having
knowledge ofthe facts and
including a particular description ofthe real property
and an attested or
certified copy ofa record ofdeath made and filed in a
designated public office
as required by law.
ii. A certified copy ofa court order that determines the
fact of death pursuant to
another statute that provides for a determination of the determination
of the
fact ofdeath.
b. For estates worth less than $100,000, an Affidavit Transfer
ofAssets may be made
without the necessity of ancillary probate.
14. Upon the death ofa married person, one halfof the community
property belongs to the
surviving spouse and the other halfbelongs to the decedent. Any part
ofthe estate ofa
decedent not effectively disposed of by will passes to the decedent’s
heirs as follows:
a. lfthere is a surviving spouse the surviving spouse takes their halfofthe
community
estate plus the following share ofseparate property:
i. The entire intestate estate ifthe decedent did not leave any surviving
issue,
parent, brother, sister, or issue ofa deceased brother or sister,
ii. One-halfof the intestate estate ifthe decedent leaves only one child
or the
issue ofonly one child, OR leaves no issue but leaves a parent or parents
or
issue ofeither of them,
iii. One-third ofthe intestate estate ifthe decedent either:
1. Leaves more than one child
2. Leaves one child and the issue ofone or more deceased children
3. Leaves issue oftwo or more deceased children.
b. The part ofthe intestate estate not passing to the surviving spouse, or the entire
intestate estate if there is no surviving spouse, passes as follows:
i. To the issue of the decedent taking equally ifthey are all of the same degree of
kinship to the decedent, otherwise per stirpes
ii. lfthere is no surviving issue of the decedent, then to parent or parents equally,
iii. lfthere is no surviving issue or parent ofthe decedent, then to the issue ofthe
parents or either ofthem, the issue taking equally if they are all ofthe same
degree ofkinship to the decedent, otherwise per stirpes
iv. lfthere is no surviving issue, parent or issue ofa parent ofthe decedent, but
the decedent is survived by one or more grandparents or issue of
grandparents, to the grandparent or grandparents equally, or, if there is no
surviving grandparent, then to the issue of such grandparents per stirpes.
V. Ifthere is no surviving issue, parent or issue ofa parent, or grandparent or
issue of a grandparent, the decedent is survived by the issue ofa predeceased
spouse, then to such issue per stirpes.
vi. Ifthere is no surviving issue, parent or issue ofa parent, grandparent or issue
ofa grandparent, or issue ofa predeceased spouse, but the decedent is
survived by any next of kin, then to the next ofkin in equal degree, but where
there are two or more collateral kindred in equal degree who claim through
different ancestors, those who claim through the nearest ancestor are
preferred to those claiming through a more remote ancestor.
vii. Ifthere is no surviving kin of the decedent and no surviving issue ofa
predeceased spouse of the decedent, but the decedent is survived by the
parents of a predeceased spouse or the issue of such parents, then to the
parent or parents equally, or to the issue of such parents ifboth are deceased,
the issue taking per stirpes.
c. lfthe decedent had a predeceased spouse who died not more than 15 years before
the decedent and there is no surviving spouse or issue ofthe decedent, the portion of
the decedent's estate attributable to the decedent's predeceased spouse, passes as
follows:
i. lfthe decedent is survived by the issue ofthe predeceased spouse, then to the
surviving issue of the predeceased spouse per stirpes.
ii. Ifthere is no surviving issue of the predeceased spouse, but the decedent is
survived by a parent or parents ofthe predeceased spouse, then to the
predeceased spouse’s surviving parent or parents equally.
iii. Ifthere is no surviving issue or parent ofthe predeceased spouse but the
decedent is survived by issue ofa parent ofthe predeceased spouse, then to
the surviving issue of the parents, or either parent, of the predeceased spouse
per stirpes
iv. lfthe decedent is not survived by issue, parent or issue ofa parent ofthe
predeceased spouse, then to the next of kin of the decedent
v. lfthe portion of the decedent's estate attributable to a predeceased spouse
who died not more than 15 years before the decedent would otherwise
escheat to the state, then such portion ofthe decedent’s estate passes to the
next of kin of the predeceased spouse who take in the same manner as ifthe
predeceased spouse was the decedent.
15. In general, Personal Representatives, Conservators, and Guardians cannot sell, lease, or
otherwise convey real property in the absence ofa specific court order authorizing same.
Under certain circumstances the administrator may petition the court for approval of
broader powers.
16. A petition may be filed requesting an order setting aside the
decedent’s estate to the
decedent’s surviving spouse and children, or one or more
ofthem, ifthe net value ofthe
decedent’s estate, over and above all liens and encumbrances
at the date ofdeath and over
and above the value of any probate homestead interest set
apart out of decedent's estate
does not exceed twenty thousand dollars.
17. California does allow for Pay on Death accounts and Joint Tenancy
accounts.
CDOA REVIEW — CHAPTER 13
Overview of New Mexico Oil and Gas Laws
Introduction
New Mexico is similzu‘ in some respects to Texas.
New Mexico ()il Conservation Commission has developed extensive regulations governing
oil and gas activities
Case law is limited, possibly because of the amount of state and federal ownership but also
possibly because of the extensive regulation detail.
Oil and gas in place in New Mexico is deemed to be real property.
Elements of the Mineral Estate.

Mine ‘al estate includes:
— Right to explore for, develop, produce, sever, and sell the mine ‘als under the land
— Right to execute oil, gas, and mineral l ‘ascs (executive rights)
- Right to receive bonus
— Right to receive delay rental
-— Right to receive royalties
- Right ofingress and egress and reasonable use of the surface estate to conduct
mineral operations.
— The mineral estate may be stripped of one of thes ‘ attributes by execution of a
deed granting a portion of the rights or reserving a portion of the rights in a deed.
An example would be non—participating mineral interest.
A lease of the mineral estate is a conveyance of real property and vests the lessee with
ownership of a mineral estate.
The estate granted is a fee simple determinable.
Determinable ownership is one that terminates upon the happening ofa stated event.
Oil and Gas Leases

Few mine ‘al owners actually drill their own wells.
The oil and gas lease forms the basis of most relationships among pzu‘ties in an oil and gas
venture.
The lease may be sold or traded multiple times both before and alter production is
obtained.
There is not standard oil or gas lease form in New Mexico on fee lands, although both
State and Federal l ‘ases are on their own stzuidard form.
An oil zmd gas lease has characteristics of both a contract turd a conveyance since it contains
both covenants and conditions.
Federal forms are set by the Secretary of the Interior and are periodically changed as the
I
Mineral Leasing Act of 1920 is amended.
State forms are statutory, although the Commissioner of Public Lands has discretion to use
one of three statutory forms based upon the circumstances.
Types of lease forms:
' Unless lease form is the most common. “This lease will terminate at the end of the
primary term unless production is obtained in paying quantities.”
° D1771 01‘Paylease form gives the lessor the right to terminate the lease if the lessor
does not meet conditions of the lease.
An oil, gas, and minerals lease will generally cover any minerals located on the ground.
An oil and gas lease will only cover oil and gas, but not sulfur, urtmium, or other minerals.
The date of the lease is critical for many reasons:
' It provides the beginning and ending dates of the lease
' It provides an anniversary (late for my rental payments that may be due
' It may determine the owner of the leasehold in the event multiple leases were given
by an unscrupulous or cmeless lessor to more than one lessee on the same tract of
land.
Leases may have a different effective date and execution date.
If there are differences between the date ofexecution and the effective date stated in the
lease, the date of the lease pre 'ails.
An undated lease is not void, but it takes effect upon execution 2u1d delivery. That date
may be difficult to prove.
An oil zuul gas lease is not effective until delivery and payment of valid consideration.
The parties of the lease nmst be set forth and is generally identified in the first paragraph.
The lessor may be any owner who has a vested interest in the mineral estate, who has the
capacity to execute a lease, and has not previously executed a currently existing 1 ‘ase.
The following parties are proper lessors of a lease:
' A court appointed conservator on behalf of a minor or incapacitated person
' The trustee of a trust should be listed zuid identified as the lessor and not merely
the trust.
° The personal representative ofa decedent’s estate that has not previously been
distributed to the heirs and/or devisees.
= Owner of executive rights where that right has been severed from other interests.
' Attorney in fact may execute only if they hold a power of attorney that grants the
authority to lease minerals. The power of sale does not include a power to execute
oil and gas leases.
° A married lessor should be joined by his/her spouse unless the interest is clearly
separate property.
' Partnerships, corporations, and limited liability companies may hold title to real
property and may be a valid lessor.
The Habendum clause gives the term of the lease....”VVhen do it endum? Check the
habendum.”
The primary term is usually set as a specified period of time for the lessee to start
operations or actual drilling.
“As long thereafter...” is the secondary term.
Most New Mexico leases require the commencement of drilling operations within the
primary term.
The grzuiting clause is the provision that causes conveyance of the estate from the lessor to
the lessee. It will tell you what specific rights are being conveyed.
New Mexico does not generally have Mother Hubbard clauses in their leases because the
Jeffersonian survey system does not leave the ambiguities or opportunity for incorrectly
describing a tract.
A royalty interest is an interest in real property.
The royalty clause is a covenant, not a condition.
The lease does not terminate for failure to pay royalties.
()il royalty may be taken in cash or in kind at the option of the lessor.
()il royalty generally bears their proportionate share of post production cost, which may
include transportation, production taxes, and severance taxes.
Federal leases may contain a sliding s ‘ale royalty where the royalty is dependent upon the
average quantity of oil or gas produced per well per month.
Gas royalties are generally payable based on the market value at the well for well use gas, or
on the amount realized from the sale when sold on or off the premises.
In determining market value, New Mexico would generally follow the Texas
interpretations.
Texas has determined that the market value for gas royalty production is the fair market
value at the time of production and deliver rather than the value at the time of the
contracts.
Where one or more lessees is not marketing gas, 1 ‘ew Mexico differs from Texas. The
New Mexico Proceeds Payment Act requires timely payment of proceeds of production to
all persons entitled to payment. This means royalty should be paid to the lessor based on
all gas produced, saved and sold from the premises, even though the lessee is not
mm‘keting their share of gas.
Payments for royalty are due not later than 6 months after the first day of the month
following the (late of first sale.
Subsequent payments are due not later than 45 days after the end of the calendar month
within which payment is received by the payor.
18% Interest is due on any late payments unless:
— The failure to pay is the result of good faith reliance upon a title opinion by a
licensed New Mexico attorney making objection to the lack of good and marketable
title of record to the party claiming entitlement.
-— Information is received that brings entitlement into question
—— The amount is less than $100
— The party has refused to execute a reasonable division order.
-— Interest under one of these scenarios is the discount of the federal reserve bank in
Dallas plus I 1/2 percent.
Most leases contain a shut in gas provision requiring payments to be made nithin 60 or 90
days from the date a well is shut in.
Most shut in gas royalty provisions are a condition in the lease...not a covenant. That
means that if the royalties are not properly paid, the lease will terminate.
Shut in payments generally are $1 per acre per year or an amount equal to the delay rental.
It may even be a set mnount per well per yea‘ and limit the length of tim ‘ a lease can be
extended by the payment of shut 'in royalty.
Shut in payments would be made to the royalty owner if different from the mine ‘al owner.
Under the “unless” lease form the lease will automatically terminate during the primary
term unless a well is commenced, production is obtained, or the annual delay rental is
paid.
Payment of the delay rental allows the lessee to delay drilling operations for a year.
In New Mexico failure to make timely payment of the rental is not fatal to the lease if the
lessee’s actions manifest a good faith intent to continue the lease.
Modern lease forms provide for continuance of the lease upon a bona lide attempt by the
lessee to make the rental payment. They place the burden on the lessor to notify the lessee
of my mistakes in the rental payment.
State of New Mexico leases require payment of annual rental regardless of whether
production is obtained; however, failure to pay annual rentals on a state does not result in
automatic termination.
In addition to the express provisions contained in the oil and gas leases, New Mexico
courts have recognized several implied covemmts of the lease:
—- Lessee has an implied covenant to develop the land with reasonable diligence after
discovery of oil and gas in paying quantities.
— Lessee has an implied covenant to drill an offset well to prevent d ‘ainage.
— Lessee has an implied covenant to market oil or gas produced.
— The prudent operator standard is applied to determine if the implied covenants
have been complied with.
Pooling, Communitization and Unitizau'on
The Oil Conservation Division (()C D) has established statewide spacing and establishes
field rules in such a manner to protect the correlative rights and prevent waste.
The ()CD has the authority to pool tracts owned by two or more parties when an
agreement to pool and develop cmmot be reached.
Pooling is the term used to reflect the consolidation of two or more leases to form the
spacing or proration unit. The term “connnunitization” is used for pooling involving
federal or state ownership.
Force pooling proceedings are common when an unleased mineral owner refuses to join in
the proposed drilling operation or two or more working interests owners cannot agree on
how operations should proceed.
The operator must attempt to consent for voluntary pooling of all interest within the
spacing or proration unit. If he cannot, he petitions the ()CD in Santa Fe to force pool.
The ()CD will determine terms that are fair to all parties. A risk penalty is generally
allowed to be charged against the interests of any party that choses not to voluntarily join in
drilling the well.
An unleased mineral owner’s interest will be deemed to be 1/8 royalty interest and 7/8
working interest.
All interests owners must agree to pool their interest. Leases and agreements generally
grant the power for the lessee to pool their interests. If authority is not granted in the lease,
a ratification of the pooling, joinder or a forced pooling order must be secured.
Communitization of a federal is approved by the BLM 2111(l the Commissioner of Public
Lands approves communitization ofstate lands.
Voluntary pooling is accomplished by the agreement of all interest owners and a
Designation of Pooling should be recorded in the county records.
()nee pooling has been established, operations on and production from the pooled unit
are deemed to have been conducted on each tract within the unit.
Production is allocated on a tract pzu‘ticipation factor based on th ‘ acreage in the tract
divided by the acreage in the unit.
Spacing is based on the type of production, distance from existing production, the depth of
the formation, and the area of the state where the well is located.
A wildcat well is a well to be drilled a dist2u1ce of one mile or more from the outer
boundary of a defined pool in the projected formation or from :my well that has produced
in the existing formation.
Southeast New Mexico is Chaves, Eddy, Lea, and Roosevelt Counties. Northwest New
Mexico is made up of Rio Arriba, Sandoval, and San Juan Counties. All other counties are
included under “Other.”
Communitization, pooling, and unitization or commonly used interchangeably, but in
reality unitization is an attempt to provide for unilied development and operation of an
entire geologic prospect or producing reservoir.
Most lease forms do not contain a unitization provision allowing the lessee to commit the
'
lease or a portion thereof to a unit agreement.
Agreements for exploratory units differ from unit agreements for enhanced recovery.
If the United States owns the mine ‘al estate in more thtui 10 percent of the lands proposed
to be unitized for an exploratory unit, a Model ()nshore Unit Agreement for Unproven
Areas must be used.
The unit agreement becomes ellective upon approval, but the public interest requirements
is only satisfied if the unit operator commences actual drilling operations and diligently
prosecutes operations in accordance with the terms of the unit agreement.
If the public interest requirement is not met, the leases committed to it are treated as
though the unit had never been formed, and any segregations or extensions that occurred
by reason of commitment to the unit are invalid.
There is no federal form of unit agreement for enhanced recovery.
The unit agreement and unit operating agreement should be recorded in the county where
the lands are located.
Marital Property
New Mexico is a community property state.
Community property is defined by statute as property acquired by either or both spouses
during marriage which is not separate property.
The presumption is that property acquired during marriage is community property.
Separate property is property acquired by either spouse in one of the following ways:
— Acquired before marriage
— After a divorce decree is entered
—- Gilt
— Devise, bequest, or descent
— Designated as separate property by a written agreement between spouses
— Designated as separate by ajudgmenl or decree of any court havingjurisdiction.
— Property acquired by a woman by an instrument in writing in her name alone or in
her name and another person not her husband prior to July 1, 1973 is presumed to
be her separate property.
- Property acquired with funds that are separate property remains separate property.
— Property takes its status at the time it was acquired
— The presumption of community property overrides any attempt by one party to an
instrument to recite that the interest is being held as the pzu‘ty’s separate property.
Both spouses must join in any transfer, conveyance, mortgage or contract to transfer,
convey or mortgage any interest in community property.
Any attempted conveyance of community property by one spouse is void.
The New Mexico legislature revised the statute to provide that “nothing in this section shall
affect the right ofa spouse not joined in a trzuisfer, conveyance, mortgage, lease or contract
to validate an instrument at any time by a ratification in writing?
This statute revision raises many questions:
—- Can the non—joining spouse alone ratify a “void” instrument or does ratification
require the joinder of both spouses?
— Can a ratification lacking present words of grant breathe life into a “void”
conveyance?
— The statute does not say it is retroactive; therefore, any ratifications taken before
June 18, 1993 are not effective unlessjoined by both spouses.
— Spouses may hold property as joint tenants with right of sun'ivorship and their
interest may be either separate or community.
Corporations, Painlerships and LLC’s

New Mexico corporations have the power to acquire, convey, lease, or othemise deal in
real property.
Th ‘ authority of officers and agents is derived from the bylaws or from resolutions of the
board of directors not inconsistent with the bylaws.
A transfer may require authorization from the board of directors, depending on the
magnitude.
The president or vice-president usually has the authority to execute oil and gas leases.
If an agent other than an executive officer is to sign a lease, a board resolution or other
authorization should be obtained.
In a partnership, individual partners generally have the power to convey real property in
the partnership’s name, with 3 basic exceptions: .
—- The grantee knows the partner lacks the authority to execute the instrument
— Title is in the name of one or more but not all of the partners, and the partnership’s
interest is not disclosed on the record, the only pzu‘tners in whose mune the title
stands may convey the property.
— If title is in the name of all partners, they should all be a party in conveying the
property.
The New Mexico Uniform Revised Limited Partnership Act authorizes the trrmsaction of
any and all business by limited partnerships.
General partners have the right to execute leases in the name of the limited partnership.
Foreign limited pzutnerships may apply for a certificate of authority to transact business in
the state.
Merely owning a non—operating mineral interest in New Mexico does not constitute
transacting business.
Limited Liability Companies were provided for in New Mexico in 1993 and are authorized
to conduct any lawful business.
The management of an LLC is generally vested in the member Or members but if
management is vested in a manager it must be set out in the articles of organization.
If a manager has been provided for, then unless specifically resen'ed to the members by
the Limited Liability Company Act, the manager or managers, in accordance with the
articles or agreement, have the exclusive power to make all decisions for the company.
Decedent’s Estates
Any part ofa decedent’s estate not effectively disposed of by will passes by intestate
succession to the decedent’s heirs pursuant to the applicable rules of descent and
distribution.
Sepa‘ate property passes V1 to the surviving spouse and 3/4 to the sun'iving issue of the
decedent by representation. If there are no sun'iving issue, all passes to the spouse.
Community property all goes to the surviving spouse.
If the decedent is not survived by a spouse or issue the entire estate passes to the
decedent’s parents or surviving parent.
If both parents are deceased the entire estate passes to the descendants of the decedent’s
parents or either of them by representation.
If the decedent is not survived by any ofth ‘ above, one-half of the estate passes to the
maternal grandparents or their descendants by representation and the other one-half to the
descendant’s paternal grandptu‘ents or their descendants.
If there are no surviving descendants on one side the entire estate passes to the other side.
Prior to 1993 any distribution that is now “by representation” in the statute was a per stirpes
distribution.
Title is generally not considered marketable in New Mexico until there has been a probate
proceeding conducted on the decedent’s estate.
Original probate proceedings may be either informal or formal. Formal proceedings
require court approval at all phases of administration of the proceedings. Most probates
are informal.
The personal representative generally has broad powers in attending to estate matters,
including the power to execute oil and gas leases and other instruments concerning the
decedent’s minerals pending the probate proceeding.
A will is not effective until it is admitted to probate but the passage of title relates back to
the date of death.
A will must be probate within 3 years after the decedent’s death.
Statues were recently amended to allow the submission of a will in a formal testacy
proceeding after three years following the decedent’s death to evidence passage of title to
from the decedent to the person named in the will.
Since 1975 the personal representative must execute deeds of distribution to evidence the
passage oftille from the estate to the heir, devisee, or distributcc. New Mexico no longer
requires that a determination of heirship be made by the court.
Pretermitted Heirs - Under New Mexico law, a child (or descendant of a deceased child)
not mentioned in a decedent’s “all takes an intestate share of the estate, unless the estate
was devised to the unmentioned child’s other parent.
Prior to July 1973 a wife could not dispose of her community property interest and upon
her death, it passed directly to her husband without the necessity of probate.
From June 12, 1959 to July 1, 1973 the “ife received the entire community estate of her
husband in the absence of a will, without necessity of probate.
Prior to June 12, 1959, upon the death of the husband, the wife received her one-half of
the community property and one-fourth of the husband’s one—half giving her five-eighths
with the remaining three-eighths divided among the children.
New Mexico does not have forced heirship.
New Mexico does not accept foreign probate like Texas (recording authenticated copies of
decedent’s will and probate in county) but it does have a short form proceeding in addition
to a full ancillary probate proceeding.
The short form of ancillary probate is fairly inexpensive but th ‘ authority to act in New
Mexico is only good for the duration ofhis or her appointment in the foreign court.
Full ancillary probate is similar to the original resident probate proceedings.
Both forms of ancillzu‘y probate require authenticated or exemplified copies of the petition,
orde ‘ admitting the “ill to probate, orde ‘ appointing the personal representative, the will,
letters testamentary, and any other orders providing for the authority of the personal
representative or making a determination of heirship.
Title to r ‘al property in New Mexico is subject to the laws of the State of New Mexico.
New Mexico law of descent ;md distribution determines who is entitled to an intestate
decedent’s estate.
The presumption of community property is made even if the domicile of the decedent is in
a non-community property state. The presumption may be rebutted by a preponderance
of the evidence.
Marketable title does not pass without a New Mexico probate proceeding, it is common to
rely upon affidavits of heirship and death certificates. The affidavits of heirship, must be
recorded in the county where the property is located.
The affidz vit must be taken from someone who does not benefit from the decedent’s estate
and sets forth the following:
— Name of the decedent
— Decedent’s residence at the time of death
-— Time tuid place of death
— Names and addresses of decedent’s heirs mid each of their relationship to the
decedent
— Marital history, including the names of each spouse and dates of marriage, divorce,
and their death if they predeceased the decedent while married
— Whether the decedent died testalc or intestate and, if testate, the disposition of the
decedent’s will and a copy , if available, and names of the devisces, legatees, and
personal representative appointed therein
— The court and location of any probate proceedings that have been commenced
—— A description of the real property in the state owned by the decedent
The affidavit must be sworn or aJlirmed under oath, properly acknowledged, and properly
recorded in each county where the decedent owned real property. _
Title is still considered unmarketable absent probate proceedings are held in New Mexico.
Life tenancies follow the basic handling as in other states.
Neither the life tenant nor the remainderman has the right to explore and produce oil, gas,
or minerals and neither has executory rights.
The life tenant cannot waste the corpus of the estate, so he is not entitled to the royalties.
rl‘echnically he is entitled to interest from depositing the royalty proceeds in an interest
bearing account.
The remaindera is not entitled to the corpus until the death of the life tenant.
The life tenant and remainder can jointly enter into a lease or agreement or one can ratify a
lease taken from the other with present words of grant.
Bonus is generally treated the same as royalty but delay rentals are generally paid to the life
tenant as income from the estate.
Most states apply the 0a Mine Doctrine which grants the right to develop and exploit
the minerals in the life tenant if the mine was opened before the creation of the life estate.
If the mine was opened subsequent to the creation of the life estate, the royalties would be
paid to the remainderman.
Attorney in Fact
An attorney in fact may execute conveyancing instruments on behalf of the principal
consistent with the powers granted by the principal in a validly executed, acknowledge zuid
recorded power 01‘ attorney instrument.
The FDA must be recorded in every county where the principal owns property.
The FDA is effective until revoked by m instrument recorded in each county where the
principal owns property.
The POA must state specific authority. A power of sale does not confer a power to l ‘ase.
A POA must be a “durable” FDA in order to sun’ive the disability of the principal. A
durable POA states that the power of attorney will not be affected by the incapacity of the
principal or that it becomes effective upon the incapacity of the principal.
The statutes protect bona lide purchasers and the attorney who act without knowledge of
the principal’s death or incapacity, if not a durable power. If the principal died or became
incapacitated before the date of the execution of the conveyancing instrument by the
attorney-in-fact, an affidavit from the attorney stating he or she did not have knowledge of
the death or disability must be secured and filed in the county records.
An attorney in fact may execute conveyancing instruments on behalf of the principal
consistent with the powers granted by the principal in a validly executed, acknowledge and
recorded power of attorney instrument.
Trusts
A trustee has all of the powers conferred by the New Mexico Uniform Trust Code unless
the powers are withheld or limited by the trust instrument.
Those powers include the power to lease.
Attorneys prefer that the trust agreement be recorded but most trustees are hesitant to
record the entire agreement, A Memo ‘andum of Trust may be recorded as long as it
identifies the trustee, his powers and any limitations, and the duration of the trust or the
events of termination.
Title to property should be held in the name of the trustee, in trust for the specified trust.
The trust is not a le al entity by itself.
Conservators and Guardians

New Mexico cmlrt-appointed conservators of an incompctcnt’s estate, as well as guardians
of a minor, have the authority to execute oil and gas leases without further court action.
It is wise to obtain court approval of a lease acquired from a guarding acting on behalf of a
minor. ‘
Foreign conservators or guardians must receive authority from a New Mexico court to
exercise such authority.
Production in Paying Quantities

New Mexico requires production in “paying quantities” to extend oil and gas leases into
their secondary terms under their habendum clauses.
-New Mexico courts have also required wells capable of production in “paying quzuitities” in
order to continue lease’s where the lessee is paying a shut in royalty to preserve the lease.
Pursuant to Garcia v King, to meet the paying quantities standard, a well must produce
suflicient oil and/or gas to pay the operating expenses and yield a profit to the lessee.
The cost of drilling and equipping the well does not affect the calculation, so a well might
meet the producing in paying quantities standard but still be unprofitable.
Texas expanded the rule in Clifton v. Koontz making the test whether a reasonably prudent
operator would continue to operate the well in the same manner, for the purpose of
making a profit and not merely speculation.
The factors to be considered were:
The depletion of the resewoir and the price for which the lessee is able to sell his
produce
— The relative profitableness of other wells in the area
—- The operating and marketing costs of the lease
— The lessee’s net profit
— The lease provisions
— A reasonable period of time under the circumstances
— VVhether or not the lessee is holding the lease merely for speculative purposes
— Under this test the operating expenses of the well and the lessee’s net profit are
among the primary factors considered.
Surface Damages
New Mexico recognizes the mineral estate’s dominance over the surface estate.
Lessee’s are entitled to use as much of the surface area as is reasonably necessary for its
drilling and production operations, but they must exercise due regard for the rights of the
I
surface ouner.
Any damages are measured against the reasonableness standard.
A Texas case is created the reasonable use doctrine. In situations where there are
reasonable alternatives available to the lessee to prevent damage or disruption of the
surface owner’s use, the lessee may be required to accommodate the surface owner.
An oil and gas lessee has access to the entire surface area committed to a communitized or
pooled agreement, but the New Mexico Supreme Court has held that an ope ‘ator may not
use the surface estate of the lease outside of the communitized area to access a
Communitized well on adjacent land.
In 2006 New Mexico enacted the New Mexico Surface Owners Protection Act which
requires the lessee to give 5 days notice for non-surface disturbing activities and 30 days for
surface disturbing activities.
The lessee must offer a surface use agreement and compensation to the surface Oimer. If
the surface owner does not enter into the agreement timely, the lessee may enter proceed
with operations after posting financial security with a New Mexico financial institution.
A statewide bond is necessary before an ope ‘ator begins operations in New Mexico.
By statute the operator must pay damages t the surface owner and must reclaim the land to
its original condition when abandoning the oil and gas operations.
Injune 2009 the Commissioner of Public Lands for the State of New Mexico began
including a surface damage policy in all agricultural lease renewals. State grazing lessees are
allowed to collect actual damages and my reasonable lost business costs due to oil and gas
activities on state trust léurds subject to a grazing lease.
The grazing lessee must split all damages in excess of actual damages and costs associated
with lost earnings with the Commissioner, which ranges from 50 to 70% of the damages
received.
Recording and Constructive Notice

Failure to record an instrument does not invalidate the instrument but constructive notice is
provided by recording, and recording precludes a third party from securing an instrument
purporting to convey the same interest.
New Mexico is a notice state. A purchaser of 2m interest is on notice of all matters allbcting
the real property appem‘ing of record in the clerk’s ollice as well as matters apparent from a
visual inspection of the premises.
Federal records are not deemed to impart constructive notice, so assignments affecting
federal oil and gas leases must be recorded in the county.
Federal records will be filed twice, one in the federal records and one in the county
records.
By statute the records of the Commissioner of Public Lands do impart constructive notice
so there is no need to lile those records in the county.
To be recorded 2m instrument must contain an acknowledgment form that substantially
complies with the new Mexico statutory form of acknowledgment.
Filing fees are currently $5 for the first page and $2 for each additional page, plus the clerk
may charge an equipment recording fee of $1 per instrument.
If an assignment or releases references more tlrzur one grarrtor, grantee, deed, mortgage,
l‘asc or other instrument or describes more than one deed, lease or other instrument the
clerk “ill charge $5 for each reference.
If there we more than two aclmmvledgmcnts, the clerk will change an additional 50 cents
per additional acknowledgement.
New Mexico law states that even if m instrument containing a defective acknowledgment is
recorded in the county records, it is not entitled to constructive notice.
Prior to July 1993 many acknowledgments were rejected because the form (lid not reflect
the marital status of a husband and wife executing an instrument or left off the state of
incorporation on a corporate acknowledgment.
There is a curative statute that proves that certain minor defects in an aclmowlcdgnrent
form are cured if the instrument has been of record for more than 10 years.
CHAPTER 14 — PART 1
FREQUENTLY ENCOUNTERED TITLE PROBLEMS IN OKLAHOMA
l. Al‘iansactions - 'l‘ransactions must be completed accurately.

a. In determining owuership, title examiners and land prolcssions consider
documents from both a record title perspective and from a transactional
perspective.
i. If the transactional people have done their jobs properly, the division order
analyst should be able to rely on recorded d<)cumentation.
ii. 'l‘ransactional people would have a minimum:
1. Verilicd that the person executing the document is who they claim
to he
2. Verilied that that person has authority to execute the document as
evidenced by a corporation resolution or an opinion of counsel.
3. Verilied that the corporation is ingood standing in the state of
incorporation and that they are domesticated in Oklahoma and in
good standing with the State oli ( )klahoma.
l-. Verilied that the legal description matches the description ol‘the
previous deed, or il'only a portion is being translcrred, verilied that
the portion being translerred is correctly described.
1). Title problems can be avoided if name changes are identilied in the conveyances.
For example, Apex Corporation purchased the stock ol~ and merged with Smith
Company. The deed should recite the grantor as “Apex Corporation. successor by
merger to Smith Company.”
c. A copy of the merger documentation can be recorded with the conveyance or an
Allidavit of Fact can be recorded stating that Apex is the successor company to
Smith Company by virtue of a merger.
2. Correction Documents (p2)

a. Any time a correction instrument is liled of record to correct an error in a previous
instrument, the instrument should be labeled as a “Correction Assignment or
Deed” and the correction being made should clearly be spelled out in the
correction instrument.
b. 11' the error was a clerical error that does not diminish the value of the conveyance,
such as a spelling error in the grantor or grantee’s name, an allidavit may be placed
of record as notice ol'the error.
c. Any time the correction diminishes the value of the conveyance to the grantee, both
grantor and grantee nmst execute the agreement.
3. Consistency in name
as title was issued into that
EL Title out ()1 an individual or company should be exactly
individual or company.
who subsequently married, the
1). Ila property was conveyed to a single woman
names. For example, “Jane
conveyance should identily the woman by both
her husbmulJohn Randolph” or
Mosley, now known as Jane Randolph,joined by
joined by her husband,John
“Jane Randolph, previously known as Jane Mosley,
Randolph.”
allidavit as part 01‘ their
A subsequent seller can and should execute a recordable
that seller does not match
closing documents i1 the name on the conveyance into
Mosley was grantee on the
the conveyance into that owner. For example, Jane
Evans shows “John Randolph
deed but the next conveyance on the tract to Sarah
have an allidavit recorded
and Jane Randolph, husband and wile.” Sarah should
one and the same person.
stating that Jane Mosley andJane Randolph are
(1. Conveyances out ()1 a trust can create problems:
a trust, it may be
1. \Vhen there is no recorded documentation establishing
dillicult to determine the correct name 01 the trust.
Doe Revocable
ii. Ila deed is granted to “John Doe, Trustee of the John
of the trust should be
Trust datedJanuary 1, 1995” then the conveyance out
styled the same way.
or grantee is, the
iii. Any time there is a question about who the trust grantor
correction
title examiner should require an allidavit lrom the trustee or a
deed.
ol‘ the
iv. 11' the grantee on the original conveyance was John Doe, Trustee
is Sarah
John Doe Revocable Trust but the grantor on the next conveyance
liled alter
Doe, Trustee ol the John Doe Trust and the instrument was
01'
November 1, 1989, the trustee was required to lile a Memorandum
2008 the
Trust, and Sarah Doe may have been listed as trustee. In
B'Iemorandum ol‘Trnst requirement was clarilied so that the l\'lemorandum
is not required il~ the deed is directed to the trustee.
v. 11' an instrument has been recorded [or 5 years, the Rebuttable Presumption
Statute authorizes the title examiner to rely on the rebuttable presumption
the
that the person executing the document was the proper person and had
authority to execute it. Evidence to the contrary will still invalidate the
document. (p. 1)
vi. Any time it cannot be determined with certainty that the trusts being
trusts
conveyed are one and the same, a recorded allidavit stating that the
“John
are one and the same should be required. Example: Deed shows
as
Doe, Trustee ()1 the John Doe Revocable Trust datedJanumy 1, 1995”
Doc
grantor. Subsequent deed shows “John Doe, Trustee 01‘ the John
Trust as last amendedJuly 1, 1990.
‘9!
1-. HomesteadInterest
a. Both spouses should sign a conveyance il‘ a surface interest is involved due to a
potential homestead claim.
1). The statute provides that a recorded and acknowledged allidavit is “notice ol‘
matters covered therein" relating to the property, its use or its ownership.
c. The Oklahoma Al‘lidavit 'l‘itle l‘lxamination Standard last underwent major
revisions in 1996. '
d. Oklahoma statutes have been changed to give a lot more weight to allidavits.
Allidavits may relate to:
i. Age, sex, birth, death, relationship, family history, names, and identity of
parties
ii. Identity ol‘ ollicers of corporations
iii. Membership of partnerships, joint ventures, and other unincorp()ratcd
associations
iv. Identity of trustees of trusts and their respective terms of service
v. History of the organization of corporations, partnerships, joint ventures and
'
trusts
vi. Marital status
vii. Possession; residence
viii. Service in the Armed Forces
ix. Conflicts and ambiguities in descriptions of land in recorded instruments.
e. l‘illective September 1, 1991- the recording of an allidavit in the ollice ol' the county
clerk in the county in which the real property is situated creates a rebuttable
presumption that [acts stated in the recorded allidavit are trite as they relate to real
estate, its use, or its ownership.
1‘. Allidavits. which were previously regarded merely as documents giving notice 01'
possible lacts now may constitute prima lacie evidence that those [acts are true.
.5. Powers of attorney should always be recorded with any document executed by the attorney-
in—lact.
:1. Powers ol‘ attorney create an agency relationship and grants the P( )A the authority
to act on behalf ol‘ the principal. (p. 5)
l). The power ol‘attorncy document that creates the agency relationship sets out the
scope of the authority granted as well as the duration of the power.
c. The P( )A must be recorded in the county where the land is in order to be ellbctive.
Any conveyance is of no ellect unless the P( )A has been lilcd ol‘rccord in the
county.
(1. A power ol‘attorncy ceases at the death of the grantor. A power of attorney will
terminate at the incapacity of the grantor unless it is a durable power ol attorney.
c. There are various types 01‘ P( )A:
i. Limited power of attorney
ii. General power of attorney
iii. Durable power oli attorney
iv. Medical power of attorney
v. Financial power of attorney
vi. Special power of attorney
index, it must contain a legal
1‘. In order for a Power of Attorney to be filed in a tract
the Power of Attorney
description. Since POA’s rarely contain legal descriptions,
for it to be properly placed
should be attached to an allidavit as an exhibit in order
of record.
The revocation must be liled in
g. Powers of Attorney are revocable by the principal.
the same ollice where the Power of Attorney is recorded
6. llomcstead Issues
attorney are void.
a. Conveyances 01' a homestead property by a power ol‘
land that is or could be
l). Any conveyance signed by only one spouse which covers
homestead property is void.
widowed person’s property
c. In Tulsa and Oklahoma Counties, 21 single person’s or
is incapacitated.
may not be sold by a deed executed by a POA unless the principal
(1). (3)
in the county clerk’s
d. An instrument with one 01‘ the following defects recorded
to be a valid
ollice in the proper county for a period 015 years is c<msidercd
instrument:
entity.
i. It has not been signed by the property representative of a legal
on behall‘ol
ii. The representative is not authorized to execute the instrument
the legal entity.
in fact
iii. A power ()1. attorney has not been liled of record for an attorney
executing the instrument.
instrument or
iv. The seal of the legal entity has not been impressed on such
the record does not show such seal.
v. The instrument is not acknowledged
by the
vi. A deed or conveyance does not b ear endorsement of approval
appropriate governmental planning authority havingjurisdiction.
of
vii. Any (lel‘ect in the execution, acknowledgment, recording or certificate
recording the same.
shall be
e. The instrument or the record thereof or a duly authenticated copy thereof
for
competent evidence without requiring the original to be produced or accounted
or
to the same extent that written instruments, duly executed and acluiowledged,
the record thereof, are competent.
l. A deed executed by an attorney-in fact without a recorded power of attoruev is
void. IIowever, live years later. that deed suddenly becomes validlllli’i’i’i’ (p. 7)
7. Joint 'l‘enancy
a. If a property is held by two people as joint tenants with rights of survivorship and
one dies, an Affidavit of Death and 'l‘erminalion ofJoint 'l‘enaucy with the death
certificate must be filed of record to make the title marketable.
b. I'nless the joint tenancy was between spouses, an estate tax release or waiver must
also be filed.
c. To create a joint tenancy. the deed must specify that it is into two people as “joint
tenants” as a minimum. It is preferable to state that it is conveyed as “joint tenants
with rights of survivorship.”
8. Limited license companies — Oklahoma does not allow a limited liability corporation to
designate officers so there is no president of a 1.1 .C in Oklahoma. If title is transferred by a
I.I.C, it should be executed by the manager. I'nless an operating agreement specilies that
one manager can sign on behalfof the I.I.(.‘, all managers must sign.
9. l')eeds lo trusts — Title conveyed into a trust can be conveyed to the trustee of the express
trust or in the name ofthe trust itself. The mere listing of a property in the trust agreement
does not put the property in trust. It must actually be conveyed into the trust. (1). 3)
10. Reference to "trustee" only

a. Oklahoma does not recognize blind trusts. A conveyance into‘lohn Does. Trustee
without naming the trust is a conveyance into John Doe. individually. You can
attach the trust document, an allidavit, or a .\Iemorandum ofTrust to the
conveyance to provide the trust name.
I). An allidavit identifying the trust may be filed by the trustee. a beneficiary, or even
anyone who has knowledge of the trust, as long as the alliant identifies his or her
source of inlormation.
c. An aflidavit executed by a person who has an interest in the property does not
diminish the value of the Affidavit.
d. A memorandum of trust can only be executed by the trustee.
11. Final Decree —A final decree in a probate acts as a deed vesting title in the designated
heirs, beneliciaries. or devisees shown in the decree. It should be recorded in any county
where property is located.
a. Title 58 of the Oklahoma probate statutes allows the filing of a summary of the liual
decree in lieu of the full document.
I). The summary must describe:
i. The property by legal description,
proceeding
ii. The nameoi the decedent in the probate
linal decree or judgment was entered
iii. The court. case number and date the
or parties now holding title to the
iv. The name and addresses of the party
property
or judgment was entered.
v. The county where the 11111 linal decree
interest that the decedent did not
c. 11' a final decree describes property or a mineral
cloud title in and 01 itself. (p. 9)
own at the time olihis or her death, it does not
deed ol‘ record. The decree is

12. Divorce decrees act as a deed it there is no other
property were owned or divided between
recorded in each county where minerals or real
the ollice oi. the county clerk in the county
the parties. The decree must be recorded in
notice of the transfer ()1 title.
where the land is located to give constructive
but also allocate property and
a. Divorce decrees not only terminate the marriage.
award title to one or the other spouse.
01‘ any property being divided. A
1). The divorce decree must list a legal description
street address is not sullicient legal description.
between the two cx-spouscs
c. A divorce decree terminates any joint tenancy existing
and also removes the ex-spouse [mm a will.
records but a deed surfaces 1'rom
(1. 11‘ the divorce decree is not entered in the county
would be under
the ex-spouse to a third party, the Division ()rder analyst
acquired her interest.
reasonable inquiry notice to determine where the ex-spouse
(1). 10)
lease was taken from the
e. 11' the deed into a lessor shows he was married but the
inquiry responsibility to
lessor as a single individual, the analyst would have
determine the lacts.
debtor spouse and provide

13. Liens in divorce decrees are liens on the real property oi the
.constructive notice.
a divorce decree entered
a. An order for the payment ()1 property division alimony in
person whom the
alter September 1, 1901 is alien against the real property of the
notice to
property division alimony is awarded and it provides constructive
subsequent purchasers it:
and
i. The order states the amount of alimony as a delinite sum,
real
ii. The order expressly provides 101‘ a lien on the debtor spouse's
property; and either
ol‘ the
1. The court’s order providing [or a lien is recorded in the ollice
county clerk in the county in which the real property is situated. or,
2. The debtor spouse acquired some or all ol‘the interest in the real
property that is subject to the lien via the divorce decree.
liens last
b. The specific language used in the decree determines how long the
i. II‘ the lien was payable in a lump sum with no stated due date, it is
extinguished 5 years alter the date of prom>uncement ol' the lien by the
court in a divorce case
ii. ll. the lien was payable in a lump sum with a stated due date, the lien is
extinguished 5 years alter the due date 01' the lump sum obligation.
iii. ll the lien was payable in installments. then the lien is incrementally
extinguished as to each installment 5 years alter the due date of each
installment.
iv. Il~ the lien was payable in a single lump sum which is due upon the
occurrence 01‘ a designated event. then the lien is extinguished 5 years alter
the designated event occurs. For constructive notice, evidence ol‘ the
occurrence ol'the designated event must appear in the record. (p. l l)
l l. l‘lnlorceability ol' \lt'u‘tgages

El. Mortgages cease to be a valid em'umln‘ance 7 years alter their due date.
1). ll~ no due date is specilied they are not enlorceable 30 years alter they were
recorded.
A note holder must foreclose the mortgage within a seven year limitation period
alter the due date.
15. Estate tax liens

21. Estate tax liens cannot be enlorced 10 years alter the date 01‘ the death ol the
decedent. This is 10 years alter the date oldeath, not the date ol‘ probate.
1). 'l‘itle acquired through a decedent is considered marketable. as to the Oklahoma
estate or translcr tax unless prior to the end ol‘the 10 year period there was a tax
warrant liled ol' record by the Oklahoma Tax Commission.
'
16. 'l‘ranslcr on death deeds
21. 'l‘ransler on death deeds allow a grantor to convey his or her property to a grantee
upon the grantor’s death without probate proceedings.
b. ()1) November 1, 2008 a new ()klahoma statute, the N<)n-testamentary 'l‘ransler ol‘
Property Act, went into ellect that allows a person to title real property in himsell
and name a beneliciary who is to receive the property upon the owner’s death.
The beneliciary on such a deed does not need to be a signatory on the deed and
consideration is not necessary to validate the in-the-luture conveyance.
d. 'l‘he transler—on-deatli deed is executed. acknowledged and recorded in the olliee
ol' the county clerk in the county where the real property is located, prior to the
'
death 01‘ the owner.
C. The designation ol. the grantee beneliciary may be revoked at any time prior to the
death ol the record owner.
owner, acknowledged and
i. The revocation must be executed by the record
the land is located.
recorded in the county clerk’s olfice where
of the beneficiary is not required.
ii. Notice to the beneficiary or agreement
beneficiary to the record title owner does
iii. Payment 01‘ consideration by the
beneficiary from the deed.
not prevent the owner from removing the
by the beneficiary within 9 months
l‘. A transfer-on death deed may be disclaimed
alter the record owner dies.
where the property is
i. The disclaimer must also be filed in the county
located.
il‘ the beneficiary exercises
ii. The beneficiary’s ability to disclaim is waived
period. (p. 12)
dominion over the property during the 9 month
at the death of the record owners and
g. Title to the property vests in the beneficiary
with a copy of the death
is evidenced by liling an alfidavit by the beneficiary,
beneficiary is not the spouse of
certificate and an estate tax release attached H the
the record owner.
and no alternate beneficiary is
11. If the beneficiary dies prior to the records owner
named in the deed, the ti'ansl'er will lapse.
but it only takes ellect il’ that
i. A joint tenant may utilize a transler-tm-dealh deed,
transfer-on death deed does not
joint tenant survives all other joint tenants. The
sever the joint tenancy.
l7. llomestead and Trust problem

both are trustees, all
a. 11’ both spouses deed all their property into a trust, and
by both trustees
conveyances of real property out of the trust must be executed
needs to sign to ell'ectuate a
regardless of whether the trust say sonly one trustee
translcr.
husband and wile. ()nly
b. No deed or mortgage is valid unless executed by both
it is obvious that an
individuals can claim a homestead interest in property, so
express trust cannot claim a homestead.
l’rom the trust
"2 Some mortgage companies will require that a property be. transl‘erred
re-convey the property
back to the individuals before a mortgage is signed and their
back into trust.
waived.
d. The homestead right is a personal right and it can be
trust and the deed
’3 “both spouses did not join in the creation of the express private
is void unless the
is 01‘ the homestead ol. the trust. then the conveyance into the trust
action has been instituted
deed into the trust has been of record for 10 years and no
seeking to avoid, invalidate, or cancel the deed.
deeds by either
1‘. II' the property is separate property owned by only one spouse,
spouse with the joinder ol‘ the other is allowed.
g.
(T Because a title examiner has no way ol‘knowing which property is homestead, he
must treat every deed of real property in Oklahoma executed by a married person
without their spouse’sjoindcr as void. (p. 13)
h. lhe problem can be cured by either having a corrective deed signed by both
spouses or by obtaining a waiver of any homestead rights signed by both spouses.
l8. lural and Ackmnvlcdgcment

a. A jural, (“subscribed and sworn before me”) is not an acknt)wledgement and will
prevent a deed or mortgage from being recorded. A jurat is simply a statement
that the person executing the document swore before the notary that what the
document said was true.
b. An ackmnvledgcmeut is necessary for a deed or mortgage to be recorded. An
ackm)wledgement must include a recitation that the notary knows the signer
personally or has seen positive identilicalion and further conlirms that the person
signing intends to convey or encumber the property.
c. People other than notaries are authorized to take ackm)wledgements in Oklahoma.
19. lntestacy — If a spouse dies intestate survived by a spouse and one or more minor
children. a legal guardian will need to be appointed by the court prior to property being
sold. The surviving parent is not automatically the guardian for purposes 01‘ selling real
property inherited by the minor children.
20. 'l‘rustees as grantors -

a. l'nless the trust specilically allows the trustees to act alone in executing a document,
all trustees must sign every document under common law. The Oklahoma 'l‘rust
Act modilied the common law approach to provide that. where there are three or
more trustees serving at the same time, authority may be exercised by a majority ol‘
the trustees.
b. The Oklahoma Trust Act also provides that where there are two or more trustees
and one or more dies, the survivor may exercise the authority previously held by
the trusteesjointly, unless the trust provides otherwise.
c. The Oklahoma Trust Act also allows one co—trustee to give another co-trustee his
or her power of attorney to act in his place.
21. Tillst and estate tax release

a. liven il'property is held in a trust. if one spouse dies, it is necessary to obtain an
Estate Tax Release or \Vaiver Letter.
1). Most trusts are revocable living trusts where the settlors, trustees, and beneliciaries
are one and the same person retaining his or her right to li‘eely amend or revoke
the trust. This makes the ti‘;u1slei‘ into the trust an illusory transfer. In this
of the settlor when the settlor
instance, the properly is included in the gross estate
dies. (1). l 1‘)
of the gross estate, used as a basis for
c. The Oklahoma statute states that the value
determined by includino':
determination of the value of the net estate, is
real, personal, or mixed,
i. The value at the time of death of all property,
including any interest held in trust
to take died in
ii. The value ol any real or personal property intended
transfer made by the
possession or enjoyment at or alter his death. Any
prior to death,
decedent ol‘ a material part of his estate within 3 years
unless shown to the
without an equivalent monetary consideration, shall.
of death, and such
contrary, he deemed to have been in contemplation
of decedent’s death.
transfers shall be included in the net value at the date
no estate taxes are
iii. 11‘ the estate of a decedent passes to his or her spouse,
due.
should be
iv. Absent any evidence to the contrary, an estate tax release
property where all
requested where any revocable trust transfers title to real
the trust in the
the original individuals who conveyed the property into
(1). 15)
original deed are not executing the deed out ol'the trust.
to sell the
v. In order to prevent further del; ys it it becomes necessary
be prudent for
property prior to the death of the second spouse, it would
the lirst spouse,
the attorney to lile an estate tax return upon the death 01‘
even though the property is in trust.
the property that
vi. There is a recording requirement as to the tax release with
who is not
is held in trust and a deed is executed out ol the trust by a trustee
the title
a settlor. This can only be avoided il~ evidence is provided to
or that
examiner that the nonfioiniug settlor died more than 10 years prior
the nonfioiuine,‘ settlor was alive at the time ol‘ the conveyance.
ellect ol the record

22. The Rebuttable l’r‘csuluptions Statute pertains to the evidentiary
in the documents that have
documents. It says that it can be assumed that the facts are true
for any person who
been recorded. The statute, however, does not provide any salcty net
relies on it.
CDOA REVII‘KY — CHAPTER 1 LB
OKLAHOMA INDIAN TITLES
Most of the State of Oklahoma was originally set aside for Indian occupancy.
In 1889, the western part of Oklahoma was opened to non-Indian settlers. Title to
most of those lands is derived from federal patents.
3. Title to the eastern portion of Oklahoma stems from allotments to individual tribal
members pursuant to three general legislative schemes:
i. The tr ‘aties and statutes governing the hmds of the Five Civilized
rl‘ribes...Cherokee, Choctaw, Creek, Chickasaw, and Seminole
ii. The treaties and statutes governing the lands of the Osage Nation
iii. The General Allotment Act which applies to all other tribes.
Article I of the Constitution ofthe United States gives the federal government complete
jurisdiction over Indi2m tribes and their lands.
From the formation of the United States, the federal government has held fee title to
Indian lands as “guardian” for the tribes, subject to the right and use of the tribes.
The Oklahoma Enablimy Act and the Supremacy Clause found in Article II of the
constitution protected this federal power when the State of Oklahoma was formed.
\l The general theme of Oklahoma Indian Titles is that the federal government imposed
restrictions on alienation of Indian lands to protect the Indian allottees.
Indian laws are complex, were changed trequently, and are not codified in the usual
manner, which makes research difficult.
0. liven a slight violation of an Indian restriction may invalidate a transaction.
10. The lands allotted to the Five Civilized Tribes zue approximately the eastern half of
Oklahoma with the exception ofOsage County, which was allotted to the Osage Tribe,
and a small area in northeast Oklahoma which was allotted to the Quapaws, Delaware‘s,
and a few other tribes.
ll. The lands of the Five Civilized Tribes in Indian Territory were held as tribal domains,
and pursuant to treaties, tribal consent was necessary to include the lands within the
territorial limits of a state.
12. In 1893, the Dawes Commission was created to negotiate agreements with the tribes
regarding their rights under the treaties and to dissolve the tribal domains by allocating
the tribal lzuids in severalty to tribal members.
In order to determine who was entitled to share in the tribal domains, the Dawes
Commission compiled tribal rolls. The Indians were classified according to amount of
Indian blood :md age, and a roll book was published in 1906. (p. 2 I)
ll. For the Five Civilized Tribes, the overall scheme of allotment of lands was to give each
Indian an equal share of the tribal lands or monetzuy compensation.
The allotments were accompanied by restrictions as to alienability which evolved over a
period ol~ time as numerous acts were adopted amending the restrictions.
16. The justification for the restricted Indian ownership of land was to allow the Indians
time to adapt to a dillcrent culture and to prepare for competent business dealings.
17. An ()klahoma title examiner needs to be familiar with a minimum 01‘ thirteen Acts ol~
Congress in connection with determining ownership ol‘lands descending from an
allotment of a member 01‘ the Five Civilized Tribes.
18. A purported conveyance in violation of alienation of restrictions is void.
19. The initial step in determining ownership on Indian lands is to determine whether the
inception ol‘ the Indian title is from an individual allotment or from unallotted Indian
lands.
20. In addition to allotting lands to individual tribal members, the treaties with the tribes
reserved lands lrom allotment. Lands used for cemeteries, churches and schools were
i
allotted but were reserved as common properties.
Lots in existing towns were sold at auction and patents lrom the applicable tribe issued
to purchasers.
()ther unallotted lands were sold at public auction under rules promulgated by the
Secretary of the Interior promulgated by the Secretary ol the Interior, and purchasers
took lee simple title under Ilnallotted Land Deeds, which were approved by the
Secretary ol Interior and signed by the appropriate tribal authority.
28. Restriction is lar more protective of tribal members with more Indian blood. The
patentwill show the name of the tribe and the roll number 01‘ the allottee. The degree
01’ blood of the allottee is determined by reference to the Dawes Commission roll.
The Dawes Commission rolls are available in the county law library or at the Bureau of
Indian Allairs ()llice in Muskogee, OK.
Each member ol‘each tribe, except for the Choctaw and Chickasaw lreemcn, received
two allotments: a homestead allotment and a surplus allotment. Choctaw ;m(l
Chickasaw lreedmen Were allotted only surplus lands.
\Vhethcr the allottee has attained majority at the date 01' the conveyance may determine
whether or not restrictions were removed by an Act 01‘ Congress. (1). 25)
A conveyance by a minor 01‘ allotted lands was prohibited. A conveyance by a guardian
requires the determination that the guardian was appointed pursuant to proper
authority and procedure.
28. The restrictions on allotted land is (lillererit for an original allottee than for an heir 01.
an allottee.
29. If title descends 'l‘rom a tax deed, it must be determined that the lands were subject to
taxation. 11' not, the tax sale and deeds are void, and title remains in the allottee.
30. Characteristically, the initial Indian instrument encountered when examining title is a
sheet of Dawes Commission roll information for the allottee followed by an Allotment
Patent designated either “Homestead” or “Surplus”.
81. In an Indian conveyance, whether the instrument is a deed or oil and gas lease the
allotment restrictions must be satisfied.
32. Restrictions allecting current conveyances, including oil and gas leases, apply to Indians
of one-half or more blood.
3 3. Restricted Indizms ofhalf-blood or more may convey their property if the Secretary of
Interior or the district court removes restrictions.
3f. If the lands remain restricted, the restrictions are removed when the allottee dies,
pursuant to the Act of August 1-, 1917.
Conveyances by an allottee’s heirs or devisees of one-half or more Indian blood are
exceptions, when the land was restricted in the hand of the person from whom the heir
or devise ‘ acquired title.
36 . In these situations, a conveyance requires removal of restrictions or approval of the
district court alter completion of the follouing procedures:
i. File petition for approval in the district court where the land is located and
set hearing not less than ten days from the date of liling.
ii. The judge signs a notice which describes the land and recites the
consideration. This is published one time in a newspaper of general
circulation in the county and notice is given to the Area Director’s office at
least ten days prior to the hearing.
iii. The grantor appears at the hearing unless he or she and the probate
attorney consent otherwise.
iv. The court must be satisfied that consideration is paid and that the
conveyance is in the best interest of the Indizur.
v. Evidence at the hearing must be transcribed and filed of record in the case.
(p. 2(5)
vi. The purchaser must pay all costs of the case.
vii. Competitive bids may be taken at the hearing and the sale confirmed to the
highest bidder.
After completing the court approval proceeding, the Indian is free to execute a
commercial oil 21nd gas lease or deed.
38. Tribal l2u1ds and Indian allottees whose restrictions have not been removed are leased
under department forms of oil and gas leases. The Bureau of Indian Affairs at
Muskogee, Oklahoma has forms for these leases and assignments available.
39. A departmental lease cannot be assigned unless the BIA approves.
IO. The provisions of these departmental leases do not (lie uith the lessors/allottees but
continue until the department relinquishes supervision.
fl. The BIA in Muskogee will furnish a copy of departmental oil and gas l‘ases and their
‘
status.
f2. The most common title opinion requirement in the area of Indian titles is for a judicial
determination of heirship of a deceased allottee. Although an order approving a deed
usually sets out information of heirship, the order is not a judicial finding as to heirship
because the judge is merely acting in an administrative capacity as delegated by the
federal govermnent.
13. To determine heirship 01‘ a deceased allottee, it is necessary to use one ol‘ the lollowing
'
methods:
i. Section 1 ol the Act olJune 11, 1918, where the procedure is essentially
administratiye and not judicial
ii. Decree of final distribution where an estate is administered in probate
court, or
iii. Quiet title or partition action in district court.
ll. The lands were held as tribal domain until passage of the Act of Congress oli‘lune 28,
1906. Pursuant to that act, the surface of the lands were allotted to individual tribal
members, and the oil, gas, coal and other minerals were reserved to the tribe.
It is not necessary to examine the records 01‘ Osage County because all records are
located at the Bureau of Indian Affairs.
1. 6. All royalties are paid to the Bureau of Indian Affairs and then transkrred to the ()sage
Tribe. Royalties are calculated at the highest posted price by the major purchasers in
Osage County, and the Bureau of Indian Allairs notilies lessees of the amount to remit.
(p. 27)
The income from this source is distributed to tribal members according to their
headrights which is their pro rata share of the income.
Ilpon the death of the original allottee, the headright is divided among the heirs.
The surlace ol' the ()sage Nation was allotted to individual tribal members by the Act of
Congress ol‘June 28, 1906. The homestead was inalienable and non-tavable.
The surplus was inalienable for twenty-live years and non-tavable [or three years or
until a certificate 01‘ competency was issued.
Inherited lands were alienable until passage 01' the Act 01‘ February 27, 1925, which
made lands inherited by tribal members ol‘one-hall‘ blood or more inalienable.
The act ()1 March 3, 1921 removed restrictions as to adults 01. less than one-hall blood.
Restricted ()sage Indians may execute wills ill the wills are approved by the Secretary of
the Interior. ()klahoma district courts have jurisdiction over estates of members of the
()sage Nation.
Indian allotments under the General Allotment Act (more commonly known as the
Dawes Act) were made on the basis 01~ trust-type ownership.
The allottee has an equitable and present useable estate in land, but the legal title
remains in the federal govermnent and does not pass to the allottee or his heirs until
the issuance of a fee patent.
The General Allotment Act covered most tribes except for the Five Civilized Tribes
(Cherokee, Choctaw, Creek, Chickasaw, Seminole), in Indian Territory and the Usage
tribe in Oklahoma territory.
Working with lands allotted under the General Allotment Act requires examination of
the records 01‘ the appropriate office 01‘ the Bureau of Indian All‘airs.
Indian allotments under the Gene ‘al Allotment Act (more commonly known as the
Dawes Act) were made on the basis of trust-type ownership.
State recording statutes zmd curative acts have a limited effect on the rights of parties
who could claim an interest in these lands.
[inless restrictions are removed or federal law or regulation specifically refers to state
law, federal law will control all aspects of ownership of these land. Any contracts or
conveyances made without the authority of federal law are void.
61. The general concept of the General Allotment Act was to divide tribal lands among
eligible members of the tribes and to sell the excess lands.
62. Trust patents were issued to individual allottees eyidencing the right to use and
occupancy of the premises with final title to be issued at the end of the trust period]
(p. 28)
(‘3. The early trust patents set out an initial trust period of 25 years, which has been
extended pursuant to various executive orders up to the present time. The most recent
extension was january I, 1991.
Removal of restrictions and governmental trust supervision can be terminated in a
variety of ways, including:
i. Competency determinations
ii. Fee patents
iii. Sales to non-trust status
iv. Death of the allotte ‘ and the inheritance by non-Indizms
v. Mortgages
vi. Condemnations
\ii. Leasing
viii. Easements
6 in The Secretary of the Interior has broad powers in determining the effectiveness of wills
and the heirship ofa deceased allottee.
66. Oklahoma state laws of descent and distribution are applied unless specifically
othemise provided by the Acts of Congress.
Until such time that the land is no longer restricted, the state courts have no
jurisdiction.
If the heirs of a deceased allottee were not detennined during the trust period, and a
trust patent has been withdrawn, a fee patent issued and the supervision of the
government removed, the state district courts have jurisdiction to determine the heirs of
th ‘ allottee.
69. Statutes and regulations control the leasing of allotted lands for oil and gas. The Act of
March 3, 1909 states that the allottee may negotiate a lease if it is deemed advisable by
the Secretary of Interior or the Superintendent of the Bur ‘au of Indian Affairs Agency.
70. If the allottee is deceased, and the heirs are not determined, or if some or all of the
heirs are not located, the Secretary of the Interior may negotiate a lease but must offer
the lease for bid.
71. The Secretary must first give notice and advertise, and the lease is granted by
competitive bidding. The Act of August 9, 1955 expands this to apply to all leases of
allotted lands, not only those ofhcirs or unlocatables.
72. The 1938 ()mnibus Leasing Act is the basic authority for leasing tribal lands. (1). 29)
Many of the rules and regulations governing the leasing of tribal lands for oil and gas
are identical or substantially the same as those governing allotted lands.
7f. The analyst needs to be aware of some general principles in dealing with tribal lands:
a. Always determine the tribal officials which are authorized to act on behalf of the
tribe with respect to the transaction. These differ among tribes.
b. Although the Secretary of the Interior may reject a lease, he or she cannot grant a
lease on tribal lands of his(her) ouu authority. The lease must be approved by the
authorized tribal body.
c. All leases must first be olfered for competitive bid by advertisement in accordance
with the regulations. The lease can then be made through private negotiations.
The title attorney must have evidence that the lease had lirst been advertised, such
as the certilied transcript of the prior advertised sale proceedings obtained from the
Bureau of Indian Affairs agency lravingjurisdiction over the land.
Section 1 of the ()mnibus Leasing Act makes all operations on Indian land under oil
and gas leases covering Indian lands subject to rules and regulations promulgated by
the Secretary of the Interior.
76. The regulations are administered under the direction of the BLM. If the lease
agreement refers to any other agency, it should now be interpreted to refer to the
Bureau of Land i\Ianagement or the Mineral Management Service (now the ON RR) as
appropriate.
Operations may not be commenced on any tribal lease before it is approved by the
Secretary of the Interior or his or her representative, usually the Superintendent of the
appropriate Indian agency.
78. After the lease has been approved, the lessee must obtain mitten permission from the
BLM before commencing operations on the lease, and then the lessee must stay in
compliance with all BLM regulations.
If the lease covers allotted lands and not tribal lands, the regulations are very similar.
OO\! The Department of Interior has held that failure to put leased premises under
production in paying quantities during the primary term results in the termination of
the lease by its own terms. However, case law has held, based on Oklahoma law, that a
well commenced during a primary term of :m allotted lease with a standard habendum
clause would extend the lease for a period sufficient to complete the well.
81. All documents trzuisferring any interest in, or modifying the terms of the tribal or
allotted oil and gas lease must be on forms prescribed by the Secretary of the Interior
and must bear the Secretary’s approval.
82. Assignments of overriding royalties do not need to be tiled for approval.
83. Assignments of tribal leases issued under the Omnibus Leasing Act of 1938 can be of
either the entire interest or an undin'ded interest in the whole lease. (p. 30)
81. There has not been consistency with the Secrctm‘y of Interior’s approval of divided
assigmnents of interest in a tribal lease. Some times they have been approved and
some times not.
Recent forms usually provide that if a lease is divided by the assignment of an entire
interest in any part, each part is considered a separate lease.
All assiginnents and conveyances 0f leasehold interests other than overrides must be
filed with the Superintendent within 30 days of execution. If a document is filed alter
this time but nonetheless is approved, this is not deemed a title defect.
In many instances where a prior assignment has not been approved, companies will use
an assignment of operating rights as a document of transfer of an interest in the oil and
gas lease.
88. Assignments of operating rights must be approved in order to be effective under the
applicable regulations; however, a 1956 Oklahoma court has indicated that the
assignment of operating rights may be enforced between the parties regardless of
whether approval had been granted.
89. Be ‘ause many companies do not seek approval of the assignment of operating rights, it
is very important to review company files as well as BIA files and county records in
determining title.
90. Kah-Kah-to-tl1e-Quah was a restricted Indian who executed a \Varrzurty Deed to the
C.R.l.&P Railroad, but his deed was not approved by the Secretary of the Interior.
After his death, his heirs executed an oil and gas lease. The railroad also issued an oil
and gas lease on the same land. The courts ruled that the deed to the railroad was void
because it did not have the Secretary’s approval so therefore the oil and gas lease from
the railroad was void.
91. The Clieyenne-Arapallo Tribes executed four oil and gas leases with \Voods
Petroleum expiring in May of 1976 and two with Reading & Bates expiring in February
of 1980. All of the leases were for 5 year primary terms. In April 1981 Reading &
Bates and \Voods tried to connnunitize all of the leases. The tribe refused to approve
the eommunitization without additional consideration, even though the director of the
Anadarko Office of BIA approved the connnunitization.
CHAPTER 1 l — PART 3
Sl‘ZNA'l‘l’. BILI. 108
1. Introduction
it. In 1963 the Oklahoma Supreme Court handed down the Blanchard decision
which caused the “Blancllardixing” ol‘one-eighth ol‘ all production from a unitized
area. l’nder this ruling royalty owners received one-eighth ol‘everyone’s proceeds.
not just one-eighth of the price [or which their lessee sold his gas.
b. In 1085 the Oklahoma legislature enacted SB 160 which attempted to Blanchardize
the excess royalty. The hill was contested by certain pipeline companies as being
unconstitutional.
A panel ol‘ lawyers. legislators. producers. royalty owners. and pipeline
representatives were charged with finding a solution
d. The Production Revenue Standards Act (SB 168) which became ellectiveJuly l,
1993 was the result of their labor.
C. This statute also includes the Natural Gas Market sharing Act which eliminated the
Sweetheart Gas Bill. This act requires a working interest owner to ratably share gas
production and the resulting revenues with the non-c()ntracted working interest
owners in the same well who elect to share and who meet certain of the Act’s
requirements. The NGMSA became ellective September 1, 1992.
2. Production Reienue Standards Act

11. Production Revenue Standards Act delinitions:
i. Owner - A person or governmental entity with a legal interest I the mineral
acreage under a well which entitles that person or entity to oil or gas
production or the proceeds ol‘ revenues from it.
ii. Producing owner — An owner entitled to produce, who , during a given
month, produces oil or gas for its own account or the account of
subsequently created interest as they burden its interest.
iii. Proportionate Production Interest (PPI) — The interest in production which
a working interest owner is entitled to produce in order to adjust for shilling
of royalty burdens among working interest owners under the royalty
payment provisions ol'this act. (p. 19.)
iv. PPI is calculated as (sum ol‘\\'I ()wiier’s NRI plus their subsequently
created interests)/( 1 -royalty share)
v. The Proportionate Royalty Share (PRS) is the percentage ol‘ the royalty
owned by a royalty interest owner. It is calculated as: (owner’s royalty
shard/(well royalty share)
vi. The Royalty Interest In aWell is calculated as: owner’s royalty interest x
(owner’s gross mineral acres/total mineral acres in well)
vii. The Royalty Proceeds is the share of proceeds or other revenue derived
from or attributable to any production olioil and gas attributable to the
royalty share. It does not include payments ol‘bonus, delay rentals. shut-in
royalties or any additional royalty payable to the Commissioners 01' the
Land Office or other government entity.
viii. The Royalty Share is the percentage of the well equal to the sum of all
royalty payments in the well.
ix. Subsequently Created Interest is any interest carved from a working interest
other than a royalty interest.
1. A n<>n-1)articipatory interested created by a working interest owner
lorthe benelit of a mineral interest owner in excess of a one—eighth
royalty interest, may, by separate agreement other than the oil and
gas lease, be a subsequently created interest. It cannot thereby be
communitixcd under the terms 01' the Production Revenue
Standards Act.
2. The additional royalty payable to the Commissioners of the Land
Office or other govermnental entity. pursuzmt to and valued
according to the terms of the lease, which is calculated separately
from the royalty portion 01‘ actual proceeds from the sale ol‘oil or
gas is also a subsequently created interest and thereby is not
communitized under the Production Revenue Standards Act.
x. The PRSA applies to all owners and to all producing wells, regardless of the
date pooled. drilled. or the date of the underlying leases.
3. Communitization of Royalty
21. Section 570. 1. provides that each month every royalty owner shares in all the
proceeds derived from the sale of gas production to the extent ol‘thc owner's
royalty interest in the well.
b. Each producing owner pays the operator the royalty share of its gas sales proceeds,
valued according to the producing owner’s lease terms or the Corporation
Commission force pooling order, from all gas produced from the well by the owner
during that month.
The operator is then required to pay each royalty interest owner in that well
according to the royalty interest owner’s proportionate royalty share. (1). l3)
1.. Commissioners olithe land ()Ilice Leases

21. The additional value due the Commissioners of the Land Office under their lease
is not communitized under the Act. It is treated as a subsequently created interest.
b. Restricted Indian leases (BLM or BIA) are not connnunitized under the Act.
c. Il‘ an owner, including the Commissioner of the Land Office. takes his royalty
in
kind, it is considered consumption of gas from a well by the royalty
interest owner
and is deemed production by the working interest owner burden by
the CL() lease.
(1. The accounting is based on the average price. weighted by volume for gas
sold by
that working interest owner [or that month.
5. lnteiest on proceeds
a. Any portion of the proceeds not paid within the applicable time (which starts (5
month from the date of first production) earns interest at the rate of 12% per
annum compounded annually. calculated from the end of the month in which the
production is sold until the day paid.
1). If an interest ()WDCI' is not paid because his or her title is not marketable, the
interest is (W) per annum compounded annually and calculated from the end of the
month in which production is sold until the time the title becomes marketable.
(i. Balancing —- l'nder the PRSA. royalty owners should not ever get out of balance on a well.
However, the I’RSA did not require balancing at the time the Act became ellcctive. Time
has resolved most ol‘ the balancing issues that have carried over from the effective date ol~
the act, but there could be some royalty owners who are still out of balance.
7. Application of the. I’RSA

a. The PRSA applies to all owners and producing wells. regardless of the date pooled,
drilled. or the date ol‘the underlying leases. It does not apply to wells in common
sources of supply under unitized management pursuant to Sec 287.1 oli'l‘itle f2 ol‘
the Oklahoma Statutes or where royalty remittance is otherwise provided by written
agreement among all owners in a well.
1). Owners of interests in any well can remove themselves from the operation ()I' the
I’RSA. Everyone is required to sign an agreement. usually as part of their division
orders. that they agree to remove themselves from the ellccts of the Act. (1). ll)
'
8. When are payments due
a. Proceeds are payable commencing not later than 6 months alter the date 01' lirst
sales and therealter not later than the last day of the second succeeding month alter
the end 01' the month in which production was sold.
i. The purchaser and selling working interest owner are responsible for paying
i
the royalty within 2 months of sale.
ii. If the proceeds are less than $25, they can be paid semi-annually.
b. If the operator distributes the royalty, a three month rule applies to gas production
proceeds.
9. Federal lands and restricted lndian leases

of ( )ldahoma
Since states cannot exercise jurisdiction over federal entities, the State
Revenue (formerly
does not have jurisdiction over the Office of Natural Resources
\I\IS) or Indian lands located111 the state.
I). lhisis the reason that Indian lands cannot be [1111e pooled but
must be included111
11 unit, if at all, under 11 c111111111111itization agreement.
interest is not
For the same reason. the ()NRR. BIA, or restricted Indian mineral
to
communitized into the royalty pool since such federal entities do not have
submit to state enlo11ed statutory p111ment plans.
of the
i. ON RR BI\, 111111 Indian interests 111e1valued based on the te1ms
lease and what the lessee recoups from its share of p1‘odu1tion
ii. The ()NRR, BIA. 111111 Indian royalty is excluded from the royalty pool
share
iii. The ()NRR, BIA, and Indian interest is excluded from the royalty
and proportionate royalty share computation.
10. 1\'11t11111l(las‘.\larket Sharing .\ct background (1). I5)

21. In the early 1980s the biggest problem facing gas producers was finding someone to
purchase their gas from their new wells.
b. The operator of the well generally entered into 11 sales contract 111111 the non-
operators either ratified the operator’s contract or the operator sold the
uncontracted owner’s gas under his contract and disbursed the proceeds directly to
the interest owners.
Tlnough the late 1970’ sgas prices 11meregulated. Sinee11gas prices did not vary
h‘om contract to contract, it did not really matter who purchased the gas as long as
the operator found someone who would.
d. \Vhen natural gas prices were deregulated 111111 the gas bubble fo11ned111 the e1111)
1980’s gas purchasers had more gas than they wanted and started strictly enforcing
the quantity 11nd dedication provisions of their contracts, especially new contracts
that 111111 higher pricedg1111s payments.
C. lhis lelt some producels without a market l()l their g11
lhe ()klahoma legislature passed the Sweetheart (1113 ct, which was designed to
force those producers. primarily perceived as the 11111jor oil companies, to share
those contract rights with smaller- produeers who did not have the leverage or the
clout to obtain such contracts.
The Sweetheart Gas Bill did not meet the needs of the growing industry.
I'nder produced owners were till out of balance 111th over produced owners.
\ew pur1hasers appeared to fill the11gap previously held only by traditional pipeline
purchasers thus effectively curing the problems which spawned the Sweet heart Gas
Act.
\Vorking interest owners began to dispose of whatever production was availahle on
the spot market. The centralized control traditionally enjoyed by the operator or
lirst purchaser was lost. The resulting contusion culminated in the enactment ol‘
SB 160 in 198.").
This legislation was immediately disl‘avored hecause it made the lirst purchaser
liable for all royalty payments.
The second part 01‘ the SBltiS is the Natural Gas Marketing Sharing Act, which
replaces the Sweetheart Gas Bill.
11. Natural gas market sharing act delinitions

ll. Designated marketer is the operator of the well or a producing owner suhstituted
[or the operator.
1). Electing owner is any owner who elects to produce and market his share of
production pursuant to the provision ol‘this act.
Nonexempt sales are those gas sale which are subject to the provisions ()1 this act
and do not quality for exemptions as set torth in Section 21 of this act.
d. Overproduced owner is an owner who has produced and sold a volume o1~ gas in
excess of his or her working interest percentage ol‘ cumulative sales from a well.
An Owner is a person who owns a working interest in a well.
Producing owner is an owner who produces and sells gas from a well [or its own
account (p. lti)
Working interest is the interest in a well calculated prior to deduction for royalty,
overriding royalty, and other non-cost hearing interests hurdening production,
entitling the owner to drill for and produce oil and gas. including the interest ol‘ a
participating mineral owner to the extent set forth in Section 87.1 oli'l‘itle 52 ol‘ the
Oklahoma Statutes.
12. Calculations and Examples — 640 acre section
W/2 E/2
RIO A RIO B
1/8 Royalty 1/4 Royalty

CI IAP'l‘l‘ZR 15
I.( )I’ISIANA SI '(‘Cl‘lSSK )N AND I'NIQI '1“.

I.A\\'S
1. Introduction - _I.ouisiana laws are different than

tnost other states.
2. Successions - A succession is a legal procedure in which

the court places the heirs and/or
devisees of an estate in possession ofproperty.
a. The court order wltich accomplishes the transfer ofhoth
personal and real
property is known as aJudgment of Possession
h. A Judgment of Possession can he issued whether
the deceased party dicd testate or
intestate (without a will).
3. General principles of intestate succession

a. In order to he called as an heir to an intestate succession.
a person must he a
descendant, ascendant or collateral, hy blood or adoption, or he
a surviving spouse
. notjudiciallv separated from the deceased.
h. Descendants are children, grandchildren. great grandchildren.
etc.
c. Ascendants are parents, grandparents. great grandparents. etc.
d. Collaterals are relatives who do not descend from one another hut
share a common
ancestor such as siblings. aunts and uncles. and cousins
e. Generally the nearest heir is called to the succession. The measurement
is the
generation and each generation is a degree.
a. A father is related to a child in the first degree and to his grandchild in
the
second degree.
b. In the direct line. either ascending or descending. the numher ofdcgrees
is
equal to the tunnher ofgeneralions hetween the relative and the deceased.
C. In the collateral line. the tntmher ofdegrees is equal to the nttmher of
generations hel\veen the relative and the common ancestor. plus the
tunuher of generations hetween the common ancestor attd the deceased.
d. An uncle and nephew are related in the third degree while first cousins are
related in the fourth degree.
I. Doctrine of Representation - Representation is a matter of law in intestate succession and

takes place ad inlinitum with respect to decendants of the deceased. ( p. 3)
Example: A father of two children dies intestate. sun'ived hv one child and predeceased hy the
other. The predeceased child is survived hv two children. According to the doctrine of
representation the two gramlchildren represent the predeceased child’s share attd the estate is
inherited one-haltby the surviving child and the other one-half is inherited by the two
grandchildren through representation of the predeceased child.
5. Representation operates the same way in favor of descendants ol predeceased brothers

and sisters of the deceased.
Example: A man dies intestate, survived by no descendants and no parents, but is survived by a
brother and two children of a predeceased sister. The two children of the predeceased sister
represent her share and the estate is divided hall‘to the surviving brother and one-lourth by each of
the children of the predeceased sister.
ti. Only a deceased person can be represented.
Example: A lather 01‘ two children dies intestate. survived by both children. One children
renounces his share ol~ the succession. The children of the child who renounces are not allowed to
step in and take his share. The other child ol'the deceased will take the entire estate.
7. Devolution ol'Communily - Louisiana is a community property state. Community

property is created in the same manner as other states.
8. Rulesol‘intestacy ot community property for d ‘aths tlilk‘l’Jilllllttl} l. 1082(1). I)

a. It the deceased leaves descendants, the deceased’s share of the community is
inherited by his descendants, subject to the usulruct (lite estate) ol‘the surviving
spouse.
3. Descendants succeed in equal proportions and by head il‘they are all of the
same degree.
b. Decendants take by roots it~ all or some succeed by representatiou.
C. The usulruct olthe surviving spouse terminates at death or remarriage and
at that time the property will pass to the naked owners (remaindernieu).
b. It. the deceased leaves no descendants, the deceased’s shzu‘e of the community is
inherited in full by the surviving spouse.
9. Rules of intestacy ol‘conununity property for deaths prior toJanuaiv l, 1932 allowed the
surviving spouse to inherit the decedent’s share in [1111 only if there were no descendants
and no surviving parents.
a. The usuli‘uct of the surviving spouse affected only community property inherited by
issue ot‘ the marriage.
b. If one or both parents survived, they took one half of the decedent’s estate and the
surviving spouse took the other hall‘.
c. The surviving spouse inherited the deceased’s share of the conununity in lull only
when the deceased was survived by no descendants and was predeceased by both
parents.
10. Devolution ol separate property Separate
properly is property exclusively owned
person. It comprises: by a
El. Property acquired by a spouse prior to the
establishment ol a conmmnity properly
regime
Properly acquired by a spouse with separate
things, or with separate and
connnunity things when the value olthe
conmmnity things is incl)nseqnential in
comparison with the value ol the separate things
used to acquire it.
Property acquired by a spouse by inheritance or donation
to him or her individually
(1. Damages awarded to a spouse in an action
lor breach olcontract against the other
spouse.
Damages due to personal injuries. or damages awarded
to a spouse in connection
with the management olhis or her separate property.
Things acquired by a spouse as a result ola voluntary
partition ol the community
property
Fruits ol separate property ila declaration is executed
Donation by a spouse to the other spouse olhis or her interest
in the connnunity
property.
11. Rules olinteslacy olseparale property lor deaths allerJanuar)

l. 1982 - Ila decedent died
al‘terJanuary 1, 1.082 and leaves descendants. the separate
property is inherited in lull by
his descendants, by head il they are in the same degree or
by roots il some ol them succeed
by representation.
21. ll the deceased leaves no descendants but is survived by a
lather, mother, or both,
and by siblings or descendants olsiblings. the siblings inherit the
property subject to
a usulruct in lavor ol the parent or parents.
b. Ilthe deceased leaves no descendants and is predeceased
by his parents, his
siblings. or their descendants, inherit the separate property in lull
ownership.
llthe deceased leaves parents but no siblings, the parents inherit the
separate
property in lull ownership.
'l‘he surviving spouse inherits the separate property ol the deceased only
when the
deceased leaves no descendants, no parents. and no siblings or descendants
ol
siblings.
C. Il the deceased has none olthe above. the separate property is inherited
by the
nearest ascendants. ll the ascendanls in the paternal and maternal lines
are in the
same degree, the property is divided into two equal shares, one share lor the
paternal and one share lor the maternal line. The descendants in each line share
by head. Il there is only one ascendant in the nearest degree in the two lines. that
ascendant excludes the more remote ascendants.
Ilnone olthe above exist, the separate property is inherited by the nearest
collateral relations.
g. In default of all of the above, the estate belongs to the State of Louisiana.
12. It the deceased died pl iur toJanuary l. l‘l3‘l, the surviving spouse will not inherit any
separate property unless the deceased is not survived by any descendants, ascendants, or
collaterals. (p (i)
a. II‘ the deceased is survived by his parents and siblings. or descendants of siblings,
the succession is divided into two portions, with ball going to the mother and lather
and the other hall going to the brothers and sisters, or their descendants.
1). Should only one parent be alive, the surviving parent only takes one fourth and the
siblings, or the descendants of the siblings, take the other three quarters.
13. Special rules and evceptions - \Vhen there are lull brothers or sisters and hall'brothers or
sisters, the property is divided into two equal shares representing the maternal and paternal
blood lines.
a. The 11111 brothers or sisters will take their share in both lines.
I). The hall siblings will take their share only out of the hallol‘ the common parent.
c. Right of inheritance of immovable property - Ascendants inherit immovable
donated by them to their descendants who die without posterity when these
immovable are found in the succession, but they take them subject to any
mortgages that have been created by the done.
1 1.. General principles ol'usnli'nct - A usul‘ruu is defined is defined as the right ol'enjoyment
of a thing belonging to another with the right to use the thing so as to derive all profits and
possible advantages from it.
a. The person who has the usulruct is called the usulrucluary.
b. The person who owns the property subject to the usnlruct is called the naked
owner.
c. If the usulruct is of a consumable, such as money or royalties, the usulructuary is
treated as owner and may consume the property as he sees lit, but at the
termination of the usulruct, the usulructuary is bound to pay the named owner the
value of the consumable at the commencement ol' the usulruct or deliver to the
naked owner things of the same quantity or quality.
(1. If the usulruct is of a nc)nconsumable, such as land or house, the usulructuary has
the right to possess them and to derive all prolits that they may produce. The
usulructuary is obligated to use them as a prudent administrator in order to
preserve their substance and, at the termination of the usnlruct, to deliver them to
the naked owner. (1) 7)
15. legal usultuct ol the surviving spouse - The surviving spouse acquires by operation of law
the usnlruct ol' the deceased ‘s share ol‘the community when the deceased dies intestate
and is survived by descemlants. This usuh‘uct terminates
upon the death or rernarriage ol
the surviving spouse.
3. l'nder current law the usuli‘uct allccts the
cornrmluity property inherited by
all descendants ol‘the deceased
b. Prior toJanuary l. 1982 the usuh'uct allected only
conrnnrnity property
inherited by issue of the marriage between the deceased
and the surviving
spouse.
lti. 'l‘estamentary usulr'uct - The Louisiana Civil Code

provides that a testator may grant his
or her spouse. as usuli‘uctuary, the lollowing:
a. The usulruct over all ol‘his property. both separate and
community,
including the forced portion
b. The power to dispose ol‘nt)nconsumables without the
consent of the naked
owners. and
c. The usul‘ruct is for me unless a shorter period is expressly
designated.
17. The Mineral Code makes a distinction between the ustllrllct

ol'land and the usuli'uct of a
mineral right.
a. The usulruct ol'land refers to the situation in which title
to the mineral
rights is part of the ownership of the land itsell‘.
b. The usulruct of mineral rights refers to the situation in which the
ownership
of the mineral rights is segregated from the ownership of the land,
such as
the usuli'uct oIia mineral servitude, mineral lease or mineral royalty.
c. The surviving spouse. as usul’ructuary may not execute a mineral lease
without the consent olthe naked owners
d. Prior to legislative amendment in 201 l. the surviving spouse was only
entitled to the use and enjoyment ol'the laudowner’s rights in minerals
as to
mines or quarries actually worked at the time the usulruct was created (open
mine doctrine).
e. The surviving spouse, as the usulructuary of a mineral right. is entitled to all
of the benefits of use and enjoyment that would accrue to him or her as if
he or she were the owner of right.
1. He may use the right for the duration of the 11strli'i1(‘t (p 8)
2. A usulructuary of a mineral servitude may grant a mineral lease that
extends beyond the term of the usulruct and bind the naked owner
of the servitude.
l8. (leneral prim iples ol'testrtte succession

a. Donation mortis cause (in anticipation oliapproachiug death) is a donation which
takes effect on death of the donor and by which the donor disposes of some or all
of his property. It must be contained in a form of last will ;u1d testament
recognized by law.
1). The person who makes a will is called the testator
c. Capacity of the testator must exist at the time he executes the will.
a. The legatee must have capacity to receive under a will at the lime ofthe
death of the testator. He must he in existence at the time ofthe death
1. An unborn child must he conceived at the time of the death and
must he subsequently born alive'
2. A minor under the age of 16 does not have capacity to make a will,
except in favor ofhis or her spouse or children.
b. To have capacity to make a will a person must he able to comprehend the
nature and consequences of the disposition he is making.
c. A will is invalid if:
1. It is the result of fraud or duress
2. It was procured through undue inlluence
d All wills must he in writing. There are currently two acceptable forms:
1. ()lographic (hand written)
2. Notarial (statutory testament form)
e. Any will executed prior to‘lanuary l, 1098 that was valid under the laws of
that date are still acceptable. (p. 9)
19. The term interdiction refers to the status of a person who has lost control ofhis or her
own interest, usually by way ofinsanity or who is put under control of a guardian by a court
'
of law.
20. Ownership of sulfacc and minerals cannot he separated.

a. The surface owner may grant a mineral servitude.
b. A servitude is defined as the right to use something belonging to someone else.
c. The servitude is good for only 10 years if not used. At the end ofthat of the ten
year period, the servitude will revert back to the surface owner if the minerals have
not been used.
a. Prescription is the term used for the reverting of the minerals back to the
surface
b. There are a number of situations that will interrupt prescription
1. Establishment of production
2. Pooling or unitization
c. Non—contiguous tracts will be septu‘ate servitude and will require separate
“use" to he established in order to perpetuate it beyond the 10 year period.
(1). 10)
‘21. l niti/ation
a. Louisiana is a loreed pooling state.
b. The govermnent authority for administration ol‘the
laws ol‘unitizatiou is the
Department of Conservation. This body issues orders
establishing units, the
boundaries thereol', the density of wells, and designates
wells to serve the units.
Types ol‘unitization are:
e. Commissioner’s Unit whieh is delined and approved by the Louisiana
Department
oli Conservation alter a hearing.
a. The order will designate the operator, the unit We“, the unit
size and
eonliguration as to the reservoir for the zone being drained.
b. The operator will have the unit surveyed and have a plat prepared
showing
traet partieipalion usually determined by the pereentage the traet aereage
bears to the unit aereage.
d. The size and eonliguration ol' Declared Unit is determined by the operator
and
approved by the Conservation Commission
e. The size and eonliguration of a Voluntmy Unit is determined by the operator
and
the royalty owner(s).
l'. A ficldwide unit usually eomprises a large number ol‘ acres or an entire lield.
a. It requires approval by 75% ol‘alltnvners and the Conservation
Commission.
b. The traet participation is usually ealeulated on aere l‘eet basis
22. Convewnees - The term "mineral rights” as used in Louisiana refers to the rights in
minerals by the surlaee owners, servitude owners, working interest owners and owners of
royalty, overriding royalty, and nt)n-partieipating royalty.
a. A mineral or royalty is eonveyed by an Act ol‘Sale or Aet of Donation . The Aet ol
Donation is used where no money consideration is involved.
1). The working interest and overriding royalty are eonveyed by assignment or
sublease.
CHAPTER 16
HOT TITLE CURATIVE ISSUES FACING PENNSYLVANIA OIL AND GAS OPERATORS
1. Pennsylvania Dormant Oil and Gas Act was enacted as a title curative mechanism to
facilitate the development of subsurface properties.
a. The purpose of the Act is NOT to vest the surface owner with title to oil and gas
interests that have been severed from the surface estate but to attempt to reduce
the problems caused by fragmented and unknown or unlocatable owners of oil and
gas.
The Act specifically excludes coalbed methane gas.
Anyone who has an interest in fee is permitted to petition the court in the county
where the property is located to declare a trust in favor of the unknown or
unlocatable owners of oil and gas.
i. To petition the court, an oil and gas operator must have a lease with at least
one fractional owner of the oil and gas underlying the property.
ii. If all the oil and gas owners are unknown and no one can be located then no
one has standing to petition the court to declare a trust and the oil and gas
remains dormant.
ThelDormant Oil and Gas Act does not define diligent efforts to locate unknown
owners and service of process. A good faith effort may require an heir and assigns
search in the county records.
The Petitioner’s Requirements mandates that the petitioner must make a diligent
effort to locate the owner(s) of the oil and gas. He then must request the
appointment of a trustee in the best interest of all the unknown owners of an
interest in the oil and gas.
To be able to be appointed as trustee, the trustee must be a financial institution
authorized to do business in the Commonwealth of Pennsylvania.
Administration and Duration of Trust —
i. All payments of bonuses, rental payments, royalties, and other income is paid
to the trustee until the trust is terminated and notice of its termination is
given by the trustee to the oil and gas operator.
ii. The trustee distributes monies as owners are located.
iii. The trust will remain in force until all owners are identified.
iv. Proceeds held in the trust are subject to escheat laws at 5 years. (p 3)
v. Liability of Operator —
other
1. Any lessee who pays bonuses, rental payments, royalties, or
income to the trustee is not liable for further claims by unknown
owners.
due date
2. Any lessee who fails to pay the trust within 6 months of the
with
is liable for all attorney fees and court costs of collection,
interest.
2. Miscellaneous title and curative issues

a. May lessors will file a Memorandum of oil and gas lease.
i. All parties to the oil and gas must execute the Memorandum of Lease
ii. The Memorandum must include the following:
Name of Lessor
Name of Lessee
Addresses set forth in the lease for the lessee and lessor
Reference to the date of the lease
Description of the leasehold premises
P‘E-“PWNP Date of commencement of the term of the lease, if a fixed date, and if
not, the full provision or provisions that determine the date of
commencement
7. Term of the lease
8. If the lease has a right of extension or renewal, the date of expiration
ofthe final period for which this right is given.
9. If the lease has a right of purchase of or refusal on the leasehold
premises or any party of it, a statement of the terms during which this
right is exercisable.
b. Royalty Provisions — Pennsylvania law requires that the lessor be paid a minimum
of 1/8 royalty. Recently, many lessors have been filing lawsuits claiming that if a
lessee deducts cost prior to calculating the 1/8th royalty the statute is violated,
even if the oil and gas lease expressly permits the deduction of post—production
costs.
c. Minerals vs Oil and Gas — Prevailing Pennsylvania law holds that the word
”minerals" alone is insufficient in and of itself to include oil and gas, unless clear,
convincing evidence is shown that the parties’ intent at the time of conveyance was
to convey the oil and gas as part of the minerals. (p 4)
d. . An Adverse Possession may be had in Pennsylvania if there is actual, continuous,
exclusive, visible, notorious, distinct, and hostile possession for a period of 21
years. In at least case the courts have held that an oil and gas operator who
operated a lease under which he held no oil and gas title for 21 years had adversely
possessed the property.
Marital Interests - Pennsylvania is not a community property state, but property
acquired during the marriage is considered ”marital property." As a precaution,
both spouses should execute an oil and gas lease if record title is only in one name.
The grantor of a cemetery plot retains fee simple to the plot, and the grantee
receives only a privilege/easement/license to use the plot for burial purposes.
The law is unclear as to who owns fee simple title to the oil and gas under
roadways (p 5) and railroads. (p 6) The curative solution to this problem may be:
i. Obtain a quit claim deed from the commonwealth, political subdivision, or
railroad to the current oil and gas owner.
ii. File a quiet title suit asking the court to declare who owns the oil and gas.
iii. Avoid highways and railroads.
CI IAP’l‘lflR l 7
R( )Clx’l 1‘18 (F15.1) ERAI . I 'N ITS) DIVISION ()RD ER ‘Rli\ '1 1‘1“"
1. The mineral ownership in the Rockies is much more dominated by federal acreage than
any other area with the exception of Alaska and offshore.
2. Administration of federal lands is handled by the Department ofthe Interior and is split
into two agencies.
a. The Bureau of Land Management oversees leasing, surface use, and development
of the minerals owned by the {'8 with the exception of forest lands.
l). The Office of Natural Resources Revenue accounts for the revenues from oil and
gas.
3. Leasing by the BLM is accomplished basically by a closed-bid auction. The BLM lists a
group of tracts to lease and then sets an auction date. Each lease will go to the highest
qualified bidder. Anyone can apply to bid.
1-. The royalty rate varies depending on the area, industry standard, whether the acreage is
within a known geological structure, or in the case of sliding scale royalties by product and
volume produced.
a. Sliding scale royalties range higher as the volume ofoil produced on a daily basis
increases. The volumes and royalties are identified on Exhibit 15 attached to the
lease.
1). The sliding scale royalty on gas is determined by applying one of two percentages
based on volume produced.
The ()NRR has increasingly been concerned about the pricing of royalty payments. The
concern was that the royalty owner should receive payment based on a fair price for the
product, not based on some reduced price received by the producer. New ()NRR
regulations govern the price that must now be followed.
6. The ()NRR has defined in the regulations which post production costs can be deducted.
As a general rule, gathering costs may be deducted from ()NRR royalties, but there are
many exceptions to this rule.
7. Another issued addressed in BLM leases is compensatory royalties for a well drilled too
close to the lease line or where draining ofoil or gas from a lease not included in the
spacing unit may cause damage. If the BLM determines that a federal lease is being
drained, compensatory royalties will be due based on production from the well and the
theoretical percentage of production that the lease is due.
it is
8. Any well drilled on or near a federal l ‘ase is initially considered a lease well unless
drilled within a previously approved unit.
'd.Royalties are paid only to the lessor on which the well was drilled.
a spacing unit, a
b. Any lime there is a federal lease contributing more than 10% of
eommunitization agreement must be submitted to the BLM for approval.
a
A communitizati<)n agreement is a single well pooling of leases that combines
a state
federal lease with any other kind of lease, whether it is another federal lease,
lease, or a fee lease.
d. THE BLM will not accept any royalty payment based on a pooled basis until
the
com agreement is approved.
i. Ifthe well is drilled on a federal lease, the ()NRR will initially expect 100T
of the royalty to be reported to them.
ii. If the well is NOT drilled on federal lands, the ()NRR will not accept any
payment until the communitizatu)n agreement is approved.
\Vhen a well will be communitizcd, generally two divisions of interest will need to
be set up.
i. A lease basis ownership will need to be set up for use prior to approval of
the conumlnitizath)n agreement
ii. A communitized division of interest will be set up for use after approval is
obtained. .
iii. Once the c<)mmunitixation agreement has been received, the division order
analyst will notify revenue accounting that the revenue needs to be reversed
out of the lease level ownership and rebooked to the pooled, or
communitixed interest.
iv. Royalty and overriding royalty owners may be significantly overpaid if they
are paid at a lease basis. The entire royalty should be paid, but business
risk should be determined prior to putting overrides in payment status.
v. Ad valorem and production taxes will be over or under accrued when
paying at a lease level and will need to be reconciled after the fact.
vi. \Vorking‘ interest owners generally have a contractual interest created under
a JOA which prevents them from being significantly overpaid or underpaid
when going from a lease basis to a communitized basis.
9. Federal exploratory units, which may contain up to 50,000 acres, have multiple benefits.
21. The unit has a primary term of 5 years. Drilling over the expiration date and then
continuously drilling within a specified number of days will extend the term of the
unit another 5 years, and then one additional year for a total possible primary term
of 11 years.
b. Once the unit expires, it will contract to the boundaries of its participating areas.
()wnersliip in the contracted unit is based on ownership within each of the
surviving participating areas.
If there are no wells capable of producing in paying quantities as defined in the
unit
agreement, then unit will terminate.
d. Leases throughout the unit are extended by activity anywhere in the unit,
so long as
they are properly maintained with rental or royalty payments.
i. l'pon contraction or termination ofthe unit, each lease that is excluded will
he extended by an additional two years.
ii. The term twelfth year rentals applies to the rental payments made after the
eleventh year of an exploraty unit.
C. Any leaseholder can refuse tojoin in a federal exploratory unit but if they do they
are individually responsible for developing that tract on a lease basis.
\Vhen a well is completed within a federal unit a proposed participating area is sent
to the ELM. The acreage will conform to state spacing requirements but generally
BLM will require the circle—tangent method of creating the PA area.
i. A circle will be drawn around the well, with the well in the center of the
circle, equaling the acreage required by state spacing.
ii. Any quarter quarter section that falls at least 50% within the circle will he
included in the PA.
iii. The BIN may wish to watch production for several months to determine
whether a unit well is producing in commercial quantities. After the well
has been determined to be commercial, a participating area is proposed for
approval to the BLM.
l. l'ntil the PA is approved, all payments will be based on a lease well.
2. Once the PA is approved, payments must be reversed at a lease
basis and rebooked at a PA basis.
iv. ()1i an approval letter from the BIAI should be used as a basis for setting
up participating areas or communitized ownership for a well.
1. l‘lxhibits to the approval letter will include a list ofthe leases covered
and a map ofthe approved participation area as well as some of the
calculations.
2. The approval ofthe PA is the only thing that legitimizes the pooling
of federal leases.
v. The ()NRR will expect full royalties on any well drilled on a federal tract
until the PA is approved and will refuse any payments not on federal lands
until it is approved.
vi. A second well drilled in the exploratory unit must be approved as
commercial by the BLM. Once that approval is given, either that PA will
be revised to include th ‘ acreage contributed by the second well or if the
second well is too far away, a second PA will be created.
1. If the second well is close to the first well, it’s acreage will be
determined in the same manner as the first with a circle drawn
around the center ofthe well. Tangent lines between the circles will
50% inside
be drawn and any quarter quarter section that is at least
the tangent lines will be included. .
basis until the
2. Royalties on the second well will he paid on a lease
is
PA is revised or a second PA is approved. ()nce approval
hack to the date
received born the BLM, royalties must be reversed
PA basis.
01' first sales from the second well and paid on a revised
PA basis
3. Royalties on the lirst well will he paid on the approved
must be
until the revision is approved. at which time that revenue
with
reversed and rehooked according to the revised PA ell‘ective
the date ol lirst sales from the second well.
change
l. The ()N RR allots 90 days from approval to process each
and report the proper revenues.
designated as initial
vii. A second well drilled too far from the initial well will be
A consolidated
participating area B and the lirst PA will become PA “A”.
are in
PA may be approved once the two PA’s expand so that the areas
close proximity.
the unit will

q; Once the unit has been lully drilled or the unit has ollicially expired,
should
he contracted to only acreage within the PA. All that point the DUI
remain constant except for ownership changes.
to
Any given PA is limited to the lormation [or which it is approved. It is possible
It is
have multiple PA’s within the unit boundaries [or multiple deptlis/l'ormations.
also quite possible for a given tract of land to he in multiple PA’s in dillerent
formations.
Any new well drilled within the boundaries of an approved PA does not require
it
approval 01' commercial status and it’s interest will he identical to that ol‘ the PA
falls within.
Any new well drilled in a depth not included in an approved PA will he treated as a
lease well.
lease or
k. The leases are held by the unit, subject to any pugh clause included in the
by a state statutory pugh clause.
Unless specilically modilied by a subsequent .lOA or Unit Operating Agreement,
terms ol a prior ‘I( )A will carry lorward into new agreement.
m. Because of the strictness ol 03' RR royalty reporting, many operating agreements in
the Rockies are composed in such a way as to ensure that each producer is
responsible for its omi royalty distribution in cases where the producer is taking its
product in kind.
It is not uncommon, especially in Southern \Vyoming, tor the KIOA to specify that a
company may market an amount (lillei‘eiit from their working interest in order to
amicably pay royalties.
0. It is critical in [lic Rockics lo rcud all (locumcnls liclkn‘c (lclcmiining ()\\'11L‘1‘Slll]) 21ml
paymcnl x‘csponsilfililics.
ClIAP’l‘l‘IR 18
II( )VV A FEDERAL UNIT IS F( )RMI‘ZD
1. Oil and gas operations in the Rocky Mountain states are primarily governed by each state’s
(Hi and gas conservation act. Each conservation act empowers the designated regulatory
agency to regulate the spacing of wells.
2. Other purposes of the regulatory agency’s mission are:

a. To protect the correlative rights of the owners in a common source of supply of oil
and gas to the end that each may obtain a lair share of production
b. To encourage the ellicient development of natural resources
c. To protect public and private interests against both physical and economic waste
(1. To provide [or the development of an oil and gas pool in such a manner as to
mavimize ultimate recovery
e. To encourage voluntary agreements for assisted recovery operations for the benefit
ol‘the public as well as for the owners ol'the oil and gas rights.
3. The regulatory agency of each state has adopted a rule regulating the location ol‘wells.
The rule usually will prohibit the drilling of a well closer than a stated distance to a lease
line, a property line, or a surveyed governmental subdivision line.
It. The rule will also establish a minimum distance between wells drilled to a common source
of supply.
.). It maybe necessary to pool interests together to provide for the sharing of production and
possibly the costs for the permitted well. Pooling may be accomplished either voluntarily
by agreement of the parties or involuntarily by order ol' the state regulatory agency alter
application, notice, and hearing.
a. The majority of tee leases contain a pooling provision and ordinarily pooling may
be accomplished by the lessee tiling a declaration of pooling pursuant to that
provision in the oil and gas lease. This declaration must be filed in the appropriate
county records.
b. IF one or more of the leases involved does not permit pooling by declaration, a
pooling may be entered into by the parties concerned.
(5. 11' federal leases are involved, pooling must be accomplished by means of a
communitization agreement. Operations or production under an approved
communitixation agreement shall be deemed to be operations or production as to each
lease committed thereto.
is a common practice,
7. \Vhile pooling or communitiziug leasehold of up to (i 10 acres
when the pooled area covers an
serious consideration should be given to federal unitization
leasehold.
entire oil and gas lield involving at least 10% or more federal
lessor’s interests within a

8. llnitization in its simplest form means pooling the lessee’s an
and development.
given area and sharing the risks and possible benefits of exploration
9. There are two types of federal units.

well in the unit.
a. An exploratory unit is one that is formed prior to drilling the first
formed alter the lield or
1). A secondary recovery or enhanced recovery unit is usually
from the field
unit area is fully developed in order to maximize ultimate recovery
by some method of assisted recovery.
in 1930 and in early

10. Congress passed a temporary act authorizing pooling of federal lands
is found in
1031 a permanent act was passed. The present authority for federal unitization
the Mineral Leasing Act. 13 CFR Part 3180 addresses unit agreements.
limited to
11 The size of the unit area is determined by the geological feature but is generally
there may
25,000 acres for a one well commitment. Ifthe prospect is larger than 25,000 ,
acres.
be an additional well commitment required for each additional 10,000 to 15,000
.— {\7 The purpose of unitization is to conserve natural resources, prevent waste, and
secure
a
other benefits only obtainable through exploration, development and operations under
unified plan. Some 011110 other benefits ol’operatious under a federal exploratory unit:
a. If a unit is proposed, the unit proponent may be able to solicit farmouts, acreage
C(uitributions, and dry hole money from other working interest owners within the
unit area.
i. Some owners may be anxious to delay lease expirations
ii. “'1 owners may wish to avoid including their leasehold in the chargeability
determination
iii. Others may be unwilling to bear the cost of exploration alone.
1). If the unit proponent were to drill a discovery exploratoiy well without the benefit
of unitizatiou, they would be exposed to possible offset well obligations.
i. Under a federal unit, the offset obligation is limited after discover in paying
quantities.
ii. The model form Unit Agreement provides that a Plan of Further
Development and Operation will be submitted for approval within 6
months after completion of a well capable of producing unitized substances
in paying quantities.
1. The Plan must include the number and location of any wells to be
drilled and the timing for the drilling.
2. I “()1 to the expiration of the approved plan, an additional plan for a
specified period must be submitted.
C. Generally, all fee and state leases which cover interests that are committed to the
unit are extended for the life ofthe unit.
d. Federal leases are not extended unless production is obtained in paying is obtained
in paying quantities in the unit prior to the expiration of the term of the lease.
i. If a unit well, drilling over the initial expiration date of the federal lease will
extended the lease or leases for a period of two years or and as long as oil or
gas is produced.
ii. A federal lease may receive only one extension by drilling.
iii. A lease extension resulting from segregation from a unit or lease extension
resulting from a unit termination are considered extensions by drilling.
C. If there is more than one “’10, the owners enter into a I'nit Operating Agreement
which provides the basis for sharing of costs and production from the unit wells.
i. The basis of sharing by the “'I owners does not have to be the same as the
basis provided for in the I'nit Agreement, but the I'()A cannot alter or
modify the terms and provisions ofthe I'nit Agreement.
ii. In the event of a conflict between the {IA and the I'( )A. the IInit
Agreement controls.
iii. RI owners on a committed tract are paidbased on the percentage of
production allocated to that tract but the \VI share may be divided any
manner the parties agree, as set forth in the II( )A.
iv. After the completion oftlte discovery well as a well capable ofproducing oil
or gas in paying quantities, the sharing of costs and benefits is dependent
upon the participating areas.
Any acreage committed to a federal unit is not counted against chargeability.
i. No entity can control more than 2 fti,080 acres of federal oil and gas leases
in any one state at any one time.
ii. No more than 200,000 acres may be held under option.
iii. The State of Alaska has a different chargeable lease limit.
(Y
(’7‘ In the event the initial exploratory well drilled in the unit area is a dry hole, the unit
agreement provides that the unit operator must continue drilling one well at a time,
allowing not more than 0 months between completion of one well and the
beginning of the next well until a well capable of producing in paying quantities is
completed.
i. The unit agreement will automatically terminate if the operator fails to
commence any such well within the time allowed
ii. If the first well has been completed as a dry hole, the unit may be
terminated by not less than 75% (on a surface acreage basis) of the
committed working interest owners with the approval of the BLM.
iii. The operator, with the approval of 75% of the \\'1( )’s, request voluntary
termination of the unit agreement, effective as of a date just prior to the date
of the expiring lease or leases.
iv. All federal leases in effect at the effective date of the termination will
continue in effect for the original term of the lease, or for two years alter the
termination, whichever is the longer, and so long thereafter as oil or gas is
produced in paying quantities.
11. Developing wells on a unit basis minimizes surface disturbances.
i. Separate storage facilities are not needed for each lease
ii.Separate gathering lines, roads, R( )\\”s and trucking activity is not needed
for each lease.
i. Separate development tends to reduce rather than increase the maximum ultimate
recovery from a field by eliminating selHn‘eservation ofeach lessee’s position.
13. The standard form of unit operating agreement has a provision pertaining to secondary
recovery and pressure maintenance.
a. The unit operator is not permitted to undertake any program of secondary recovery
or pressure maintenance with the consent of the parties. The consent required
varies from 80 to 90 percent of the committed working interests on an acreage
basis.
1). The time needed to negotiate a participation formula for allocation of costs should
and production should be considerably shortened because of this provision in the
exploratory unit operating agmt.
c. Pressure maintenance and lluid or gas injection programs may be commenced
prior to primary depletion, resulting in greater ultimate recovery.
(1. The parameters most commonly used in determining secondary recovery
participation are acre feet, cumulative production, current production, original oil
in place, and remaining primary production.
e. The ideal objective in secondary recovery is to establish that each owner’s share of
production from the unit is in exact proportion to the contribution which he makes
to the unit.
1 f. Recap of benefits:
a. Conservation of natural resources
1). ()rderly development
c. Spreading the risks and costs among several owners
d. Minimizing damage to the environment
e. Maximizing administrative efficiency through delegation to one operator
f. Relief from federal acreage limitation
g. luxtensions of leases by timely drilling or discovery of a well in paying quantities
Ease of institution of secondary recovery operations or pressure maintenance when
needed
Increasing ultimate recovery
Providing :1 better rate of return on investment
CHAPTER 19
MICHIGAN OIL AND GAS TITLE
Spacing Orders - The State of Michigan has established 40 acre spacing

for all wells in
Michigan, however there are numerous exceptions to this general
spacing rule.
State leases - The lessee needs a performance bond according to the number
of acres
under lease, with the minimum amount being $2000.
Most companies will put up a $2000 Certificate of Deposit inthe name of the
State of
Michigan.
a. This allows the company the option of being paid the interest.
b. The division order analyst notifies the state that the interest should be paid to
the company.
i. The bank holding the CD pays the state
ii. The state pays the lessee annually
Pooling and Unitization

a. The current state lease form allows the operator to pool the lease into a spaced
unit, but not larger.
b. A pooling agreement will be necessary ifthe lease is involved in a production
unit that is larger than a spaced unit. (p 3)
Shut in wells
3. Older private leases in Michigan almost never have a shut in provision for oil
wells. The lease usually allows between 60 and 120 days to rework and put it
back into production.
b. The classification of a well should be confirmed by both the Michigan Public
Service Commission and the Michigan Department of Environmental Quality.
Michigan does have compulsory pooling. An UMI within a spaced unit is subject to
compulsory pooling upon a request to the Michigan Department of Environmental
Quality.
3. A well cannot be drilled on an unleased interest, even if the request for
compulsory pooling has been successful. (p. 4)
b. The state will not issue a drilling permit until all of the interests are leased or
compulsory pooled.
- will not sign a division order but
Division orders and revenue The State of Michigan
agree with your calculation.
they will send you a letter confirming they
Act
- of Michigan passed the Dormant Mineral
Michigan Dormant Mineral Act The State
no activity on a several mineral in a 20 year
in 1963 which provided that if there was
reverted to the surface owner.
period, the oil and gas went dormant and
leasing the property,
a. Activities that will toll the 20 year period include
of record, or reserving or
completing a sale, mortgage or transfer of interest
claiming the interest. ( p 5)
Claim of Interest and describe the
b. The mineral owner can file an affidavit entitled
land on which he wishes to toll the oil and gas interest.
—
9. Tax foreclosures on severed minerals
that if a surface owner
a. Several years ago, the state of Michigan took the position
foreclosed, the state would
failed to pay the real estate taxes and the state
that the lease buy a new
extinguish any existing oil and gas leases and demand
lease from them at a higher royalty rate.
to make the State
The Courts sided with the mineral owners and were going
return the minerals to the previous mineral owners.
The Dormant Mineral Act was passed by the State as a result.
10. Titles
and sell their real
a. Married women can hold title in their own names and buy
indicate marital
estate without joinder by their husband. There is no need to
status.
because the
Married men do need to have their wives execute a conveyance
status is not
wife has a dower interest in the property. If a man’s marital
record the instrument.
indicated on an instrument, the Register of Deeds will not
(I3 6)
property, so
Michigan considers leasehold interest personal rather than real
without his wife’s joinder.
technically a man can buy and sell a leasehold interest
for married
Title can be held as joint tenants, tenants by the entireties (JT
couples) or tenants in common.
11. Post Production costs

a. Private lease forms are statutorily required to include a definition of post-
production costs. This language ensures that the lessor understands post
production cost deductions from his royalty check.
b. Oil and gas liquids in Michigan are typically priced at the wellhead, so post—
production costs usually do not come into play.
12. Riparian rights — Because Michigan has a lot of inland lakes, the parties that own land
along the shore land have rights that extend to the centerline ofthe adjoining lake.
Some leases actually include or list riparian rights in the granting clause.
CHAPTER 20
FUNDAMENTALS OF FEDERAL OCS TITLE
Continental shelf refers to the submerged extension of a continent. With respect to the
United States, it is comprised ofthe submerged lands surrounding the entire continental
United States as well as Alaska.
Outer continental shelf has been defined as ”those submerged offshore areas lying
seaward of the territorial lands of the adjacent country out to a water depth of at least
200 meters (656 feet) and extending beyond that to depths where there exists the
likelihood of minerals exploitation of natural resources.”
The US has asserted jurisdiction over its OCS pursuant to a pair of laws enacted in 1953
— the Submerged Lands Act and the Outer Continental Shelf Lands Act.
a. The Submerged Lands Act grants certain offshore lands to the coastal states and
reaffirms the submerged lands (and associated natural resources) extending
beyond'those granted to the states are under the jurisdiction of the federal
government for the benefit of the entire nation.
The OCSLA delegates to the Department of the interior primary responsibility for
managing the OCS. The DOI has further subdivided responsibilities to the Bureau of
Ocean Energy Management (BOE), the ONRR, and the Bureau of Safety and
Environment (BSEE), which were all formerly part ofthe MMS.
The OCS is divided into 4 regions for administrative purpose:

a. Atlantic g
b. Gulf of Mexico
c Pacific
d Alaska
The Atlantic region is the only one with no oil and gas production. 47 exploratory wells
have been drilled, with 5 drilled offshore New Jersey showing some‘oil and gas reserves,
but all 5 were abandoned as non-commercial.
The Gulf of Mexico is the most prolific producer of the four regions.
areas, and each planning
Within each region, the OCS is further divided into planning
block being a numbered
area is further subdivided into tracts referred to as blocks..a
corresponding latitude
area in an OCS planning area with a specific identifying number,
acres.
and longitude coordinates and generally not exceeding 5,760
and maintain an oil and gas

The OCSLA requires the Secretary of the Interior to prepare
proposed lease sales, by
leasing program consisting of a series of 5 year schedules of
in an approved 5 year OCS
region, and a sale cannot be held unless it has been included
lease sale schedule.
bidder (or subsequent

10. Pursuant to statutory requirements under OCSLA, a successful
one of the following
owner) for an OCS lease must be qualified and must meet '
requirements:
a. Citizen or national ofthe US
b. Alien lawfully admitted for permanent residence in the US
of the US or
c. Private, public or municipal corporations organized under the laws
any State or of the District of Columbia or territory thereof
public, or
cl. Associations of such citizens, nationals, resident aliens or private,
municipal corporations, States or political subdivisions of States.
owners must
11. In addition to meeting one of the above requirements, the lease interest
post certain bonds with the BOE before a lease will be awarded to an otherwise
qualified holder, and subsequent bonds must be posted prior to lese exploration
activities and again prior to further development and production activities.
12. If an OCS lease interest owner is not the sole record title owner of the lease, all record
must file
title owners as well as any operating rights interest owners in the affected area
signed designations of operator with the ONRR and the BOE.
13. The BOE describes the interest in an OCS hydrocarbon lease acquired by an original
lessee as a record title interest. Much like federal onshore leases the term is defined as
”a lessee’s interest in a lease which includes the obligation to pay rent,-and the rights to
assign an relinquish the lease. Overriding royalty and operating rights are severable
from record title interest.”
14. The record title owner alone has the right to relinquish the entirety of a lease,
notwithstanding the existence of operating rights in the lease.
15. With respect to OCS hydro-carbon leases, the BOE/MMS maintains ownership records
for both record title and operating rights in each awarded and active OCS lease.
16. An assignment must be approved by the regional director of the BOE/MMS; this
approval remains within the discretion of the regional director even after the apparent
satisfaction of the filing requirements.
17. The BOE/MMS is principally concerned with the percentage ownership of each record
title owner and the percentage ownership of each operating rights interest owner in the
recognized operating rights severance of a given OCS lease. The agency does not keep
track of net revenue interests of its approved OCS lease holders.
18. The regulations do require filing with the BOE/MMS for record purposes, all instruments
creating or transferring overriding royalty interests, carried working interests or
payments out of production, but these filings are not subject to BOE/MMS approval.
CI)( )A REVII’M" - CIIAIYI‘ICR 21
'1‘I'1‘I.I’. ISSI T19.8 \VITII RI‘ZSI’I‘IC'I‘ T() C()RI’( )RATIONS AN D I’AR'I‘NICRSI III’S IN
'1‘1‘1XAS AND N1’,\V .\II§XIC()
Corporations:
A corporation, hoth in Texas and New Mexico, is vested with powers to huy, sell, lease,
convey, translcr, mortgage and othenvise dispose 01' real property interests in the same
fashion that an individual is allowed.
A corporation, however, can only control and operate its real property interests through its
duly authorized agents or employees.
A conveyance of real property interest vested in a Texas corporation is governed by Article
5.08 01' the Texas Business Corporation Act
A conveyance 01' real property interest vested in a New Mexico corporation is governed hy
Chapter 53, Article 15-1 ol'the New Mexico Business Corporation Act.
Article 5.08 01 the Texas Business Corporation Act provides that any corporation may
convey land with or without the seal 01 the corporation, signed hy an ollicer or attorney-in-
lact ol' the corporation when authorized by the appropriate resolution of the hoard ol‘
directors.
Any such deed, when recorded, it signed by an ollicer ol‘ the corporation, constitutes prima
lacie evidence that the resolution of the hoard olidirectors was duly adopted.
In Texas prior to August 28, 1989, the conveyance had to he executed by the president or
vide president 01 the corporation to constitute prima lacie evidence that the resolution of
the hoard of directors was adopted.
' In 1989 the act was amended to provide that any ollicer’s execution on behalf ol'the
corporation constituted the required evidence.
11' the instrument does not show that the person executing was an ollicer ()1 the corporation
either in the signature hlock or in the acluu>w1edgement, a title requirement will he made to
determine whether the person who signed was an ollicer or was otherwise authorized to act
on hehall ()1 the corporation in executing documents.
' The title examiner should he furnished with a copy ol‘the power of attorney, but the power
01 attorney does not need to he recorded [or the executing party to he authorized to
execute.
' Chapter 53, Article 15-1- 01 the New Mexico Business Corporation Act is similar to the
Texas Statute and provides for the sale, lease, exchange, or other disposition of all, or
substantially all, 01‘ the property and assets 01:1 corporation in the usual and regular course
of husiness and the mortgage or pledge of assets 01' a corporation.
' No authorization or consent ()1 the shareholders is required. (1). 3)
° The responsihility 1ior executing a conveyance of a real property interest generally lies with
the ollicers and agents 01' the corporation as prescrihed in the corporation’s hylaws.
or a duly appointed
° This is generally construed to be the president, a vice president,
attorney-in fact of the corporation.
are typically not vested with the
' ()ther corporate ollicers, such as a treasurer or secretary,
the corporation in New Mexico.
implied powers to execute instruments in the name ol‘
by the treasurer or secretary he
' Should a title examiner receive an instrument executed
directors he exmnined which
should require that a copy of the resolution ol‘the hoard of
authorized the treasurer or secretary to execute the conveyance.
which prevent a corporation from
' Both Texas and New Mexico have statutes ol limitations
under certain circumstances
tiling an action against a gr; ntee [or recovery of real property
which were not executed by
and allow third parties to rely upon instruments liled of record
an authorized corporate ollicer.
years alter the day the
' The Texas statute provides that no action can be brought alter two
corporation claims
instrument was liled for record lor recovery of real property where the
that the record does
that an instrument was not executed by a proper corporate ollicer or
not show the authority 01‘ the ollicer executing the instrument.
alter September 1, 2007.
' This statute applies to all instruments liled lor record'on or
1, 2007, the statute
° For instruments recorded lrom September 1, 1993 to September
provides a limitations period of four years.
period is ten years.
' For instruments recorded prior to September 1, 1903, the limitations
can be
' The New Mexico statute involving Limitations of Actions provides that no action
is
brought alter lilteen y ‘ars from the date the instrument allecting title to real estate
recorded for claims that the instrument was not signed by the proper ollicer ol‘ a
corporation or that the record does not show any authorization of the board 01‘ directors
for the transaction.
real
Partnerships, like corporations, are also vested with the same powers to deal with
property interests in the same fashion as an individual.
A conveyance of real property interested vested in a Texas partnership is governed by
Texas
Section 152 01' the Texas Business Organizations Code and Article (5132(1)) of the
Revised Partnership Act.
A conveyance of a real property interest vested in a New Mexico partnership is governed
by Chapter 5 l, Article lA ol~ the New Mexico Uniform Partnership Act.
Each oli these separate code sections provides that a partner is an agent [or the partnership
and that any action by the partner in what appears to be the ordinary course ol‘business is
binding on the partnership.
Partnerships:
Partnerships, like corporations, are also vested with the same powers to deal with real
.
property interests in the same fashion as an individual.

A conveyance ol‘ real property interested vested in a Texas partnership is governed by
Section 152 of the Texas Business Organizations Code and Article (51320)) ol the 'l‘exas
Revised Partnership Act.
A conveyance ol a real property interest vested in a New Mexico partnership is governed
by Chapter 5 l, Article lA ol~ the New Mexico I’nilorm Partnership Act.
Each of these separate code sections provides that a partner is an agent lor the partnership
and that any action by the partner in what appears to be the ordinary course of business is
binding on the partnership.
The partnership is not bound, however, by the act ol the partner where the partner does
not have authority to act on behall'ol'the partnership in a particular matter and that the
person with whom the partner is dealing has knowledge ol'the partner’s lack ol. authority.
(1). l)
The examining attorney cannot know whether the partner had authority to execute or what
knowledge the grantee had about the partner’s authority, so the attorney should always
request a copy of the partnership agreement to determine their authority.
Again, the Texas Civil Practice and Remedies Code applies to prevent a partnership lrom
recovering real property alter two years from the date the instrument was liled lor record
where the partnership claims that the executing partner was not the proper partner to
execute instruments or the executing partner did not have authority from the other partners
to execute on behalliol' the partnership.
The New Mexico statute olilimitations does not apply to partnerships.
CHAPTER 23
ACQUISITIONS, DlVESTITURES, AND TRADES
1. Introduction
a. Land Administration should be involved from the very inception of an
acquisition, divestiture, or trade.
They will be one of the last to complete all tasks necessary to have a property
fully integrated into the company or transitioned out of the company.
All project planning and tools used to complete the project should be customized
to that project since no article or checklist will ever take the place of applying
one’s own professional experience to a situation.
Trades are a combination of both acquisitions and divestitures, each occurring at
the same time. ,
One of the biggest mistakes made in industry is the assumption that all work
associated with Acquisition and Divestiture work can be absorbed by existing
staff. This may be true with a small deal, but it should never be assumed.
Property transfer costs should always be considered, although it should not be a
deal-killer.
One might believe that the requirements for both an acquisition and divestiture
from a project viewpoint might be very similar, but they actually vary
substantially.
. There should always be a buyer’s due diligence team and a seller’s due diligence
team. (p. 3). Steps to be completed by each team must be clearly defined to
prevent duplicated effort.
2. General pitfalls commonly affecting A&D activities:

3. Many confuse Closing Date — Property Management Cut-off Date — Post
Closing Date and think they are the same date or are interrelated.
1. The close date of the agreement is just the closing of the deal,
when the parties sign off to major deal terms.
a. This is almost never the same date as the Property
Management Cut—off date (aka Disbursement Cut-off date)
which is usually several months later.
b. A transition agreement usually controls this date.
2. Post closing on all financial items is usually six months or more
after the deal is consummated.
3. Remember that staffing needs have not changed until the
management responsibility transfers.
funds accumulated to the point of
3. Many companies insist on keeping legal suspense
periods when the seller
property transfer, usually because these were production
will look to them for these funds.
operated the property, and the seller feels the owners
a. Retention of suspended dollars creates
a myriad of problems. Any lag
management is
time in taking over ownership maintenance and suspense
very costly.
month.
Suspense is loaded by owner, property and production
simultaneously.
1. Ownership and suspense detail must be loaded
back to
If not, ownership changes and title will have to be traced
the original owner and dollars prorated to the new ownership
percentages.
owners with
lf suspense is not transferred with the sale, then all
on
these suspended funds must still be maintained and managed
the seller's records.
a. it is a cost without an offsetting revenue
and
b. It forces owners to have to provide documentation
curative to two companies instead, of one. (p. 4)
if suspense
Other difficulties arise with out of period adjustments
is not transferred. Usually the buyer assumes all adjustments
unless they are extremely large and are provided for in the post-
close or side agreements. Any adjustments without related
expenses would be skewed, and positives and negatives would
not balance correctly.
and
c. Agreements regarding suspense should be covered in the Purchase
' Sale Agreement or the Transition Agreement.
1. The buyer should insist on receiving suspense information current

to the same date. if suspense detail does not match active
property ownership, thebuyer should not take owners or
suspense that do not match.
Minimum accumulated suspense should not be taken by the
buyer if possible. One option is to ask the seller to clear all
minimum suspense on their next checkwrite or ask them to retain
the funds for their next minimum checkwrite.
4. Don’t assume that the files a buyer sees at a seller’s office will be the same files
delivered to the buyer’s door. A structured, specific due diligence is recommended.
5. Well status is a very important element in a divestiture.
a. The usual intent isto include an entire field and/or all wells in a spacing unit.
b. if shut~in or temporarily abandoned wells are not included on the exhibit, they
will not be conveyed unless language in the body ofthe assignment overrides
the exhibit.
a. Seller would be left with scattered properties in an area where it is
abandoning operations.
b. Plugging liabilities would be left with the seller which were intended to
be passed to the new owner.
c. The buyer needs to know the properties exist if they want to pursue
secondary recovery, future completion attempts, and planning for
plugging liabilities.
d. Abandoned or shut in wells should be set up in the property master.
Significant confusion can occur when you rework or plug a well but there
is no record of the property in your system.
6. Title due diligence is often conducted separately from administrative due diligence.
a. Both title and administrative due diligence should be conducted concurrently.
b. Title due diligence concentrates on the interest the buyer is actually purchasing.
c. Title due diligence must concentrate only on the legal validity of the interest to
be conveyed and any encumbrances burdening that interest.
7. Administrative Acquisition Checklist — see handout in manual.

CHAPTER 24
COALBED M ETHAN E
1. introduction
a. Coalbed methane, or coalbed gas, is a form of natural gas extracted from coal
beds.
It is called methane because the early assumption was that the only type of gas
in coal beds would be methane, but subsequent research has shown that the gas
may actually be:
i. Ethane
ii. Methane
iii. Butane
iv. Pentane
v. Higher hydrocarbons, such as carbon dioxide and nitrogen.
in some areas, light weight (API 40+ gravity) oils are also produced from coal
seams.
Coalbed methane now represents nine percent of proved dry gas reserves.
More than 80% of the coalbed methane is located in the western US.
Over 50% of current coal gas production is in the San Juan Basis, and another
23% is produced in the Powder River Basin.
Coalbed methane represents an abundant supply of environmentally clean
energy and a source of hydrogen.
Unwanted greenhouse gases such as carbon dioxide can be sequestered into
coal beds. Injection of carbon dioxide into coal beds enhances coalbed methane
production while simultaneously reducing greenhouse gas emissions to the
atmosphere, thereby reducing global warming potential.
Production has increased in proved coal gas reserves is attributable to small
operators find new reserves. (p. 3)
2. Coal gas sorption and gas content

a. In conventional gas reservoirs, coal gases occupy the voids, which are either pore
spaces or fractures. The gas is not generally physically sorbed (trapped) to the
mineral grains, but may be sorbed to organic matter in the rocks.
The gases in these conventional reservoirs have been generated by source rock,
such as shale and coal, and subsequently migrated to the reservoir.
Well cuttings are collected during drilling and taken to a lab for testing.
is
The amount of gas liberated from the coal is called gas content and
usually given in cubic feet per ton of coal.
Proximate analysis measures the moisture and ash (inorganic fraction)
content of the coal, because the coal gases are sorbed only on the
organic fraction of the coal and not the ash.
basis.
Gas content values are often corrected to a moisture and ash—free
More natural gas can be retained or sorbed to the coal surface as the
pressure increases and in general, less thermally mature coals have a
higher sorption capacity than more thermally mature coal seams.
Most coal beds are undersaturated with respect to methane.
vi. For the operator, finding saturated or nearly saturated coal beds
is very
important economically, because the coal beds must be depressurized in
order for gas production to begin.
vii. The coal seams are depressurized by removing water from the fractures
in the coal.
viii. Coalbed methane production will continually increase during the first
few
years of production during the dewatering or depressurization stage,
reach a maximum production rate, and then follow a normal type of
production decline curve similar to conventional oil and gas reservoirs.(p.
4)
It is possible for coalbed methane production to continue for 40 or more
years where the decline curve is flat.
3. Review of water disposal issues

a. Concerns regarding coalbed methane water disposal have been raised.
Many of the arguments against coalbed methane development as a
whole are based on misconceptions and omissions of information.
Arguments appear to focus primarily on activity in the Powder River Basin
an ignore data from other basins worldwide.
b. The water and gas production varies significantly among basins and even within
coal-bearing basins. Powder River Basin’s high water production is the
exception rather than the rule.
c. Using natural gas produced from coal seams is much cleaner than burning coal
for electricity generation.
d. Natural gas appears to be the dominant source of hydrogen in the near term.
e. Coal seam gas can range from fresh to highly saline and the water chemistry
generally varies across the basin.
Fresh water can be disposed of through surface discharge or vaporization
techniques using high pressure jet sprays to enhance evaporation.
Saline waters must be re-injected into the subsurface.
In some cases, operators have re-injected the produced coalbed methane
into oil reservoirs water as part of enhanced oil recovery water floods,
thereby reducing the need for water from other sources.
Some states require all water , fresh or saline, to be re-injected into an
appropriate formation.
4. Review of coal gas owner ship issues

a. There have been numerous lawsuits over who owns coalbed methane...coa|
owners or gas owners.
b. In 1993, Lewin et al noted that courts couple apply any of six rules pertaining to
ownership:
CBM is gas and gas owners have title to it.
CBM is coal and coal owners have title to it.
Priority of severance, where the purchaser in the severing transaction
receives title to CBM
Case by case, where title to CBM is based on the documents in the
severing transaction
Successive ownership where coal owners have title to the gas to CBM
within the coal, but gas owners have title to escaped or free gas in the
gob zone.
vi. Mutual simultaneous rights where gas owners have title to CBM and gob
gas in conjunction with mining as an incidental mining right.
c. The primary focus of ownership issues appears to be the definitions of coal, coal
gas, and how the gas is stored on the coal. (p. 5)
Coal is a complex compound consisting of an organic fraction and an
inorganic fraction, called ash.
The length of time for one foot of coal to form ranges from 65 years
along the Mississippi River to 1250 years in the Artic.
The organic fraction consists entirely of organic material deposited in the
peat swamp over time.
The ash fraction can be silt or clay that is carried into the peat
environment by depositional processes, volcanic ash carried by wind, and
silica within the plant material itself.
The argument boils down to whether the sorbed gas is actually part of
the coal structure or whether the sorbed gas is separate from the coal.
an inherent‘part of
vi. The coal owner will argue that the coalbed methane is
the coal. They may also argue that:
1. Coal gases are adsorbed to the coal
is so close
2. The physical bond between the coal and the coal gas
that the two cannot be separated, and
3. The coal is the source of and the reservoir for the
coal gas.
of the
vii. The oil and gas owner may argue that the chemical composition
sources
coal gas is nearly identical to natural gases derived from other
may
and that the gases may have migrated to the coal seams. They
further argue:
1. Recovery methods parallel that of natural gas
2. The migratory nature of coalbed methane is the same as
natural
gas
Revision of the container space the gas once the coal is mind gives
the
them the right to the gas in cases where the gas owner is also
surface owner.
The plain meaning of gas definitely includes coalbed methane
where coal commonly refers to a solid mineral, not a gas.
There is a weak argument that the surface owner may be able to
claim interest in the coalbed methane. In states where ownership
of the container space reverts to the surface owner once the coal
is removed, a surface owner could claim that since they own the
space where the coal was previously situated, they own the
coalbed methane within the container space.
viii. On June 7, 1999 the U S Supreme Court ruled that coalbed methane was
not a part of the coal in the case of Amoco Production Co. vs Southern
Ute Indian Tribe.
1. Oil and gas operators were given ownership of coalbed methane.
2. Coal mine operators still retain ownership of the gob gas removed
for safety purposes during or preceding mining operations.
5. Coalbed exploration model

a. Coalbed methane producibility is determined (p. 6) by the complex interplay
among 6 critical controls:
i. Depositional systems and coal distribution
ii. Coal rank
iii. Gas content
iv. Permeability
v. Hydrodynamics
vi. Tectonic/structuralsetting
b. If one or more factors is missing, then the potential for higher coalbed methane
producibility will be reduced.
6. Depositional setting and coal distribution

a. Coal beds are the source and reservoir for methane, indicating that their
widespread distribution
Coal distribution is closely tied to the tectonic, structural, and depositional
settings, because peat accumulation and preservation as coal require a delicately
balanced subsidence rate that maintains optimum water-table levels but
excludes disruptive clastic sediment influx.
7. Coal rank and gas generation - Coals must reach a certain threshold ofthermal maturity
before large volumes of thermogenic gases are generated. (p 7)
8. Gas content
a. Gas content is one of the more important controls of coalbed methane
producibility, yet often is one of the most difficult parameters to accurately
assess.
The distribution of gas content varies laterally within individual coal beds,
vertically among coals within a single well, and laterally and vertically within
thicker coal beds.
9. Permeability
a. Permeability in coal beds is determined by its fracture (cleat) system, which is in
turn largely controlled by the tectonic/structural regime.
Cleats (fractures) are the permeability pathways for migration of gas and water
to the producing well head, and cleats may either enhance or retard the success
of the coalbed methane completion.
Permeability will decrease with increasing depth, suggesting that coalbed
methane production may be limited to depths less than 5000 to 6000’.
Higher permeability will result in recovery of more sorbed coal gases, because
lower reservoir pressures and, therefore, more coal gas desorption will occur in
higher permeability reservoirs.
Permeability that is too high results in water production and may be as
detrimental to the economic production of coalbed gas as extremely low
permeability.
Curative Game Plan:
Title Curative Issues and Game-Winning Solutions
Tim McKeen, Member Kacie Bevers, Of Counsel
(304) 231-0473 (281) 203-5770
timothy.mckeen@steptoe-johnson.com kacie.bevers@steptoe-johnson.com
I. Introduction
II. Company & Title Examiner Goals
III. Common Curative Tools & Issues
a. Affidavits
i. Heirship
ii. Identity
iii. Use and Possession
b. Authority
i. Attorney-in-Fact
ii. Trustee
iii. Corporate Conveyances
c. Life Tenants and Remaindermen
d. Attorney-in-Fact
e. Joinder of Spouse
i. Homestead
ii. Community / Separate Property
f. Mortgages, Liens and Deeds of Trust
g. Survey and Land Descriptions
h. Instruments Not of Record
i. Other Issues
IV. Conclusion and Best Practices
CALCULATIONS
NADOA 2017 ANNUAL INSTITUTE
CREATED BY ELI MURRAY, CDOA, CPLTA
AGENDA
 Common Acronyms
 Basic Formulas
 Royalty Interest
 Overriding Royalty Interest
 Working Interest
 Carried Working Interest
 Examples
CALCULATIONS FOR NADOA 2017 ANNUAL INSTITUTE - CREATED BY ELI MURRAY 2

COMMON ACRONYMS
 MI – Mineral Interest  NPRI – Non-Participating Royalty Interest
 NA or NMA – Net (Mineral) Acres  ORRI or OR – Overriding Royalty Interest
 GA – Gross Acres  GWI – Gross Working Interest
 TF or TPF – Tract (Participation) Factor  NWI – Net Working Interest
 RI – Royalty Interest  NRI – Net Revenue Interest

BASIC FORMULAS
 Tract Gross Acres / Unit Acres = Tract Participation Factor (TPF)
 Mineral Interest * Tract Acres = Net Mineral Acres (NMA)
 Royalty * Mineral Interest * TPF = Royalty Interest (RI)
 Lease Net Acres / Unit Acres = Gross Working Interest (GWI)
 1 – Burdens [Lease RI & Overriding Royalty Interest (ORRI)] = Lease Net Revenue Interest (NRI)
 Net Revenue Interest (NRI) * Gross Working Interest (GWI) = Net Working Interest (NWI)

ROYALTY INTEREST
 What am I looking for?

 Mineral Interest
 Tract Acres vs Unit Acres
 Basic RI Scenario 1:
 Royalty Rate
 AJ Frost owns 160 acres in the SE/4 of Section 4. Mr.
Frost leases to Stamper Drilling Company on  Mineral Interest & Tract vs Unit Acres
12/31/2015 with a 3/16ths royalty. Stamper Drilling  Assumed 100% MI as it says he owns 160 out of the
Company plans to develop all of the SE/4 of Section quarter section.
4.
 Royalty Rate
 3/16ths or .1875

ROYALTY INTEREST
 Basic RI Scenario 1
 Royalty Rate * Mineral Interest * TPF = RI
 3/16 * 100% * 160 Tract Acres / 160 Unit Acres = .1875

ROYALTY INTEREST

 Tract Acres vs Unit Acres
 Basic RI Scenario 2:
 Royalty Rate
 AJ Frost owns 80 undivided acres in the SE/4 of
Section 4. Mr. Frost leases to Stamper Drilling  Mineral Interest & Tract vs Unit Acres
Company on 12/31/2015 with a 3/16ths royalty.  Assumed 50% as it says he owns 80 undivided acres out
Stamper Drilling Company plans to develop all of the of the quarter section.
SE/4 of Section 4.
 Royalty Rate
 3/16ths or .1875

ROYALTY INTEREST
 Basic RI Scenario 2
 Royalty Rate * Mineral Interest * TPF = RI
 3/16 * 50% * 160 Tract Acres / 160 Unit Acres = .09375

 Compared to Basic RI Scenario 1

OVERRIDING ROYALTY INTEREST

 Basic ORRI Scenario 1:  Tract Acres vs Unit Acres
 AJ Frost owns 160 acres in the SE/4 of Section 4. Mr.  Overriding Royalty Rate
Frost leases to Stamper Drilling Company on  Working Interest
12/31/2015 with a 3/16ths royalty. Stamper Drilling
Company assigns the lease to Rockhound Exploration  Mineral Interest & Tract vs Unit Acres
and reserves a 2% ORRI. Rockhound plans to develop  Assumed 100% MI as it says Lessor owns 160 out of the
all of the SE/4 of Section 4. quarter section.
 Assume 100% WI as Lessee assigns all of lease.
 Overriding Royalty Rate
 2% or .02

 Basic ORRI Scenario 1
 Overriding Royalty Rate * Working Interest * Mineral Interest * TPF = ORRI
 2% * 100% * 100% * 160 Tract Acres / 160 Unit Acres = .02
 (Basic RI Scenario 1)
 .1875 * 100% * 160 Tract Acres / 160 Unit Acres


 Basic ORRI Scenario 2:  Tract Acres vs Unit Acres
 AJ Frost owns 80 undivided acres in the SE/4 of Section  Overriding Royalty Rate
4. Mr. Frost leases to Stamper Drilling Company on  Working Interest
Company assigns the lease to Rockhound Exploration  Mineral Interest & Tract vs Unit Acres
and reserves a 2% ORRI. Rockhound plans to develop  Assumed 50% as it says Lessor owns 80 undivided acres
all of the SE/4 of Section 4. out of the quarter section.
 Overriding Royalty Rate
 2% or .02

 Basic ORRI Scenario 2
 Overriding Royalty Rate * Working Interest * Mineral Interest * TPF = ORRI
 2% * 100% * 50% * 160 Tract Acres / 160 Unit Acres = .01
 (Basic RI Scenario 2)
 .1875 * 50% * 160 Tract Acres / 160 Unit Acres
 Compared to Basic ORRI Scenario 1

WORKING INTEREST

 Mineral Interest, Tract Acres vs Unit Acres, and Royalty
 Basic WI Scenario 1:
Burdens
 AJ Frost owns 160 acres in the SE/4 of Section 4. Mr.  Working Interest
Frost leases to Stamper Drilling Company on
12/31/2015 with a 3/16ths royalty. Stamper Drilling  MI, TPF, Roy Rate
Company plans to develop all of the SE/4 of Section  Same as Basic RI Scenario 1
4.
 Assumed 100% as there are no assignments listed.
 NRI is 1 minus the burdens.

WORKING INTEREST
 Basic WI Scenario 1
 Working Interest * Mineral Interest * TPF = GWI
 NRI * WI * MI * TPF = NWI
 1 – burdens = NRI or 1 – .1875 = .8125
 100% WI * 100% MI * 160 / 160 TPF = 1.00 GWI

 .8125 NRI * 100% WI * 100% MI * 160 / 160 TPF = .8125 NWI
 Double Check:
 NWI / GWI = NRI
 .8125 / 1.00 = .8125 NRI
 1 – NRI = Burdens
 1 – .8125 = .1875 or 3/16ths royalty
WORKING INTEREST

 Basic WI Scenario 2: Burdens
 AJ Frost owns 80 undivided acres in the SE/4 of
Section 4. Mr. Frost leases to Stamper Drilling  MI, TPF, Roy Rate
Company on 12/31/2015 with a 3/16ths royalty.  Same as Basic RI Scenario 2
Stamper Drilling Company plans to develop all of the
SE/4 of Section 4.  Working Interest
 Assumed 100% as there are no assignments listed.

WORKING INTEREST
 WI * MI * TPF = GWI
 1 – burdens = NRI
 100% WI * 50% MI * 160 / 160 TPF = .50 GWI

 .8125 NRI * 100% WI * 50% MI * 160 / 160 TPF = .40625 NWI
 Double Check:
 .40625 NWI / .50 GWI = .8125 NRI
 1 – .8125 NRI = .1875 or 3/16ths royalty
WORKING INTEREST

 Basic WI Scenario 3: Burdens
 AJ Frost owns 160 acres in the SE/4 of Section 4. Mr.  Working Interest
Frost leases to Stamper Drilling Company on
 MI, TPF, Roy Burdens
Company assigns the lease to Rockhound  Same as Basic ORRI Scenario 1
Exploration and reserves a 2% ORRI. Rockhound  Working Interest
plans to develop all of the SE/4 of Section 4.

WORKING INTEREST
 1 – burdens = NRI or 1 – .1875 – .02 = .7925

 100% WI * 100% MI * 160 / 160 TPF = 1.00 GWI
 .7925 NRI * 100% WI * 100% MI * 160 / 160 TPF = .7925 NWI
 Double Check:
 NWI / GWI = NRI
 .7925 / 1.00 = .7925 NRI

 1 – NRI = Burdens
 1 – .7925 = .2075 or 3/16ths royalty + 2% ORRI

WORKING INTEREST

 Advanced WI Scenario 1: Burdens
Frost leases to Stamper Drilling Company (“SDC”)  MI, TPF, Roy Burdens
on 12/31/2015 with a 3/16ths royalty. SDC assigns
 Variation of ORRI Scenario 1 with change to the
50% of its WI to Rockhound Exploration (“REX”) reserved overriding royalty.
reserving an ORRI of 20% less burdens,
proportionately reduced. SDC & REX plan to jointly  Working Interest
develop all of the SE/4 of Section 4.  50% SDC & 50% REX.
 NRI is 1 minus the burdens but subject to WI of each
company.

WORKING INTEREST
 Advanced WI Scenario 1
 SDC
 50% WI * 100% MI * 160 / 160 TPF = .50 GWI
 NRI = 1 – 3/16 = .8125 NRI
 .8125 NRI * 50% WI * 100% MI * 160 / 160 TPF = .40625 NWI
 REX
 50% WI * 100% MI * 160 / 160 TPF = .50 GWI
 NRI = 1 – 3/16 – (20% – 3/16 or .0125) = .80 NRI
 .8000 NRI * 50% WI * 100% MI * 160 / 160 TPF = .4000 NWI

WORKING INTEREST

 Advanced WI Scenario 2:  Mineral Interest, Tract Acres vs Unit Acres, and Royalty
Burdens
Frost leases to Stamper Drilling Company (“SDC”)
on 12/31/2015 with a 3/16ths royalty. SDC assigns  MI, TPF, Roy Burdens
50% of its WI to Rockhound Exploration (“REX”)
 Variation of ORRI Scenario 2 with change to the
reserving an ORRI of 20% less burdens. Grace reserved overriding royalty and addition of Lessee.
Stamper owns 80 acres in the same lands and leases
to White Horse (“WH”) with a 1/4 royalty. SDC,  Working Interest
REX, & WH plan to jointly develop all of the SE/4 of  GWI subject to share of leasehold and mineral interest.
Section 4.
 NRI is 1 minus the burdens but subject to share of
leasehold and mineral interest.

WORKING INTEREST
 Advanced WI Scenario 2
 WI * MI * TPF = GWI
 SDC
 50% WI * 50% MI * 160 / 160 TPF = .25 GWI
 .8125 NRI * 50% WI * 50% MI * 160 / 160 TPF = .203125 NWI
 REX
 50% WI * 50% MI * 160 / 160 TPF = 0.25 GWI
 .8000 NRI * 50% WI * 50% MI * 160 / 160 TPF = .2000 NWI
 WH
 100% WI * 50% MI * 160 / 160 TPF = 0.50 GWI
 .7500 NRI * 100% WI * 50% MI * 160 / 160 TPF = .3750 NWI
CARRIED WORKING INTEREST
 Carried Interest – an agreement between two or more  What does this mean?
WI whereby one party (carried party) doesn’t share in the
 One or more WI owners will bear the cost of the non-
lease revenue until a certain amount of revenue is
consenting (“NC”) / non-participating (“NP”) owner, and
recovered by the other party (carrying party). The carrying
will enjoy their proportionate share of the revenue
party pays costs applicable to the carried party’s interest in
associated with the NC/NP owner until the applicable
the property and is reimbursed out of the revenue
payout occurs.
applicable out of the carried party’s interest.
 Payout is the point where your expenses and revenue offset
-NALTA Certification Review Manual one another…think profit.

 How do we determine “Proportionate Share”?
 Proportionate Share = GWI / Total electing GWI
 Carried Interest = Proportionate Share * NC/NP GWI and/or NWI
 Before Payout (BPO) GWI = Actual GWI + Prop Share of Carried Parties GWI
 BPO NWI = Actual NWI + Prop Share of Carried Parties NWI

 Basic Carry Scenario 1:  Carried Interest:

 Black-Eyed Susan decides not to lease to anyone.  Tulip CGWI: 100% * .05 = .05
Tulip elects to carry the UMI 100% in the Tract  Tulip CNWI: 100% * .05 = .05
well.  BPO Ownership:
 *Unleased owners are treated as WI owners with
their 8/8ths share of the minerals.  Tulip GWI: .85 + .05 (CGWI) = .900000
 Tulip NWI: .6375 + .05 (CNWI) = .687500
 Ownership:
 Buttercup GWI: .10 + 0 (CGWI) = .100000
 Tulip – .85 GWI / .6375 NWI  Buttercup NWI: .08 + 0 (CNWI) = .080000
 Buttercup – .10 GWI / .08 NWI
 UMI: No interest BPO
 UMI – .05 GWI / .05 NWI
 APO Ownership:
 Proportionate Share:
 Tulip – .85 GWI / .6375 NWI
 Tulip GWI (.85) / Tulip GWI (.85)  Buttercup – .10 GWI / .08 NWI
 Tulip Prop Share: .85 / .85 = 100%  UMI – .05 GWI / .05 NWI

 Carried Interest:
 Basic Carry Scenario 2:  Fab 4 CGWI: 82.35294% * .15 = .12352941

 Fab 4 CNWI: 82.35294% * .1125 = .09264706
 Ozzy decides not to participate in the drilling of a well.
Fab 4 and Stones both elect to carry their  Stones CGWI: 17.64706% * .15 = .02647059
proportionate share of the interest.  Stones CNWI: 17.64706% * .1125 = .01985294
 Ownership:  BPO Ownership:
 Fab 4 – .70 GWI / .525 NWI  Fab 4 GWI: .70 + .12352941 (CGWI) = .82352941
 Stones – .15 GWI / .12 NWI  Fab 4 NWI: .525 + .09264706 (CNWI) = .61764706
 Ozzy – .15 GWI / .1125 NWI
 Stones GWI: .15 + .02647059 (CGWI) = .17647059
 Proportionate Share:  Stones NWI: .12 + .01985294 (CNWI) = .13985294
 Fab 4 (.70) / Fab 4 (.70) + Stones (.15)  Ozzy: No interest BPO
 Fab 4 Prop Share: .70 / .85 = 82.35294%
 APO Ownership:
 Stones (.15) / Fab 4 (.70) + Stones (.15)
 Stones Prop Share: .15 / .85 = 17.64706%  Fab 4 – .70 GWI / .525 NWI
 Stones – .15 GWI / .12 NWI
 Ozzy – .15 GWI / .1125 NWI
 Ownership:
 Minerva – .375 GWI / .300 NWI
 Advanced Carry Scenario 1:  Albus – .250 GWI / .200 NWI
 Minerva, Albus, Severus, and Delores all own  Severus – .250 GWI / .19375 NWI
leasehold interest in a Tract, and agree to jointly  Delores – .100 GWI / .0875 NWI
develop the property. Sirius, a mineral owners,  Sirius – .025 GWI / .025 NWI
could not be located and remains unleased. Albus
decides not to participate in the drilling of a  Carried Interests 100%:
secondary well. Severus and Minerva both elect
 GWI – Albus (NC) . 250 + Sirius (UMI) .025 = .275
to carry their proportionate share of the
 NWI – Albus (NC) . 200 + Sirius (UMI) .025 = .225
unleased and non-consenting interests up to the
payout penalties of 100% & 300%, respectively.
Delores does not elect to carry any additional  Carried Interests 300%:
interest.  GWI – Albus (NC) . 250
 NWI – Albus (NC) . 200

 Advanced Carry Scenario 1 (cont’d):
 BPO 100% Ownership:

 Proportionate Share:  Minerva GWI: .375 + .165000 (CGWI) = .540000
 Minerva (.375) / Minerva (.375) + Severus (.25)
 Minerva NWI: .300 + .135000 (CNWI) = .435000
 Minerva Prop Share: .375 / .625 = 60.000%
 Severus (.25) / Minerva (.375) + Severus (.25)  Severus GWI: .25 + .110000 (CGWI) = .360000
 Severus Prop Share: .25 / .625 = 40.0000%  Severus NWI: .19375 + .090000 (CNWI) = .283750
 Delores – .100 GWI / .0875 NWI
 Carried Interests 100%:  Albus: No interest BPO
 Minerva CGWI: 60.000% * .275 = .165000  Sirius: No interest BPO
 Minerva CNWI: 60.000% * .225 = .135000
 Severus CGWI: 40.000% * .275 = .110000
 Severus CNWI: 40.000% * .225 = .090000

 Advanced Carry Scenario 1 (cont’d):  APO 100% / BPO 300% Ownership:

 Minerva GWI: .375 + .150000 (CGWI) = .525000
 Minerva NWI: .300 + .120000 (CNWI) = .420000
 Severus GWI: .25 + .100000 (CGWI) = .350000
 Proportionate Share:
 Severus NWI: .19375 + .080000 (CNWI) = .273750
 Minerva (.375) / Minerva (.375) + Severus (.25)  Delores – .100 GWI / .0875 NWI
 Minerva Prop Share: .375 / .625 = 60.000%  Sirius – .025 GWI / .025 NWI
 Severus (.25) / Minerva (.375) + Severus (.25)  Albus: No interest APO 100% / BPO 300%
 Severus Prop Share: .25 / .625 = 40.0000%
 APO 300% Ownership:

 Carried Interests 300%:
 Minerva – .375 GWI / .300 NWI
 Minerva CGWI: 60.000% * .250 = .150000  Severus – .250 GWI / .19375 NWI
 Minerva CNWI: 60.000% * .200 = .120000  Delores – .100 GWI / .0875 NWI
 Severus CGWI: 40.000% * .250 = .100000  Sirius – .025 GWI / .025 NWI
 Severus CNWI: 40.000% * .200 = .080000  Albus – .250 GWI / .200 NWI

EXAMPLES
LET’S WORK THESE TOGETHER. STOP ME IF YOU HAVE QUESTIONS!!!

PLAT
A B C
 Tract Description and Acres:
 A – NW/4 = 160 acres
 B – S/2 NE/4 & NW/4 NE/4 = 120 acres
 C – NE/4 NE/4 = 40 acres
 D – W/20 acres SW/4 = 20 acres
D E F
 E – SW/4 S&E W/20 acres = 140 acres
 F – N/2 SE/4 = 80 acres
 G – S/2 SE/4 = 80 acres G
 Total – 640 acres

MINERAL INTERESTS
 Tract A:
 Tract D (cont’d.):
 Connor MacManus – 50%
 Boromir – 1/2 * 1/5 or 10%
 Murphy MacManus – 50%
 Aragorn – 1/2 * 1/5 or 10%
 Tract B:
 Legolas the Elf – 1/5 or 20%
 Sam Witwicky – 100%
 Gimli the Dwarf – 1/5 or 20%
 Tract C:
 Gandalf the Grey – 1/5 or 20%
 Jane Rizzoli – 25%
 Tract E:
 Maura Isles – 75%
 Council of Elrond – 100%
 Tract D:
 Tract F:
 Frodo Baggins – 1/4 * 1/5 or 5%
 Anakin Skywalker – 100%
 Samwise Gamgee – 1/4 * 1/5 or 5%
 Tract G:
 Meriadoc Brandybuck – 1/4 * 1/5 or 5%
 Barden Bellas - 100%
 Peregrin Took – 1/4 * 1/5 or 5%

LEASE INFORMATION
 Tract A:
 Tract D (cont’d.):
 Connor MacManus – Roy 1/4 to Stamper Drilling (L1)
 Boromir – Roy 3/16 to Marvel E&P (L4)
 Murphy MacManus – Roy 1/4 to Stamper Drilling (L2)
 Aragorn – Roy 3/16 to Marvel E&P (L5)
 Tract B:
 Legolas the Elf – Roy 1/4 to Marvel E&P (L6)
 Sam Witwicky – Roy 1/4 to Sector Seven (L1)
 Gimli the Dwarf – Roy 1/4 to Marvel E&P (L7)
 Tract C:  Gandalf the Grey – Roy 1/8 to Marvel E&P (L8)
 Jane Rizzoli – Roy 1/5 to Frost Exploration (L1)
 Tract E:
 Maura Isles – Roy 1/4 to Stamper Drilling (L2)
 Council of Elrond – Roy 1/4 to Sector Seven (L1)
 Tract D:
 Tract F:
 Frodo Baggins – Roy 1/5 to Marvel E&P (L1)
 Anakin Skywalker – Roy 1/5 to Stamper Drilling (L1)
 Samwise Gamgee – Roy 1/5 to Marvel E&P (L2)
 Tract G:
 Meriadoc Brandybuck – Unleased
 Barden Bellas - Roy 1/8 to Frost Exploration (L1)
 Peregrin Took – Roy 1/5 to Marvel E&P (L3)

INTEREST CALCULATIONS
 Tract A: TO Lse# Type MI x Roy = Tr. NRI x Tr. Acres / Unit Acres = Unit RI
 Connor MacManus L1 RI .5000000 .2500000 .1250000 160 640 .0312500
 Murphy MacManus L2 RI .5000000 .2500000 .1250000 160 640 .0312500
NWI TO Lse# Type Tr. GWI x NRI = Tr. NWI x Tr. Acres / Unit Acres = Unit NWI
 Stamper Drilling L1&L2 NWI 1.000000 .7500000 .7500000 160 640 .1875000
GWI TO Lse# Type WI Share x Leased MI = Tr. GWI x Tr. Acres / Unit Acres = Unit GWI
 Stamper Drilling L1&L2 GWI 1.000000 1.000000 1.000000 160 640 .2500000
 Tract B: TO Lse# Type MI x Roy = Tr. NRI x Tr. Acres / Unit Acres = Unit RI
 Sam Witwicky L1 RI 1.000000 .2500000 .2500000 120 640 .0468750
 Sector Seven L1 NWI 1.000000 .7500000 .7500000 120 640 .1406250
 Sector Seven L1 GWI 1.000000 1.000000 1 .000000 120 640 .1875000

 Tract C: TO Lse# Type MI x Roy = Tr. NRI x Tr. Acres / Unit Acres = Unit RI
 Jane Rizzoli L1 RI .2500000 .2000000 .0500000 40 640 .0031250
 Maura Isles L2 RI .7500000 .2500000 .1875000 40 640 .0117187
 Frost Exploration L1 NWI .2500000 .8000000 .2000000 40 640 .0125000
 Stamper Drilling L2 NWI .7500000 .7500000 .5625000 40 640 .0351563
 Frost Exploration L1 GWI 1.000000 .2500000 .2500000 40 640 .0156250
 Stamper Drilling L2 GWI 1.000000 .7500000 .7500000 40 640 .0468750
 Tract D: TO Lse# Type MI x Roy = Tr. NRI x Tr. Acres / Unit Acres = Unit RI
 Frodo Baggins L1 RI .0500000 .2000000 .0100000 20 640 .0003125
 Samwise Gamgee L2 RI .0500000 .2000000 .0100000 20 640 .0003125
 Peregrin Took L3 RI .0500000 .2000000 .0100000 20 640 .0003125

 Tract D (cont’d.): TO Lse# Type MI x Roy = Tr. NRI x Tr. Acres / Unit Acres = Unit RI
 Boromir L4 RI .1000000 .1875000 .0018750 20 640 .0005859
 Aragorn L5 RI .1000000 .1875000 .0018750 20 640 .0005859
 Legolas the Elf L6 RI .2000000 .2500000 .0500000 20 640 .0015625
 Gimli the Dwarf L7 RI .2000000 .2500000 .0500000 20 640 .0015625
 Gandalf the Grey L8 RI .2000000 .1250000 .0250000 20 640 .0007813
 Marvel E&P L1-L8 NWI .9500000 *.79736842 .7575000 20 640 .0236719
 Meriadoc Brandybuck n/a UMI .0500000 n/a .0500000 20 640 .0015625
 Marvel E&P L1-L8 GWI 1.000000 .9500000 .9500000 20 640 .0296875
 Meriadoc Brandybuck n/a UMI 1.000000 .0500000 .0500000 20 640 .0015625

 Marvel E&P NRI TO Lse# Type MI x NRI = Tr. NRI
 Frodo Baggins L1 RI .0500000 .8000000 .0400000
 Samwise Gamgee L2 RI .0500000 .8000000 .0400000
 Peregrin Took L3 RI .0500000 .8000000 .0400000
 Boromir L4 RI .1000000 .8125000 .0812500
 Aragorn L5 RI .1000000 .8125000 .0812500
 Legolas the Elf L6 RI .2000000 .7500000 .1500000
 Gimli the Dwarf L7 RI .2000000 .7500000 .1500000
 Gandalf the Grey L8 NWI .2000000 .8750000 .1750000
 Total Burdens L1-L8 NWI .9500000 n/a .7575000 / Leased MI .95 = *Weighted .79736842 NRI

 Tract E: TO Lse# Type MI x Roy = Tr. NRI x Tr. Acres / Unit Acres = Unit RI
 Council of Elrond L1 RI 1.000000 .2500000 .2500000 140 640 .0546875
 Sector Seven L1 NWI 1.000000 .7500000 .7500000 140 640 .1640625
 Sector Seven L1 GWI 1.000000 1.000000 1.000000 140 640 .2187500
 Tract F: TO Lse# Type MI x Roy = Tr. NRI x Tr. Acres / Unit Acres = Unit RI
 Anakin Skywalker L1 RI 1.000000 .2000000 .2000000 80 640 .0250000
 Stamper Drilling L1 NWI 1.000000 .8000000 .8000000 80 640 .1000000
 Stamper Drilling L1 GWI 1.000000 1.000000 1.000000 80 640 .1250000

 Tract G: TO Lse# Type MI x Roy = Tr. NRI x Tr. Acres / Unit Acres = Unit RI
 Barden Bellas L1 RI 1.000000 .1250000 .1250000 80 640 .0156250
 Frost Exploration L1 NWI 1.000000 .8750000 .8750000 80 640 .1093750
 Frost Exploration L1 GWI 1.000000 1.000000 1.000000 80 640 .1250000
 Unit Totals: GWI NWI
 Stamper Drilling 0.4218750 0.3226563
 Sector Seven 0.4062500 0.3046875
 Frost Exploration 0.1406250 0.1218750
 Marvel E&P 0.0296875 0.0236719
 Unleased 0.0015625 0.0015625

 Carry Scenario 1: Stamper Drilling elects to carry 100% of the UMI.
 BPO: GWI NWI % Carry CGWI CNWI BPO GWI BPO NWI
 Stamper Drilling 0.4218750 0.3226563 100% 0.0015625 0.0015625 0.4234375 0.3242188
 Sector Seven 0.4062500 0.3046875 0% 0 0 0.4062500 0.3046875
 Frost Exploration 0.1406250 0.1218750 0% 0 0 0.1406250 0.1218750
 Marvel E&P 0.0296875 0.0236719 0% 0 0 0.0296875 0.0236719
 Unleased 0.0015625 0.0015625 0% 0 0 0 0
 APO: GWI NWI % Carry CGWI CNWI APO GWI APO NWI
 Stamper Drilling 0.4218750 0.3226563 0% 0 0 0.4218750 0.3226563
 Sector Seven 0.4062500 0.3046875 0% 0 0 0.4062500 0.3046875
 Marvel E&P 0.0296875 0.0236719 0% 0 0 0.0296875 0.0236719
 Unleased 0.0015625 0.0015625 0% 0 0 0.0015625 0.0015625

 Carry Scenario 2: All participating WI owners elect to proportionately carry the UMI.
 Stamper Drilling 0.4218750 0.3226563 *42.25352% 0.0006602 0.0006602 0.4225352 0.3233165
 Sector Seven 0.4062500 0.3046875 *40.68857% 0.0006358 0.0006358 0.4068857 0.3053232
 Frost Exploration 0.1406250 0.1218750 *14.08451% 0.0002201 0.0002201 0.1408451 0.1218750
 Marvel E&P 0.0296875 0.0236719 *2.97340% 0.0000465 0.0000465 0.0297340 0.0237184
 Unleased 0.0015625 0.0015625 0% 0 0 0 0
 Sector Seven 0.4062500 0.3046875 0% 0 0 0.4062500 0.3046875
 Marvel E&P 0.0296875 0.0236719 0% 0 0 0.0296875 0.0236719
 Unleased 0.0015625 0.0015625 0% 0 0 0.0015625 0.0015625

 Carry Scenario 2 (cont’d): All participating WI owners elect to proportionately carry the UMI.
 Carried Proportionate Share:
 BPO: GWI / Total GWI = %Carry
 Stamper Drilling 0.4218750 0.9984375 42.25352%
 Sector Seven 0.4062500 0.9984375 40.68857%
 Frost Exploration 0.1406250 0.9984375 14.08451%
 Marvel E&P 0.0296875 0.9984375 2.97340%
 Total WI 0.9984375 n/a n/a

 Carry Scenario 3: Sector Seven decides not to carry it’s proportionate share of the UMI, but the remaining WI owners elect to
proportionately carry the UMI.
 Stamper Drilling 0.4218750 0.3226563 *71.24011% 0.0011132 0.0011132 0.4229882 0.3237695
 Sector Seven 0.4062500 0.3046875 0% 0 0 0.4062500 0.3046875
 Frost Exploration 0.1406250 0.1218750 *23.74670% 0.0003710 0.0003710 0.1409960 0.1222460
 Marvel E&P 0.0296875 0.0236719 *5.01319% 0.0000783 0.0000783 0.0297658 0.0237502
 Unleased 0.0015625 0.0015625 0% 0 0 0 0
 Sector Seven 0.4062500 0.3046875 0% 0 0 0.4062500 0.3046875
 Marvel E&P 0.0296875 0.0236719 0% 0 0 0.0296875 0.0236719
 Unleased 0.0015625 0.0015625 0% 0 0 0.0015625 0.0015625

 Carry Scenario 3 (cont’d): Sector Seven decides not to carry it’s proportionate share of the UMI, but the remaining WI owners elect to
proportionately carry the UMI.
 BPO: GWI / Total GWI = %Carry
 Stamper Drilling 0.4218750 0.5921875 71.24011%
 Frost Exploration 0.1406250 0.5921875 23.74670%
 Marvel E&P 0.0296875 0.5921875 5.01319%
 Total WI 0.5921875 n/a n/a

 Carry Scenario 4: Marvel E&P went NC, and all participating WI owners elect to proportionately carry the NC interest with a 300%
penalty under the JOA, while Stamper Drilling will carry the UMI.
 Stamper Drilling 0.4218750 0.3226563 *See Next Pg 0.0144909 0.0118712 0.4363659 0.3345275
 Sector Seven 0.4062500 0.3046875 41.93548% 0.0124496 0.0099269 0.4186996 0.3146144
 Frost Exploration 0.1406250 0.1218750 14.51613% 0.0043095 0.0034363 0.1449345 0.1253113
 Marvel E&P 0.0296875 0.0236719 0% 0 0 0 0
 Unleased 0.0015625 0.0015625 0% 0 0 0 0
 APO 100% / BPO 300%: GWI NWI % Carry CGWI CNWI BPO GWI BPO NWI
 Stamper Drilling 0.4218750 0.3226563 43.54839% 0.0129284 0.0103087 0.4348034 0.3329650
 Sector Seven 0.4062500 0.3046875 41.93548% 0.0124496 0.0099269 0.4186996 0.3146144
 Frost Exploration 0.1406250 0.1218750 14.51613% 0.0043095 0.0034363 0.1449345 0.1253113
 Marvel E&P 0.0296875 0.0236719 0% 0 0 0 0
 Unleased 0.0015625 0.0015625 0% 0 0 0.0015625 0.0015625

 Carry Scenario 4 (cont’d): Marvel E&P went NC, and all participating WI owners elect to proportionately carry the NC interest with a
300% penalty under the JOA, while Stamper Drilling will carry the UMI.
 APO 300%: GWI NWI % Carry CGWI CNWI APO GWI APO NWI
 Sector Seven 0.4062500 0.3046875 0% 0 0 0.4062500 0.3046875
 Marvel E&P 0.0296875 0.0236719 0% 0 0 0.0296875 0.0236719
 Unleased 0.0015625 0.0015625 0% 0 0 0.0015625 0.0015625

 APO 100% / BPO 300% – NC Carry: Marvel E&P .0296875 GWI / .0236719 NWI
GWI / Total GWI = %Carry CGWI CNWI
 Stamper Drilling 0.4218750 0.9687500 43.54839% 0.0129284 0.0103087
 Sector Seven 0.4062500 0.9687500 41.93548% 0.0124496 0.0099269
 Frost Exploration 0.1406250 0.9687500 14.51613% 0.0043095 0.0034363
 Total WI 0.9687500 n/a n/a
 BPO 100% – UMI Carry: Unleased Interest 0.0015625 GWI / 0.0015625 NWI
GWI / Total GWI = %Carry CGWI CNWI
 Stamper Drilling 0.4218750 0.4218750 100.0000% 0.0015625 0.0015625
 Total WI 0.4218750 n/a n/a

 BPO 100% – Stamper Drilling Combined Total
CGWI CNWI
 BPO 100% Stamper Drilling 0.0015625 0.0015625
 APO 100% / BPO 300% Stamper Drilling + 0.0129284 0.0103087
 Combined 100% Stamper Drilling = 0.0144909 0.0118712

 Carry Scenario 5: Marvel E&P farms-out the WI to Sector Seven and reserves a ORRI for 25% less burdens BPO. Marvel has the
option to convert the ORRI for 20% of the WI APO. Stamper Drilling will carry the UMI.
 Stamper Drilling 0.4218750 0.3226563 100.00000% 0.0015625 0.0015625 0.4234375 0.3242188
 Sector Seven 0.4062500 0.3046875 *F/O *0.0296875 *0.0222656 0.4359375 0.3269531
 Marvel E&P 0.0296875 0.0236719 0% 0 0 0 0
 Unleased 0.0015625 0.0015625 0% 0 0 0 0
 APO: GWI NWI % Carry GWI NWI APO GWI APO NWI
 Sector Seven 0.4062500 0.3046875 *F/O 80% *0.0237500 *0.0189375 0.4300000 0.3236250
 Marvel E&P 0.0296875 0.0236719 *F/O 20.0% *0.0059375 *0.0047344 0.0059375 0.0047344
 Unleased 0.0015625 0.0015625 0% 0 0 0.0015625 0.0015625

 Carry Scenario 5 (cont’d): Marvel E&P farms-out the WI to Sector Seven and reserves a ORRI for 25% less burdens BPO. Marvel has
the option to convert the ORRI for 20% of the WI APO. Stamper Drilling will carry the UMI.
 Farmout Calculations BPO:
 Marvel E&P 0.0296875 GWI / 0.0236719 NWI

NWI / GWI = NRI 1 - NRI = Current Burden
 Marvel E&P 0.0236719 0.0296875 0.7973692 1.0000000 0.7973692 0.2026308
FO ORRI - Burden = % ORRI x GWI = BPO ORRI
 Marvel E&P 0.2500000 0.2026308 0.0473692 0.0296875 0.0014063
BPO FO GWI x % NRI = BPO FO NWI
 Marvel E&P 0.0296875 0.7500000 0.0222656
GWI NWI
 BPO FO to Sector Seven 0.0296875 0.0222656
 Original Sector Seven + 0.4062500 0.3046875
 Total BPO Sector Seven = 0.4359375 0.3269531

 Farmout Calculations APO w/ Marvel electing to convert:
 Marvel E&P 0.0296875 GWI / 0.0236719 NWI

FO GWI x Converted% = B/I APO GWI
 Marvel E&P 0.0296875 20.00000% 0.0059375
 Sector Seven 0.0296875 80.00000% 0.0237500
FO NWI x Converted% = B/I APO NWI
 Marvel E&P 0.0236719 20.00000% 0.0047344
 Sector Seven 0.0236719 80.00000% 0.0189375
GWI NWI
 APO FO to Sector Seven 0.0237500 0.0189375
 Original Sector Seven + 0.4062500 0.3046875
 Total APO Sector Seven = 0.4300000 0.3236250

 Farmout Calculations – Double Check:
 Marvel E&P 0.0296875 GWI / 0.0236719 NWI
 GWI * Farmee NRI = Farmee NWI
 0.0296875 x .75 = 0.0222656 NWI
 Farmor NWI – Farmee NWI = Farmor ORRI
 0.0236719 – 0.0222656 = 0.0014063 ORRI

QUESTIONS??
CONTACT INFORMATION: PHONE: EMAIL:

ELI MURRAY, CDOA, CPLTA 214.252.2730 EMURRAY@RSPPERMIAN.COM

ENHANCED RECOVERY
AND DIVISION ORDERS
IN TEXAS
The Railroad Commission, Permitting, Tax Credits and Unitization.
William "Bill" B. Hayenga II
McElroy, Sullivan, Miller, Weber & Olmstead, L.L.P.
November 10, 2017

What We will Cover Today
• The Railroad Commission (briefly)
▫ What does the Commission regulate?
▫ Why does it matter for Division Orders?
• Enhanced Recovery
▫ What is enhanced recovery: Waterfloods, CO2 Floods, and others
• Tax Credits for Enhanced Recovery Operations
• Unitization and Payment of Royalties
▫ What is unitization in Texas?
▫ Participating vs. Non-participating Interests
What is the Railroad Commission of Texas
• State Agency that Regulates Oil and Gas Industry
▫ Established in 1881
▫ Does not regulate Railroads
• Mission Statement: “Our mission is to serve Texas by our stewardship of
natural resources and the environment, our concern for personal and
community safety, and our support of enhanced development and
economic vitality for the benefit of Texans.”
• Duty to Protect Environment, Prevent Waste, and Protect Correlative
Rights.
Railroad Commission Regulation
• Well Spacing • Pipeline Safety
• Lease line spacing • Pipeline Rates
• Density • Oilfield spills*
• Plugging • Oilfield Recycling*
• Well construction • Coal
• Drilling Permits • Surface Mining
• Injection • CO2 Sequestration
• Disposal • Hearings Division
• Enhanced Recovery
• Oil and Gas Related Tax Credits
Underground Injection Control (UIC)
• 6 Types of Injection Wells classified by the EPA:
▫ Class I wells are used to inject hazardous and non-hazardous wastes into deep, isolated
rock formations.
▫ Class II wells are used exclusively to inject fluids associated with oil and natural gas
production.
▫ Class III wells are used to inject fluids to dissolve and extract minerals.
▫ Class IV wells are shallow wells used to inject hazardous or radioactive wastes into or
above a geologic formation that contains a USDW.
▫ Class V wells are used to inject non-hazardous fluids underground. Most Class V wells
are used to dispose of wastes into or above underground sources of drinking water.
▫ Class VI wells are wells used for injection of carbon dioxide (CO2) into underground
subsurface rock formations for long-term storage, or geologic sequestration.
• Railroad Commission has jurisdiction over Class II Wells in Texas.

STATEWIDE RULE 9
Any person who disposes of saltwater or other oil and gas waste by injection into a porous formation not productive
of oil, gas, or geothermal resources shall be responsible for complying with this section, Texas Water Code, Chapter
27, and Title 3 of the Natural Resources Code.
• On-Lease Disposal
• Commercial SWDs
• FORM W-14
STATEWIDE RULE 46
Any person who engages in fluid injection operations in reservoirs productive of oil, gas, or geothermal resources must
obtain a permit from the commission. Permits may be issued when the injection will not endanger oil, gas, or geothermal
resources or cause the pollution of freshwater strata unproductive of oil, gas, or geothermal resources. Permits from the
commission issued before the effective date of this section shall continue in effect until revoked, modified, or suspended by
the commission.
• Enhanced Recovery Operations:

▫ Waterfloods
▫ CO2 Floods
• FORM H-1
STATEWIDE 46- Area Permits and Areal Variance Permits
Area Permit Areal Variance
• Permit that allows injection inside a defined • Permit that allows an exception to review wells
in ¼ mile of proposed injection well.
area, like a unit boundary.
• Must submit application to RRC and provide
• No Area Permits in Texas notice for each injection well.
• Permit Requirements • 1 areal variance in recent history.
• Factors that may be considered by the
▫ Identify total number of Injection Wells commission or its delegate in granting a variance
▫ For wells converted into injection well, include:
provide wellbore diagram. (A) the area affected by pressure increases
resulting from injection operations;
▫ ¼ mile review of wells around boundary (B) the presence of local geological conditions that
preclude movement of fluid that could
▫ Expanded Notice endanger freshwater strata or the surface; or
▫ Requirements in Water Code (C) other compelling evidence that the variance
will not result in a material increase in the risk of
fluid movement into freshwater strata or to the
surface.
Protesting Injection/Disposal Applications at the
Railroad Commission
Must File Protest with the commission within 15 days of receipt of the
application or of publication, whichever is later!!!!!!!
 “Affected person" means a person who has suffered or will suffer actual
injury or economic damage other than as a member of the general public or
as a competitor, and includes surface owners of property on which the well is
located and commission-designated operators of wells located within one-
half mile of the proposed disposal well.
Includes local governments, including Groundwater Conservation Districts.
If no protest, administrative approval.
If protested, hearing in Hearings Division at Railroad Commission.
A quick word on Groundwater Conservation Districts
Generally, two types: Taxing and Non-Taxing Districts
Recently, active in protesting Class II Wells at the RRC
Importantly- “This chapter does not apply to production or injection
wells drilled for oil, gas, sulphur, uranium, or brine, or for core tests, or
for injection of gas, saltwater, or other fluids, under permits issued by
the Railroad Commission of Texas.” TEX. WATER CODE ANN. § 36.117 (West
2016).
Not All Counties Have Groundwater Conservation Districts
Common Issues in Injection Well Hearings
Common Issues Raised at Injection Hearings that are not Relevant
• The RRC does have jurisdiction over traffic or damage to roads.

▫ R.R. Com'n of Texas v. Texas Citizens for a Safe Future & Clean Water, 336
S.W.3d 619, 621 (Tex. 2011).
• The Commission has said that Dust, Noise, Lights, Odors and Air
Contaminants are also outside the Commission jurisdiction.
Contested Cases at the Railroad Commission
Hearing
Motion for Rehearing; or

Final Order becomes Proposal for Decision
final (PFD)
If motion for
rehearing is denied, Austin Court of
Supreme Court
appeal to District Appeals
Court in Austin
Final Order at Open

Meeting based on Vote
Exceptions
of 3 Elected
Commissioners
Replies to Exceptions
What is Enhanced Recovery?
• Secondary (often waterflood) or Tertiary ( often CO2 Flood)
• Goal is to recovery hydrocarbons that were not recovered in primary
production.
• Primary Production- Drilling well to “traditional reservoir.”
16
Other Types of EOR- Biologic, Seismicity, Soaking

• Biologic EOR (tertiary recovery)*
o Reduces oil/brine IFT and/or oil viscosity to increase recovery of reserves.
o Wettability Alteration- reservoir more water wet
o Can reduces water influx
 Microbial EOR (MEOR) Treatment
 Single producing well application – designed specifically to increase rate and reserves
 Waterflood application- designed to use injectors – changes reservoir fluid properties and selectively plugs high
permeability zones to allow more uniform waterdrive to recover previously unrecoverable oil.
 Paraffin-EOR Treatment
 Single well application designed to treat specific well issues
 Enhances production and reserves - additional benefit to treatment via processes listed above
• Induced Seismicity
o High Energy/low frequency Hydro-impact tools. Shockwaves every 10 seconds traveling 1.5 miles per second. Increase in
production. Derived from production bump from trains and after earthquakes above 6.0 in California. O&G Docket No. 8A-
0240292
• Cyclic Embibic Soaking
o Single well application – fluid slug to increase rate/reserves
*Information from Locus Bio-Energy

Waterflood
• What is OOIP
• Recover 50-95% of OOIP. Depending on reservoir.

Information and Illustrations from F. J. “Deacon” Marek, P.E., Sr VP, William M Cobb & Assoc., Inc., Petroluem Engineering and Geology Consultants, Dallas, Texas.
Waterflood, cont’d
Information and Illustrations from F. J.

“Deacon” Marek, P.E., Sr VP, William M
Cobb & Assoc., Inc., Petroluem
Engineering and Geology Consultants,
Dallas, Texas.
Waterflood Aerial View
Waterflood Strat View
CO Flood
2
TAX CREDITS FOR ENHANCED RECOVERY OPERATIONS
STATEWIDE RULE 50
▫ Enhanced oil recovery project (EOR)--The use of any process for the displacement of oil from the reservoir other than
primary recovery and includes the use of an immiscible, miscible, chemical, thermal, or biological process. This term does
not include pressure maintenance or water disposal projects.
 New Projects
 Expanded Projects
Tax Rate Decrease from 4.6% to 2.3% for up to 10 years on oil from new projects and
incremental oil on existing projects!!
 Complete and File Form H-12 before injection.
 Obtain RRC Approval of H-12
 Achieve a Positive Production Response within 3 years for waterflood and 5 years for CO2 flood from date on H-12.
 FILE H-13, certification of positive production response within the 3 or 5 years time period. Failure to do so can result in loss
of tax credit.
 Make additional annual filings as needed– H-14s, H-10s, comptroller filings, etc..
23
Statewide Rule 50- EOR TAX Credit

24
Tax Code 202.054

Form H-12
File
BEFORE
Injection
begins
Positive Production Response
Form H-13
File when achieve positive
production response within 3
years for waterflood and 5
years for CO2 flood from
certification date on H-12.
Anthropogenic CO2
• CO2 from a source that would otherwise be omitted into the
atmosphere, i.e.- Coal-Fired Power Plants.
• Additional Tax Credit beyond 50% for EOR projects available.
▫ Additional requirements beyond Statewide Rule 46
 16 Texas Administrative Code Chapter 5.
• A few Projects using anthropogenic CO2 in Texas.
Unitization
• Combining of leases for joint development.
• Can be a section or dozens of sections of land.
• RRC Approval requires at least:
▫ 65% Mineral Owner Sign Up & 85% Working Interest owner sign up
▫ Hearing at RRC.
▫ Compliance with Chapter 101 of the Texas Natural Resources Code
▫ 20 Questions
20 Questions for RRC Unitization Hearing
So you want to put together a Unit? What now?
• Determine Extent of reservoir- reasonably defined by production
• Determine ownership and boundaries
• Come up with Tract Participation Factor
▫ OOIP
▫ Surface Acreage
▫ Stock Tank Barrels
▫ Blue-eyed Grandchildren
▫ Number of Oak Trees on surface
 OR A COMBINATION THEREOF. TWO-FACTOR to TEN FACTOR ALLOCATION
 Keep it fair and less complicated to sell to mineral owners
Tract Participation Factors- 4 Factor example
Ownership Example
Drafting Unit Agreement
• API Model FORM 5U03
• Custom Agreement
▫ Tip: Make sure meets statutory requirements and can be sold to interest owners
• Drafting Pitfalls
▫ Timelines: Effective Date, Automatic Termination, Filing Deadlines, etc.
 Give yourself plenty of time.
▫ Agreements needs to match project: Water, CO2, etc.
 Oil Produced, gas, both
▫ Filing of Record Requirements
▫ Accounting Requirements
▫ Ownership of Injected Fluid
▫ Costs Assigned to royalty interest owners
▫ Paying of taxes in default
▫ Expansion of Unit Boundary
Examples of Provisions
Effective Data
Examples of Provisions-
Enlargement of Unit
Article 9- Tract Inclusion
 Determines what tracts are in the unit
 How much sign up is required
 Voting Rights earned
 Indemnity for issues like title
 Later Acquisition can bring interest into unit
How Royalty Owners Get Paid
Generally:
 If Royalty owner ratified Unit Agreement:
Payment based on Unit Agreement- Unit
interest based on tract participation factors
 If Royalty owner did not ratify: pay on
lease basis for production on that lease
Unitization- Sign Up
In a perfect world the Keep in mind- No forced
royalty owners in Leases pooling in Texas. The
A, B, and C all sign up. producers and injectors
They each have at this stage of the
reservoir, producers, process are likely
and injectors on their proposed or existing
respective leases. lease only operations not
Payment is made on a unit operations.
unit basis. Royalty
owners receive
payment from wells
across the entire unit.
Unitization- Producers vs. Injectors in sign up
Potential Problem Scenario:
Lease A has an oil producer Keep in mind- No forced
and no injector. Lease B and pooling in Texas. The
Lease C have some producers producers and injectors
and injectors. Lease E has 1 at this stage of the
producer and 4 injectors and process are likely
Lease D is only injectors. proposed or existing
Lease A could opt not to lease only operations not
participate but would miss unit operations.
out on production from the
other wells. Lease D has a lot
of incentive to participate
because only injectors.
Unit Operating Agreement
• Operators and Working Interest Owners in the Unit
• Generally, Need 85% to Achieve RRC approval
• Think of JOA- Agreement on how to Operate Unit
• Determine who is Unit Operator
• Powers of Unit Operator
• Title issues
• Model Form API 5U02-1993
• Custom Agreement
Some things to think about
• Selecting and Removing Unit Operator. Electing Successor
• Amount Unit Operator can expend without approval
▫ Waterflood $$ vs CO2 $$$$$$$$$$
• Plugging at the end of the project
▫ Sinking fund? Up front? Pay at the end?
• Condition of Equipment Coming into Unit
• Title Defects
• Payment of Proportionate share of costs. Remedies for failure to do so.
• Legal Counsel
▫ Regulatory Issues
▫ Settlements
• Enlargement of Unit
• Voting Requirements and Percentages
• Auditing
• Liability Insurance
Examples of Provisions: Voting
• Percentages based on
Working Interest Percentages
• Email?
• Place of Meetings
How WI Owners Get Paid
Generally:
 If WI owner ratified Unit Agreement: Payment based on
Unit Agreement- Unit interest based on tract participation
factors
 If WI owner did not ratify: pay on lease basis for
production on that lease absent “reasonable costs” if Tract
if is included in Unit.
What about their royalty interest owners? Depends if they
qualify under tracts eligible for inclusion in the Unit in the
Unit Operating Agreement Article 9.
In a perfect world- All
Unitization- Sign Up
working interest owners in
Lease A, B, and C sign up.
Unitization- Producers vs. Injectors in sign up
Keep in mind- cannot force an
Problem 1: Lease A is 50/50 interest in the unit. If not in
undivided interest that is leased by unit, generally payment is on
two companies: Good Operator lease basis.
Inc. and Difficult to deal with, LLC.
What happens if Good signs up
and Difficult does not? Depends
on Article 9. If Tract qualifies then
can be part of unit, but payment is
based on the specific interest. If
tract does not qualify under
Article 9, the no enhanced
recovery on that tract.
Unit Tract Participation Factors - Example
TOTAL> 1.000
Phase I 0.100 0.400 0.400 0.100

Tract Surface OOIP current useable
Tract Lease Participation acres MSTB BOPD wells
1 Lease 'A' 0.28149773 200 2,100 31 6

2 Lease 'B' 0.28827399 100 1,600 52 7
3 Lease 'C' 0.43022828 220 2,500 74 8
TOTALS 1.00000000 520 6,200 157 21
Lease 'A' Ownership
Net Rev. Tract Unit

Owner Interest Participation Ownership
Good Operating, Inc. 0.750000 0.281498 0.211123
John Geologist 0.050000 0.281498 0.014075
James Farmer 0.120000 0.281498 0.033780
Edith Farmer 0.080000 0.281498 0.022520
1.000000 0.281498
STATE LANDS IN UNIT- General Land Office (“GLO”)
Considerations
▫ Riverbeds
▫ Lakes
▫ Streams
▫ Mineral classified lands
• Pooling
• Leasing
• State Ratification of Unit
▫ Approval of participation factor
Questions?
DISCLAIMER
• General Information Only.
Information found on this presentation is for general informational
bhayenga@msmtx.com
purposes only and is not, and should not be construed as, legal advice. www.msmtx.com
• Not A Solicitation.
This presentation is not intended to solicit legal business.
• No Attorney-Client Relationship.
The receipt and conveyance of information via this presentation does
not create an attorney-client privileged relationship. Should you
choose to contact any attorney by email via this presentation or
website included, please be advised that the mere sending of the
email will not create an attorney-client relationship. To maintain the
security and confidentiality of any communication, please do not send
sensitive or confidential information to any attorney at MSM by email.
Unless you are an existing client, all information sent by email is
subject to disclosure.
• Board Certification.
Unless otherwise specifically referenced in the biography of an
individual attorney (see Attorney Profiles), the attorneys listed on this
website are NOT certified by the Texas Board of Legal Specialization.
2017 NADOA Institute:
Unclaimed Property Workshop
Overview, Industry Drilldown, Audits, VDAs, and Best Practices
November 8, 2017
© 2017 Keane 1
Today’s Speakers
Lucretia Jones Quinten Moore

Senior Land Administration Specialist Manager
© 2017 Keane 2
Topics
• Introductions
• Unclaimed Property 101
• Industry specific background
• Audits
• Recent changes in Delaware law
• Delaware VDA process
• Compliance in other states
• Common pitfalls and best practices
• Closing
© 2017 Keane 3
Overview of Unclaimed Property
© 2017 Keane
4
Unclaimed Property Key Concepts
• Definition– Intangible personal property that has gone

unclaimed by the rightful owner after a specified
period of time
• Roots are in English common law:
• Escheat vs. Custodial
• Governed and enforced at the state level
• Fifty-four (54) reporting jurisdictions including, DC,
Puerto Rico, Guam and U.S. Virgin Islands:
• No two laws are exactly the same
• Foreign countries, including three Canadian provinces
have unclaimed property laws
© 2017 Keane 5
Unclaimed Property Facts
• Unclaimed property is not a tax

• At its most basic level, unclaimed property laws are
intended to be consumer protection statutes
• Unclaimed property has become an additional source of
revenue for the states
• As a result, in the past 5 – 10 years, the amount of
state outreach (letters and audit notices), and
enforcement have greatly increased
© 2017 Keane 6
Modern Unclaimed Property Law
• Escheat is not an unconstitutional taking if the action:

• Is provided for by legislation;
• Includes notification provisions;
• Contains reasonable abandonment periods (trend is for states
to decrease these periods for a one time revenue push);
• Provides for the return of property to the rightful owner upon
satisfactory proof of ownership
© 2017 Keane 7
Purpose of Unclaimed Property Statutes
• Reunite lost owners with their property

• Prevent subsequent claims by the owner against the
holder after property is transferred to the state, i.e.,
indemnification
• Prevent holder from unjust enrichment
• If property cannot be returned to the owner, it will be
used to benefit all citizens of a particular state
• The states hold the funds in a perpetual trust fund
© 2017 Keane 8
Why is Unclaimed Property Compliance
Important?
• Number of audits is increasing
• Interest and penalties are being assessed
• States are looking at unclaimed property as a solution
to fill ever-increasing state budget deficits (without
raising taxes)
• Areas of potential risk may have a material impact on
financial statements
• A single year may not be material; but when applied over 10
years and coupled with potential fines and penalties, amount
may very well become material
• It’s the law and compliance is mandatory
• Reputational risk
© 2017 Keane 9
Rules of Jurisdiction
• Priority rules established and upheld in U.S. Supreme

Court cases (Texas v. New Jersey; Delaware v. New
York):
• State of the owner’s last known address has first claim to
property
• If no address, state of incorporation of the holder has claim to
property
• Foreign address property is reported to state of incorporation.
• These were later adopted in the 1981 and 1995 Uniform
Unclaimed Property Acts
• States have codified their own versions of these
Uniform Acts, either in whole or in part
© 2017 Keane 10
Burden of Proof
• The presumption of abandonment arises when property

has been outstanding or owed beyond the applicable
dormancy period
• The holder has the burden of proof to rebut the
presumption of abandonment (opposite of criminal law
burden of proof)
• Inadequate records, system changes, record retention
and destruction practices can negatively impact the
holder’s ability to satisfy this burden
• Auditors may shift the burden of proof too soon
© 2017 Keane 11
Industry Specific Background
© 2017 Keane
12
Reporting Mineral Proceeds
• Do not aggregate
• Do not include owners with a net negative
balance
• Do not report owners if you have had owner
generated contact within applicable states
dormancy period
• One line per owner (and per well, for TX, OK,
AR)
© 2017 Keane 13
Current Pay
“At the time that an interest is presumed

abandoned, any other property right
accrued or accruing to the owner as a
result of the interest, and not previously
presumed abandoned, is also presumed
abandoned.”
© 2017 Keane 14
Current Pay Statutes:
Roll Up Concept & Reporting Process
© 2017 Keane 15
Forced Pooling
• Oklahoma
• Applies to mineral owners whose mineral interest
was forced pooled on a well located in Oklahoma
• Within year of pooling, the Holder must report and
remit funds to Oklahoma Corporation Commission
• Funds are transferred to the Unclaimed Property
Division after the dormancy period has passed
• How is the holder community handling forced
pooling?
© 2017 Keane 16
Minimum Suspense
• Funds held in suspense due to low value

• Release thresholds and timing
• Holder responsibilities
© 2017 Keane 17
Mineral Interest-Related
Property Type Codes
MI01 Net Revenue Interests

MI02 Royalties
MI03 Overriding Royalties
MI04 Production Payments
MI05 Working Interests
MI06 Bonuses
MI07 Delay Rentals
MI08 Shut-In Royalties
MI09 Minimum Royalties
MI99 Aggregate Mineral Interests
© 2017 Keane 18
Other Property Types and Holder
Responsibilities
• Common property types:
• Accounts Payable
• Payroll
• Accounts Receivable/Joint Interest Billings
• Benefits
• Holder Responsibilities:
• Report all applicable property types
• Develop P&P to encompass all departments
© 2017 Keane 19
The Current Audit &
Enforcement Environment
© 2017 Keane
20
Audit Triggers
• State registration and payment of other taxes with no

unclaimed property compliance history
• Filing only negative unclaimed property reports
• Failing to file all property types
• Claiming property without being compliant
• Merger & acquisition history
• Transient workforce
• State of incorporation
• Media event / publicity
© 2017 Keane 21
How to Prepare for an Audit - General
• Identify areas of exposure.

• Determine scope.
• High level diagnostic of each property type to
determine potential unreported liability.
• Gather and review source documents.
© 2017 Keane 22
How to Prepare for an Audit – In Practice
• Kicked off meeting with management of the

following disciplines:
• Payroll
• Benefits
• Revenue
• Accounts Payable
• Legal
• Land Admin
• Determine point person for each discipline
• Line out how communication will occur
• Determined storage location for all audit documents
© 2017 Keane 23
Contract Auditors
• Third party vs. state auditors

• Historical Background
• First 3rd Party Auditor – 1984 – Unclaimed Property
Clearinghouse
• Limited in scope & number of states
© 2017 Keane 24
Familiar Faces
© 2017 Keane 25
Holder Experience - DAS vs. TSG –
Similarities:
• Requested Newfield information:
• Full entity Listing with dates and history i.e. merger,
acquisition
• State of incorporation
• Copy of our incorporated state escheat report from the
previous year
• Revenue payable and suspense for all companies related
to parent.
• Disbursement source documents
• Accounts receivable
• Stale check procedures – written procedures
© 2017 Keane 26
Holder Experience- DAS vs. TSG –
Differences:
Multiple research One large schedule of

schedules filings
Required high level of Very quick and easy.
remediation support Only one state involved
© 2017 Keane 27
Holder Experience – What Worked Well
• Keane as mediator/advocate
• No direct dealing with state
• Newfield’s electronic database validated as
business record
• Validated no estimation for mineral proceeds
• Limited scope to main operating companies
© 2017 Keane 28
Holder Experience – Areas of
Improvement
• Guilty before proven innocent
• Communication with DAS Auditors –- struggled
communicating business practices and waiting
on DAS and State rulings
• Auditors work on commission therefore casts a
cross examination feeling as opposed to
wanting to help clients
• Many renditions of the Schedule of Findings
report
• Sense of redundancy of efforts
• Old address style of accounts
© 2017 Keane 29
How to Survive an Audit - Summary
• Preparation is key
• Educate all parties involved
• Know when to cooperate and when to
take a stance
• Communicate with auditors
• Motivate staff to consistently engage in
remediation
• Establish research priorities
• Takes diligence and grit
© 2017 Keane 30
Changes in Delaware Law
© 2017 Keane
31
Delaware S.B. 13
• Signed into law on February 2, 2017 as a result of

pressures from court cases such as Temple Inland
• Promulgates regulations regarding methods of
estimation including:
• Definition of Researchable Records
• Items to be included/excluded from estimation calculation
• Aging criteria for outstanding/voided checks and accounts
receivable credits.
© 2017 Keane 32
Delaware S.B. 13 Cont.
Effective July 11, 2017, Department of State

introduced final VDA regulations for DE VDA program.
• Base period:
• Shall consist of at least the two oldest continuous years
the holder has complete and researchable records
• Aging criteria:
• Credits and checks voided or outstanding greater than 90 days
• Write off accounts to be included in scope
• Estimation still in play
© 2017 Keane 33
Delaware S.B. 13 Cont.
Effective October 11, 2017, Department of Finance

introduced final audit regulations for audit program.
• Holders under audit as of July 22, 2015 have option
to convert to VDA.
• All holders under audit as of February 2, 2017 have
option to convert to accelerated audit.
• Must make decision by December 11, 2017.
© 2017 Keane 34
Delaware VDA Program
© 2017 Keane
35
DE VDA Benefits
Audit protection Indemnification
Waiver of interest Control the

and penalties process
© 2017 Keane 36
How to Prepare - General
• If you get a letter, do not ignore it

• Automatic referral to audit program
• Similar to audit preparation – broader in scope
• Additional property types
• Longer lookback period
• Consider several factors
• State and date of incorporation
• Testing methodologies
• Establish communication protocols
• Begin gathering supporting documents
© 2017 Keane 37
How to Prepare – In Practice
• Various reports sent to KEANE

• Bank statements
• Bank reconciliations
• Company history
• Outstanding checks
• Payroll history
• Benefits payments
• Stock
• Accounts payable
• Accounts receivable - vendor
• Revenue payable – owner
• Revenue suspense
© 2017 Keane 38
DE VDA Steps
Steps Description Timeline
1 Initial contact Holder initiates contact with
the administrator and submits a
signed VDA-1 to proceed.
2 General company Holder provides general
information company information to
administrator.
3 Introductory meeting (or Discussion between the holder

conference call at the and administrator to establish a
holder’s option) VDA Work Plan, discuss VDA
process, general expectations,
and general company
information.
4 Phase 1: Scoping The initial phase of the VDA Approx. 2 to 4 months to

process during which the holder complete.
reviews its records to
determine the entities,
property types, availability of
detailed records, and years to
be included in the scope of the
VDA.
© 2017 Keane 39
DE VDA Steps (cont.)
Steps Description Timeline
5 Phase 2: Records/Review/ Holder identifies transaction Approx. 3 to 6 months to
Testing/Remediation level detail for review, testing complete.
(as appropriate), and
remediation to determine an
initial potential liability.
6 Phase 3: Due Diligence Holder and Administrator Approx. 2 to 4 months to
& Settlement resolve open issues. Holder complete.
presents findings and enters
into a settlement agreement
with State, which includes
indemnification.
7 Phase 4: Payment Holder will render payment to In as short as 9 months from
Administration the State; the State and holder kick-off meeting.
will execute VDA-2.
© 2017 Keane 40
Estimating Liability
• Reasons for Estimation:
• Missing records;
• Voluminous records;
• Decentralized records;
• Other challenges (off-site storage, hard copies,
microfiche, etc.)
• How far back do detailed records go?
• May differ dramatically between property types
• Too many records or accounts to review in detail
• There are sampling and estimation techniques to use
in these situations
• Based upon an error rate that is typically trended
against revenue
© 2017 Keane 41
Holder Experience – What Worked Well
• Voluntary disclosure program – no sense

of guilt before proven innocent
• Detailed remediated information
accepted
• Previous audit experience
© 2017 Keane 42
Holder Experience - Areas of
Improvement and Recommendations
• Newfield did not have complete records for full
look back period – extrapolate issue
• Title requirements – set a company policy
• Validate address records are setup correctly
• Don’t let old “difficult” issues linger
• Clean-up records
• Take a tougher stance when making decisions to
report items as unclaimed
© 2017 Keane 43
Success in the DE VDA Program
Know the Make sure it’s

requirements the right Scoping is key
and regulations choice for you
Don’t go silent
Get ahead,
– participate
stay ahead
actively
© 2017 Keane 44
Compliance in Other States
© 2017 Keane
45
Voluntary Disclosure Agreements
• Formal and informal programs

• Can provide audit protection
• Request penalty and interest abatement
• Potential limitation of look-back period
• Request indemnification of review period
• Set own timetable for compliance and manage the
process
© 2017 Keane 46
Drilling Down: Texas
• Current Pay state, 7/1 Due Date

• Do not aggregate amounts less than $50
• NB: Many states will disallow aggregating for mineral proceeds;
is aggregating a good idea?
• Do not include net negative amounts

• Special MI code (MI10) to report current pay on an
annual basis
• Legal description in reports required for mineral
proceeds from wells drilled in Texas
© 2017 Keane 47
Drilling Down: Texas
• Effective Jan. 1, 2016, when reporting mineral

proceeds derived from a Texas lease or well to include
the following:
• The name of the lease, property or well
• Any identification number used to identify the lease, property
or well
• The county in which the lease, property or well is located
• Issue 1: How to report items from different leases/wells
owed to the same owner.
© 2017 Keane 48
Recent Legislative Movements
OK SB 731
Originally introduced on 2/6, this bill was amended by the Senate
on 3/2. This bill would amends the Oil & Gas provision of the OK
Code (not the unclaimed property law) relating to the payment of
proceeds from the sale of oil and gas production to provide that in the
event title remains unmarketable for two years after an operator
provides written notice of the unmarketable title, the operator may
deem all accrued proceeds related to such interest to be abandoned
and remit such proceeds as payment pursuant to the Unclaimed
Property Act until such time as title is marketable. Interest on
proceeds that has not been paid prior to the applicable time periods
provided in this section shall not apply in the following circumstances:
(1) when mineral owners or their assignees elect to take their
proportionate share of production in kind, or (2) when a mineral
owner or assignee cannot be located after reasonable inquiry by the
operator and the proceeds have been remitted to the state pursuant
to the Unclaimed Property Act.
© 2017 Keane 49
Recent Legislative Movements
WV HB 2777
Introduced on 3/2/17, this bill amends the WV Uniform
Unclaimed Property Act to require that all unclaimed oil
and gas royalties due a leaseholder of the mineral estate
be transferred and paid to the legal surface owner or
owners.
© 2017 Keane 50
Industry Trends
• Increase in audits
• Adoption of well description reporting
requirements
• More attention paid to acquisition
suspense
© 2017 Keane 51
Common Pitfalls
• Automatic suspense code exclusions

• Only reporting one property type
• Acquisition suspense
• Not reporting unknown owner
• Relying on due diligence for owner
outreach
© 2017 Keane 52
Best Practices – Holder Experience
• Educate others on type of accounts involved and

reporting rules
• Communicate during due diligence and reporting period
• Conduct thorough due diligence
• Develop policy on title requirements
• Take a tough stance on what is reportable
© 2017 Keane 53
Best Practices – In General
• Implement strong written policies and procedures

to identify, track, and report unclaimed property.
• Document all owner contact
• Research potential unclaimed transactions early.
• Establish a committee approach to compliance.
• Consider VDAs in jurisdictions where exposure
exists.
© 2017 Keane 54
Contact Information
Lucretia Jones Quinten Moore

Senior Land Administration Specialist Manager
Newfield Exploration Keane
(281) 210-5429 (971) 371-0240
LucJones@Newfield.com QMoore@KeaneUP.com
© 2017 Keane 55
HEADS I WIN, TAILS YOU LOSE!
ETHICS IN NEGOTIATION
Presented by: Virginia "Ginni" Hanks is Associate General Counsel for
NIKE, Inc
Sources of modern ethics framework:

i. Personal/religious morals
ii. Statutes and laws
iii. Employer's code of ethics
iv. AAPL Code of Ethics, Standards of Practice
v. ABA Model Rules of Professionalism
vi. Relationships among the sources
vii. AAPL Standards of Practice applicable to negotiating
Case studies:
i. Puffery vs. fraud
ii. Representations covered in contract vs. fraud
iii. Unilateral mistake vs. fraud
iv. Unequal bargaining power; capacity to contract?
v. Illness, alcoholism; capacity to contract?
Firestone, Flowlines & More –
What Operators Need to
Know in Colorado
NADOA 44th Annual Institute
November 9, 2017
Presented by:
Steptoe & Johnson PLLC
David R. Little & Diana S. Prulhiere
Firestone Recap & Update
• Home explosion on April 17, 2017
– Cut, abandoned gas flowline attached to well but
not disconnected from wellhead and capped
• COGCC Summary of Investigation (10/13)
– Vapor samples
– Ground methane survey
– Soil gas survey (2x)
– No general or ongoing threat; no
hydrocarbons detected in recent monitoring
Notice to Operators
• COGCC issued NTO on May 2, 2017
– Phase I: all operators must inspect existing
flowlines within 30 days
• Provide COGCC with inventory and location data
– Phase II: within 60 days operators must (a)
pressure test all active flowlines within 1,000
ft. of occupied buildings and (b) complete
proper abandonment procedures regardless
of distance from occupied buildings
FAQs (June 22, 2017)
• Does NOT apply to midstream gas gathering
pipelines
• Does apply to federal surface & minerals; does NOT
apply to tribal lands
• Does apply to intrastate gas storage; does NOT
apply to interstate FERC gas storage
• Does apply to flowlines associated with shut in and
temporarily abandoned wells
• Distance from a Building Unit applies to both ends
of a flowline and the known pathway of a flowline
NTO Update (August 14, 2017)
http://cogcc.state.co.us/library.html#/special_projects/flowlines
NTO Update (Sept. 25, 2017)
• 120,815 flowline segments identified within
1,000 ft. of a Building Unit
– 107,297 passed integrity test or were abandoned
– 428 lines did not pass integrity test
• “COGCC is tracking down the follow‐up work on
those lines”
– 13,090 unknown lines
• Working to determine status – not tested,
incomplete data, errors, previously capped / shut‐
in/abandoned, outside scope of NTO
COGCC Resources
New Initiatives
• August 22 – Gov. Hickenlooper announced
policy initiatives to be completed in 12 mos.
– Strengthening COGCC’s flowline regulations
– Enhancing the 8‐1‐1 “one call” program
– Creating a nonprofit orphan well fund
– Prohibiting future domestic gas taps
– Improving safety training
– Requesting peer‐review of some COGCC rules
– Exploring an ambient methane leak detection pilot
program
Flowline Rulemaking
• Definitions – additions and clarifications
• Change “pipeline” to “flowline”
• 1100 Series proposed updates:
– Incorporate installation and design standards
– Include integrity monitoring and testing
– Improve flowline record keeping & reporting
– Improve flowline abandonment requirements
– Incorporate requirements from the NTO
Flowline Rulemaking
• Projected timeline as of September 8th
http://cogcc.state.co.us/documents/reg/Rules/FlowlineRulemaking/20170908%20Flowline%20Rulemaking%20Timeline.pdf
Flowline Rulemaking
• September 8th – Scoping Document
– Abandoned vs. active lines
– Well pad lines vs. remote production facilities
– Low pressure line exception
– Produced water gathering systems
– Existing engineering standards
– 811 program
– Flowline abandonment requirements
– Continuous monitoring system
Flowline Rulemaking
• September 21st – First Stakeholder Meeting
– Reviewed the September 8th Scoping Document
– Distinguished between stakeholder and party
• Party = anyone who files the form claiming party
status; forms due on October 30th
– Right to file a statement on proposed rules, respond to other
party’s filing, participate as a party in the hearing
• Stakeholder = anyone interested
– Can submit comments but do not file form
– Do not have the same rights
– Audio available on COGCC website
Flowline Rulemaking
http://cogcc.state.co.us/reg.html#/rules/flowlinerulemaking Request for Party Status in Flowline Rulemaking (MS Word Document)
Flowline Rulemaking
• October 13th – Scoping Comments
– Anadarko
• Lines used to transfer produced water; abandonment
– Boulder County
• Record keeping, mapping, leak monitoring, clean up
– Colorado Oil & Gas Association (COGA)
• Proposed definitions and additional terms
• Integrity management options
• Installation and design – technical specifications
• Water gathering systems – 700 Ser. financial assurance
Flowline Rulemaking
• October 13th – Scoping Comments cont.
– Colorado Petroleum Council
• Similar to COGA comments
– La Plata Energy Council
• Standards for high CBM producing counties
– League of Oil and Gas Impacted Coloradans (LOGIC)
• Extend rulemaking beyond flowlines
– Oil & Gas Accountability Project (OGAP)
• Removal / disposal of abandoned flowlines
Flowline Rulemaking
• October 15th – Notice of Rulemaking Hearing
http://cogcc.state.co.us/reg.html#/rules/flowlinerulemaking Notice of Rulemaking Hearing
Flowline Rulemaking
• October 15th – Notice of Rulemaking Hearing
– Public Participation = Friday, 12/1
• Anyone may submit comments
– Party Status = Monday, 10/30
• Written requests including name of party and
representative, e‐mail, street address, phone number
– Prehearing Statements and Party Filings – 11/7
• Participation required; statements limited to 5 single
spaced pages; attach alternative rule language
– Filing and Service – hard and electronic copies
Flowline Rulemaking
• October 15th – Initial Draft Proposed Rules
– 100 Series: Definitions
• Breakout tank; domestic tap; flowline; gathering line;
lockout; tagout; riser; etc.
– 1100 Series: Flowline Regulations
• Domestic tap and oil gathering line registration
• Material; design and installation; maintenance; repair
• Record keeping; one‐call participation
• Integrity management (pressure testing)
• Abandonment
Flowline Rulemaking
• October 15th – Initial Draft Proposed Rules
– 300 Series: Drilling, Devel., Prod. and Aband.
• Produced water flowline transfer systems; oil
measurement
– 600 Series: Safety Regulations
• Mechanical conditions (valves and check valves)
– 700 Series: Financial Assurance
• $50,000 statewide blanket (small system exception)
– 900 Series: Waste Management
• Reporting spills/releases of E&P waste
Local or State Control—the
Experience in Colorado
• Historical Approaches to the Local or State
Control Issue
– COGCC permitting and regulation only
– Bans (Greeley and La Plata County, 1994)
– Operation conflict hearings (Gunnison County)
– MOUs (La Plata County, Broomfield)
– COGCC – Start with local government , LUMAs
• City of Longmont v. Colo. Oil & Gas Ass’n, 369
P.3d 573 (Colo. 2016)
– Longmont adopted ban on hydraulic fracturing
within city limits and the storage or disposal of waste
from hydraulic fracturing, including flowback,
wastewater or brine
– Court acknowledges “the virtues and vices of
fracking are hotly contested” and it respects the
sincerity and good faith of competing views
• City of Longmont v. Colo. Oil & Gas Ass’n, 369
P.3d 573 (Colo. 2016)
– Court: Operational conflict exists
– Test: “whether the effectuation of a local interest
would materially impede or destroy a state interest,
recognizing that a local ordinance that authorizes
what state law forbids or that forbids what state
law authorizes will necessarily satisfy this standard”
– Court concludes an operational conflict exists
between Longmont's fracking bans and applicable
state law
• City of Fort Collins v. Colo. Oil & Gas Ass’n, 369
P.3d 586 (Colo. 2016)
– Fort Collins’ five year moratorium to study the
impacts of hydraulic fracturing on property values
and human health was preempted
– “[A] five‐year moratorium is not sufficiently different
from a perpetual ban” such as was presented in the
Longmont case
– Both cases decided on a “facial evaluation;” no need
for a factual hearing in the district court
• Boulder County – Most recent rolling moratorium
expired May 1, 2017
• State sued; Boulder County District Court denied
City’s Motion to Dismiss
• Commissioners’ multi‐pronged approach
– Focus on public health
– Change law via legislation and rulemaking
– Promote sustainable practices
– Monitor legal decisions
– Strategize future approaches
• New Boulder County regulations effective
March 23, 2017
– Increased notice and public comment
– Air quality monitoring
– Water well sampling
– Hydrocarbon emissions control measures
– Disruption payments
– Evaluation of impacts on surrounding areas and
environment using 17 criteria
• Boulder County ‐ Special Review Required
– Staff review, public hearing, and recommendation by
the Planning Commission
– Review, public hearing, and decision by the Board of
County Commissioners
– In addition to approval of APD from COGCC
• Community Engagement Required
– Local communities, residents, other stakeholders
– Opportunity to comment and address concerns
• Erie
– Odor ordinance
• Thornton
– Lawsuit filed by Colo. Oil & Gas Ass’n challenging
new regulations
• Broomfield
– MOU process; spacing applications
• Lafayette
–?
• Newest approach ‐ COGCC Rule 216 ‐ voluntary,
flexible planning and permitting tool
– Rule adopted in 2008 and 2009 COGCC rulemaking
– Identify future oil & gas activities in a defined
geographic area
– Facilitate early discussions and collaborative planning
– Identify measures to minimize adverse impacts to
public health, safety, welfare, and the environment
Crestone Peak Resources CDP
• Filed February 22, 2017; amended March
17, 2017
• 216 wells in 12 square miles
between Longmont and Erie
• Three corresponding drilling
and spacing unit applications
• CDP process developing
• Scope:
– Must cover more than one proposed location but
otherwise broad
• Participants:
– Colorado Department of Public Health and
Environment
– Colorado Division of Wildlife
– Local government designees
– All surface owners
• Information:
– Determined by operator and participants
• Benefits:
– Tailor to needs and circumstances of operator
– Can include variances to COGCC rules
– May eliminate need for site‐specific permitting
requirements
– Approved CDPs receive priority in permitting
– Once accepted, valid for 6 years
– Same procedure to modify; limited review
• Township 1 North, Range 69 West, 6th P.M.
– Section 1: All ‐ Section 10: All
• Township 2 North, Range 69 West, 6th P.M.
7,680 acres, more or less
Three 2,560‐acre drilling & spacing units
http://www.dailycamera.com/boulder‐business/ci_31249626/collision‐course‐energy‐company‐crestone‐peak‐and‐boulder
• Rule 502.b. variance to Rule 303
– Rule 303 governs Form A and Form 2As
– Variance requested = temporary hold on
acceptance and processing of any Form As or Form
2As for the Application Lands from any Owner
• Owner = right to drill into and produce from a pool
and appropriate the oil or gas produced for himself or
others (C.R.S. § 34‐60‐103(7))
• Duration = until COGCC enters an Order on the CDP
– Requires good faith effort to comply
• Stipulation for Voluntary Standstill
– Other parties:
• 8 North, LLC (Extraction) ‐ leaseholder
• Kerr‐McGee Oil & Gas Onshore LP ‐ leaseholder
– Agreed to voluntary standstill on filing Form 2s
or Form 2As within Application Lands
– 9 months (May 1, 2017 – February 1, 2018)
– Terminates if Commission has not issued an
order on the CDP at the first scheduled hearing
or 90 days thereafter (unless continued)
• Boulder County Letter
– Timing
• Define beginning and end of preliminary / final phases
• Define associated due dates for each phase
• Define dates for stakeholder meetings preceded by
information sharing deadlines
– Methods of Participation
• Define minimum number of meetings for input by all
stakeholders in each phase and at final hearing
• Define methods by which input provided
• Boulder County Letter
– Criteria
• Ensure COGCC information requests clearly identify
essential elements and standards
• Develop criteria on which CDP will be approved or
denied, together with direction whether CDP can be
approved with modifications / conditions at hearing
– Transparency
• Issue public information on the process developed
– Rulemaking
http://cogcc.state.co.us/documents/library/Special_Projects/Crestone_CDP/Description%20and%20Timing%20of%20Process.pdf
Other COGCC Updates
• Martinez v. COGCC, 2017 COA 37 (Colo. App.
Mar. 23, 2017) (cert. petition pending)
– Petition for rulemaking to COGCC
– At issue is C.R.S. § 34‐60‐102(1)(a)(I)—the COGCC is
to “foster the responsible balanced development,
production, and utilization of the natural resources
of Colorado in a manner consistent with protection
of public health, safety, and welfare, including
protection of the environment and wildlife
resources” C.R.S. § 34‐60‐102(1)(a)(I)
Other COGCC Updates
– Requested the Commission not issue any drilling
permits “unless the best available science
demonstrates, and an independent third party
organization confirms,” that drilling will not
cumulatively impair Colorado’s atmosphere, water,
wildlife, and land resources, adversely impact human
health or contribute to climate change
– District court affirmed – statute requires balancing
Other COGCC Updates
– Held: Commission has broad authority that supports
a different conclusion than Commission/District
Court
• COGCC has power to “make and enforce rules, regulations,
and orders” and “do whatever may be reasonably
necessary” in regulating oil and gas development
• Regulation “in a manner consistent with” does not require a
balancing test; it is a condition that must be fulfilled (i.e.
“subject to” as opposed to “balanced with”)
• Merits of proposed rule not addressed
Other COGCC Updates
– Disagreement over appeal – AG v. Governor
v. COGCC (v. COGCC Director?)
– Big deal?
– If petition for writ of certiorari granted, Colo.
Sup. Ct. decision in 9 to 12 months
– If petition for writ of certiorari denied,
remand to COGCC for further proceedings
Other COGCC Updates
• Grant Bros. Ranch, LLC v. Antero Res. Piceance
Corp., 2016 COA 178 (Colo. App. Dec. 1, 2016)
– Pooling issue: mineral owner Grant Brothers refused
Antero’s offer to lease or participate and was pooled
by order of the COGCC
– Three years later, Grant Brothers sued in district
court, requesting an audit and claiming the wells had
reached payout; Antero moved to dismiss
– Court: Given the Act's comprehensive scheme, the
COGCC has primary jurisdiction to resolve “payee”
issues like this one under C.R.S. 34‐60‐116 and 118.5
Other COGCC Updates
• COGCC Order No. 1‐202 (Sept. 11, 2017)
– Order issued after hearing on five applications filed
with the COGCC
– Issue: Whether the pooling provisions in C.R.S. 34‐
60‐116 require parties who have consented to
participate in drilling wells to pay overriding royalty
interests which encumber the working interests of
lessees who did not elect to pay costs during the
statutory penalty period
Other COGCC Updates
• COGCC Order No. 1‐202 (Sept. 11, 2017)
– Answer: No
– The phrase “royalty or other interest[s] not obligated
to pay any part of the cost” of a well used in C.R.S.
34‐60‐116(7)(a) does not include overriding royalty
interests carved out of nonconsenting working
interests obligated to pay statutory penalties
– To hold otherwise would permit nonconsenting
working interest owners to circumvent statutory risk
and reimbursement penalties by assigning out
overriding royalty interests
QUESTIONS?
Thank You!
David R. Little Diana S. Prulhiere
Steptoe & Johnson PLLC Steptoe & Johnson PLLC
Dominion Towers Dominion Towers
600 17th Street, Ste. 2300 South 600 17th Street, Ste. 2300 South
Denver, CO 80211 Denver, CO 80211
david.little@steptoe‐johnson.com diana.prulhiere@steptoe‐johnson.com
303‐389‐4370 303‐389‐4365
Material Disclaimer
These materials are public information and have been prepared solely
for educational purposes. These materials reflect only the personal
views of the authors and are not individualized legal advice. It is
understood that each case and/or matter is fact‐specific, and that the
appropriate solution in any case and/or matter will vary. Therefore,
these materials may or may not be relevant to any particular
situation. Thus, the authors and Steptoe & Johnson PLLC 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 Steptoe &
Johnson PLLC. While every attempt was made to ensure that these
materials are accurate, errors or omissions may be contained therein,
for which any liability is disclaimed.
ARE LEADERS BORN OR MADE?
Presented by: Dr. Santoshia S. Oggs
University of Phoenix – Program Chair, Georgia Campuses
Leadership is the process through which a person influences
and motivates others to accomplish a task. This world has
had amazing leaders including Nelson Mandela, Mahatma
Ghandi, Martin Luther King, Bill Gates, etc.. Many believe
these individuals were great leaders because they were
genetically predisposed. While others believe they
developed their stellar leadership skills through proper
education and experience. Dr. Oggs will discuss if
leadership is a trait that is inherited, learned, or a
combination of the two.

SONRIS
• WHAT DOES SONRIS STAND FOR?
• STRATEGIC ONLINE NATURAL RESOURCES INFORMATION SYSTEM AND IS THE SYSTEM USED BY THE
LOUISIANA DEPARTMENT OF NATURAL RESOURCES (AKA DNR) FOR SEARCHING PUBLIC OIL & GAS
INFORMATION.
• WHAT IS SONRIS?
• SONRIS HAS BEEN DESIGNED TO TAKE OPTIMAL ADVANTAGE OF THE LATEST, YET APPROPRIATE,
INFORMATION TECHNOLOGY. BY ADOPTING AN OPEN SYSTEMS ARCHITECTURE, DNR CAN MAXIMIZE THE
OPTIONS IT HAS IN BUILDING APPLICATIONS WHILE MINIMIZING ITS RELIANCE ON THE WHIMS AND
FORTUNES OF A SINGLE VENDOR. KNOWLEDGE ENGINEERING THEORY AND PRACTICES ARE BEING USED TO
DEVELOP A BUSINESS MODEL OF ALL DNR BUSINESS PROCESSES, ENTITIES AND THEIR RELATIONSHIPS.
ACTUAL DESIGN AND BUILD FUNCTIONS ARE ACCOMPLISHED USING THE LATEST COMPUTER-ASSISTED
SOFTWARE ENGINEERING TOOLS AND TECHNIQUES INCLUDING ORACLE’S DESIGNER AND ORACLE
DEVELOPER SUITE.
2
WHERE IN THE WORLD IS SONRIS?
SONRIS can be found in one of two links shown below:
EITHER THROUGH THE DNR HOMEPAGE

AND CLICKING ON THE SONRIS ICON OR BY ACCESSING SONRIS DIRECTLY AT
HTTP://WWW.DNR.LOUISIANA.GOV/ HTTP://WWW.SONRIS.COM/
3
WHAT TOOLS ARE AVAILABLE?
OIL AND GAS WELL DATA AND INFORMATION
IN THE FORM OF:
• GIS SONRIS
• DOCUMENT ACCESS
• STANDARD - USE JAVA TO DISPLAY
SOPHISTICATED QUERY SCREENS AND
RESULTS.
• LITE - ALLOW QUERIES WITHOUT USING
ANY PLUG-INS, ONLY NATIVE WEB
BROWSER FUNCTIONALITY.
• ROD - REPORTS ON DEMAND DISPLAY A
SPREADSHEET-LIKE INTERFACE TO
PRODUCE CUSTOMIZABLE REPORTS
*Each application is a digital source of well information. It is useful to be familiar with all applications!
4
FAVORITE TOOL - SONRIS GIS
SONRIS GIS can be found directly at the link below:

http://sonris-www.dnr.state.la.us/gis/agsweb/IE/JSViewer/index.html?TemplateID=181
5
WHAT ARE THE BENEFITS OF SONRIS- GIS?
• INTERACTIVE MAP WITH MANY DETAILED LAYERS
• ABILITY TO SELECT LAYERS AND BACKGROUNDS TO BE PLACED ON THE GEOGRAPHICALLY
REFERENCED MAP.
• ABILITY TO VIEW TOWNSHIPS, OIL AND GAS FIELDS, WELLS, ACTIVE LEASES, AND COASTAL
PERMITS.
• THE MAP CAN THEN BE SAVED, EXTRACTED, OR PRINTED DIRECTLY FROM SONRIS
• GREAT TOOL TO SPATIALLY IDENTIFY INFORMATION
• WELLS WITHOUT COORDINATES DO NOT PLOT; AS SUCH, ALWAYS CROSS CHECK WITH
STANDARD, LITE, AND DOCUMENT ACCESS
• IMPORTANT DNR RECOMMENDS GOOGLE CHROME AS THE PREFERRED BROWSER FOR
YOUR GIS NEEDS, AVAILABLE FOR FREE DOWNLOAD FROM GOOGLE'S WEBSITE. CLICK THE
"GET GOOGLE CHROME" LOGO TO THE RIGHT TO OPEN THE DOWNLOAD PAGE.
6
BASE MAPS USED IN THE SONRIS GIS MAP?
• PARISH BOUNDARY MAP, A 1:500,000, AND A 1:100,000 USGS DIGITAL RASTER
GRAPHICS (DRG) MAP, SO WELL LOCATIONS CAN BE REFERENCED TO NATURAL AND
CULTURAL FEATURES AND BOUNDARIES.
• WELL LOCATIONS ARE SHOWN AS DERRICK SYMBOLS AND CAN BE IDENTIFIED USING
THE "ID" TOOL AND SELECTING A WELL. THIS ACTION DISPLAYS A TABLE OF THE DATA
RELATED TO THE SPECIFIC WELL. THE USER CAN ALSO DISPLAY THE WELL
STATUS/PRODUCT SYMBOLS USED BY THE OFFICE OF CONSERVATION BY ACTIVATING
THE "LIGHTNING BOLT" TOOL AND SELECTING A WELL. OTHER IMPORTANT FEATURES
ARE "ZOOM" AND "PAN." USERS CAN VIEW INSTRUCTIONS FOR UTILIZING THE LIWR
INCLUDING PRINTING.
7
SONRIS- GIS
Some layers require the map to be zoomed in before they

can be displayed. Select the magnifying glass to zoom. Select box to right of criteria to display feature on map
8
SONRIS- GIS
9
SONRIS- GIS
10
SONRIS- GIS
11
SONRIS- GIS
12
VIDEO 1: HOW TO FIND LEASE AND RELATED INFO
• UPCOMING VIDEO SHOWS HOW TO FIND AN ACTIVE LEASE USING LEASE NUMBER
• ABILITY TO MAP LOCATION OF LEASE
• LIST OF THE LEASE’S CURRENT OWNERS
• DOCUMENT ACCESS – TO OBTAIN A COPY OF THE LEASE
• ADDITIONAL LEASE DETAILS SUCH AS:
• DATE
• CONSERVATION ORDER #
• ASSIGNMENTS ASSOCIATED TO THE LEASE
• INSTRUCTIONS ON PRINTING MAP WITH THE LEASE OUTLINE
LINK:
http://www.dnr.louisiana.gov/assets/OMR/media/MP4_Videos/How_to_find_a_lease_and_related_information.mp4
13
VIDEO 1 : LEASE INFO
14
VIDEO 2: HOW TO LOCATE A WELL AND GET WELL INFO
• SHOWS HOW TO LOCATE A WELL INFORMATION THROUGH GIS WITH API #
• VISUAL VIEW OF THE LOCATION OF WELL COMPLETION
• DETAILS ON THE WELL COMPLETION
• DATE OF FIRST SALES
• CONSERVATION ORDER
• SERIAL NUMBER
• DOCUMENT ACCESS
• APPLICATION FOR PERMIT TO DRILL FOR MINERALS
• AS DRILLED PLAT
LINK:
http://www.dnr.louisiana.gov/assets/OMR/media/MP4_Videos/How_to_locate_a_well_and_get_well_info.mp4
15
VIDEO 2: FINDING WELL INFO
16
WHAT
•
IS DOCUMENT ACCESS?
DATABASE FOR SCANNED DOCUMENTS ACCESS STORED DOCUMENTS;
• SOURCE OF ALL DATA FOR DATA ACCESS APPLICATIONS (STANDARD, LITE, ROD, GIS)
• MUST KNOW SPECIFIC REFERENCE TO ACCESS DOCUMENTS
Note that Document Access requires add-on such as: Adobe reader for pdf files. Irfan View for
large document display such as well log.
17
WHERE
•
ARE THE CONSERVATION ORDERS?
SEARCH WITHIN DOCUMENT ACCESS
• SEARCH BY DOCUMENT TYPE
• SELECT “FIELD ORDER INDEX-BLACK BOOKS”
• ENTER FIELD CODE- EXAMPLE 9116- VENICE
• CLICK THE SEARCH BUTTON
18
CONSERVATION ORDERS
• THE FOLLOWING BOX WILL OPEN
• CLICK ON THE XLS DOCUMENT TO FIND YOUR CONSERVATION ORDER
• CLICK ON EXCEL SHEET SHOWN AT THE BOTTOM OF YOUR WEBPAGE
19
CONSERVATION ORDERS
• OPEN THE EXCEL INDEX IN ORDER TO FIND UNIT NAME (V B7 R9B-9C SU)
• CLICK THE BLUE FONT –HYPERLINK OPENS THE ORDER
20
WELL PERMIT INFO
• SEARCH BY DOCUMENT TYPE
• SELECT “PERMITTING”
• SEARCH UNDER WELL PERMIT
DRILL/AMEND
21
WELL PERMIT INFO
DOCUMENTS ARE INDEXED BY TYPE AND
INITIALLY SORTED BY EFFECTIVE DATE
• WELL PERMIT TO DRILL/AMEND = PERMIT
DOCUMENTS
• WELL ENGINEERING/MECHANICAL = WH-1,
FORM COMP, CASING AFFIDAVITS, ETC.
• LEASE FACILITY INSPECTION REPORT =
REPORTS FILED BY CONSERVATION’S
FIELD STAFF
• WELL FILE HISTORIC = ALL WELL
DOCUMENTS PRIOR TO 2000
22
SONRIS STANDARD
• APPLICATION USED BY CONSERVATION TO KEY DATA INTO SYSTEM AND TO ANALYZE
RECORDS
• LIVE- ONCE KEYED INTO SYSTEM, AVAILABLE FOR PUBLIC ACCESS
• GREAT SEARCH TOOL TO LIMIT POPULATION TO REVIEW
23
SONRIS – STANDARD
• WORKS BEST IN INTERNET EXPLORER
• REQUIRES OLDER VERSION OF JAVA
• STANDARD WILL NOT LOAD? CHECK JAVA
REQUIREMENTS AND UPDATE (WELL,
DOWNGRADE) YOUR COMPUTER!
24
SONRIS - STANDARD
CAN SEARCH BASED ON ANY PARAMETER DISPLAYED
• SERIAL NUMBER, WELL NAME, WELL NUMBER STATUS, API NUMBER, OPERATOR CODE, FIELD
CODE, PERMIT DATE, STR, PARISH CODE
25
SONRIS - STANDARD SHORT-CUTS
•Conservation » Codes/Lookups » Well Status Information (Standard)
•Conservation » Well Information » Amended Permit To Drill (Standard)
•CONSERVATION » WELL INFORMATION » LUW HISTORY BY WELL (Standard)
•Conservation » Well Information » Permit to Drill (Standard)
•Conservation » Well Information » Well History By Operator (Standard)
•Conservation » Well Information » Wells By Operator By Field (Standard)
•Mineral Resources » Codes/Lookups » Field Information (Standard)
•Mineral Resources » Codes/Lookups » LUWS By Name (Standard)
26
SONRIS - LITE
• ALLOWS QUERIES WITHOUT USING ANY PLUG-INS; ONLY NATIVE WEB BROWSER
FUNCTIONALITY
• LIVE- ONCE KEYED INTO STANDARD, AVAILABLE IN LITE
• ACCESS DATA FROM STANDARD TO COPY AND ANALYZE
• WORKS WELL IN ANY BROWSER
27
SONRIS - LITE “USING LUW CODES”
• LUWS ARE CODES ASSIGNED TO WELLS TO REPORT PRODUCTION. MULTIPLE WELLS SHARE
THE SAME LUW IN THE FOLLOWING INSTANCES:
• ON THE SAME LEASE AND SAME PRODUCT (LUWS ARE OIL OR GAS)
• IN THE SAME UNIT OPERATED BY THE SAME OPERATOR
• A SINGLE WELL CAN HAVE MULTIPLE LUWS THROUGHOUT ITS LIFE

• PERMITTED AND COMPLETED AS A GAS LEASE WELL
• UNIT FORMED; UNIT LUW ASSIGNED
• RECOMPLETED TO AN OIL LEASE SAND
• THEREFORE, MUST REVIEW LUW HISTORY TO DETERMINE WHICH WELLS ARE ASSOCIATED
WITH THE PRODUCTION!
28
SONRIS LITE FAVORITES
• CONSERVATION » CODES/LOOKUPS » LUW INFORMATION BY CODE
NUMBER (LITE)
•CONSERVATION » CODES/LOOKUPS » LUWS BY FIELD (LITE)
•CONSERVATION » CODES/LOOKUPS » LUWS BY NAME (LITE)
• CONSERVATION » WELL INFORMATION » WELLS BY API NUMBER (LITE)
• CONSERVATION » WELL INFORMATION » WELLS BY LUW (LITE)
• CONSERVATION » WELL INFORMATION » WELLS BY SECTION, TOWNSHIP
AND RANGE (LITE)
• CONSERVATION » WELL INFORMATION » WELLS BY SERIAL NUMBER (LITE)
29
SONRIS LITE FAVORITES
• MINERAL RESOURCES » LEASE RELATED INFO » LEASE ANALYSIS
REPORT (LITE)
•MINERAL RESOURCES » LEASE RELATED INFO » LEASE OWNERSHIP BY
LEASE NUMBER (LITE)
•MINERAL RESOURCES » LEASE RELATED INFO » LEASE OWNERSHIP
REPORT (REPORT)
• MINERAL RESOURCES » LEASE RELATED INFO » PAYOR REGISTER
REPORT (REPORT)
30
SONRIS - ROD
• ROD = REPORTS ON DEMAND
• DISPLAYS SPREADSHEET-LIKE INTERFACE TO PRODUCE CUSTOMIZABLE REPORTS. DATA
PULLED FROM STANDARD AND UPDATED EACH NIGHT (IE, NOT LIVE).
• WORKS BEST IN INTERNET EXPLORER & REQUIRES OLDER VERSION OF JAVA
• MANY REPORTS AVAILABLE; HOWEVER, THE PRESENTER DOES NOT USE THIS TOOL VERY
OFTEN
31
SONRIS - ROD
32
SONRIS - ROD
• QUERY • ACTION
• ENTER • PRINT OR SAVE
• EXECUTE
33
Hilcorp Energy
1111 Travis
Houston, TX 77002
O: 713.289.2853 F: 281-203-5701
ybazan@hilcorp.com
Millenials to Seniors: How to Navigate Generational
Challenges and Work with Difficult People
NADOA 44th Annual Institute • November 8 – 10, 2017
PRESENTATION | NADOA November 2017

GRATITUDE
• Participants & attendees
• Companies & organizations
• Hotel staff and personnel
• Family, friends and supporters
• NADOA staff and Board members
PRESENTATION | NAODA November 2017

A TRUE STORY…
• Getting into a verbal and almost physical
altercation with your exes’ spouse
• Protecting your kid, disapproving over how
your child is disciplined for disobedience
• Feel obligated to protect and speak on your
kid’s behalf
• How far will you go, what is the end result

DEFINING DIFFICULT
The role of: People carry things
• Cognition • History
• Perception • Culture
• Communication • Beliefs
• Baggage

DEFINING DIFFICULT
• Other elements include:
– Mismanaged Expectations
– Mistreatment and bullying
– Unaligned goals
– Differing “whys”

TRUTHS ABOUT PEOPLE
• People can readily surprise you
• Assumption can lead to tons of problems
• You can’t change people; you can change
– Attitudes, Beliefs, Thoughts, Behavior
• Motivation: How to use fear vs power
• (Robert Evans)

TRUTHS ABOUT PEOPLE
• According to the DISC Behavioral Assessment
– Dominant = 3%
– Influencing = 11%
– Steady = 68%
– Compliant = 18%

HOW WE’RE THE SAME
• Conduct a quick exercise to see which people
are familiar with certain types of cultural
items and icons
• Demonstration of technology’s role in learning
and cultural engagement
• The role of attention, acceptance and
acknowledgement in working well with others

HOW WE’RE THE SAME
• Focusing on goals, aspirations and wins
• How can we (the organization) help you
achieve those goals etc.
• Understanding how people want the
destination but differ on the approach
• Avoiding the classic pitfall of “back in the
day…”

REMEDIES & SOLUTIONS
• 1) Identify the type of difficult person
– Achievers, Doubters, Cynics
– Understand why they are being difficult
– Act accordingly: Nurture and mentor those who
are willing and show a desire to grow; provide
options to those who are truly difficult
– Don’t fear change, go to the tough places but be
open to conflict

• Utilize the triad of conflict
– People, Process, Policy based conflicts
– Know the types of conflict you are or will
encounter
– Prepare and engage accordingly

• How to develop difficult people
– Analyze the nature of the relationship(s)
– Identify the type of conflict
– What is the source of the conflict
– Ask the right questions
– Listen, listen and listen

• Always act with purpose
• Be compassionate and understanding
• Have your limits and most importantly
• Set and communicate your boundaries
• Broken relationship is the responsibility of all
sides
• Feedback systems are valuable

BLACK BELT MINDSET
• Know your organization’s culture
• More than core values on the website
• Remember, daily or regular practice creates
mastery and prevents problems
• What is your kata? Don’t have it, then create
it!
• Change isn’t always easy but it is very
necessary

BLACK BELT MINDSET
35% of the U.S. workforce or 53.5 million
+ Experienced repeated mistreatment
+ Committed by one or more employees
+ Forms included verbal abuse, threats
+ Intimidation, humiliation or sabotage
Study: Workplace Bullying Institute, 2010
Mistreatment causes:
• Ego
• Fear
• Head Trash

BLACK BELT MINDSET
• We are all creators/contributors
• Everything that is hard isn’t always worth it
but everything that is worth is always hard
• Legacy – Means more than just what you left
behind and your reputation
• Focus on Sustainability

QUESTIONS/DISCUSSION
• Remember, ask actual questions
• Let’s not try and stump the teacher
• Arguing or contrarianism isn’t allowed
• I encourage you to keep working and to
• FIND YOUR INNER BLACK BELT

THANK YOU
• Dr. Nguyen “Tom” Griggs
• LEAD CONNECT GROW LLC
• www.ntgriggs.com
• Find Your Inner Black Belt
• Let’s connect! Facebook, Twitter, LinkedIn

NADOA Institute
September 2017
Navigating the RRC Website: How to Get

the Information
Lorenzo Garza
Manager, Drilling Permits
Railroad Commission of Texas | June 27, 2016 (Change Date In First Master Slide)
Important Information
• Permit numbers
• API numbers
• Lease ID #’s
 Oil ID’s
 Gas ID’s
2
Permit Numbers
• Form W-1 application is submitted and status

number assigned
• If it is a new drill an API number is assigned
• When application is approved status number

becomes the approved permit number
3
What Can I Find With a Permit Number?
• With the permit number you can find specific

information about a well
 Wellbore profile
 Is it in a pooled unit
 Has the well been completed
4
How to Get to the Drilling Permit Query
Go to the Commission’s home page at
http://www.rrc.texas.gov
5
What Queries are available?
6
Let’s Find Some Information
Let’s use permit 800052.
Result set for our query.
7
Look at the Most Recent Approval
What do we find?
8
What Can I Find With the API Number
• Completion information
• Historic documents
• Lease information
• Proration schedule
information
9
Completions
Two database can be used to find completion
information.
10
Completions Query
Valid for all completions filed after Nov. 2, 2009.
11
How to Pull Information From Completion Query
• What you need

 API number
 Lease number
 Permit number
 Operator number
Let’s use permit 800052 again and see what we find.

12
Query Results
• Important information you can get off of results
 Status
 Completion type
 Operator name
 Lease number
13
Form Summary Page
Current well status and forms submitted with
completion.
14
How to Find a Lease Number
There are several ways to find a lease ID #
for a well.
 New Lease ID’s Built
Query
 Oil & Gas Imaged
Records Menu
 Proration Query (Oil
and Gas)
 Wellbore Query
15
New Lease IDs Built Query
This query can be used for a maximum range of
90 days.
16
Oil & Gas Imaged Records Menu
For research on older wells.
17
Proration Query
Proration query for either oil or gas can be used to
find information. These queries are updated daily.
18
Proration Query Results
What information can you get from this result set?
 Potential of the well
 Acres assigned to the well
 Daily Allowable
 Current well status
19
Wellbore Query
Results table allows you to see well counts for
the District, County, Field, Lease, and Operator.
20
Wellbore Query Results
More basic information provided about wells as
compared to the proration schedule query.
21
How about Production Records
There are two ways to research production.
 Production Data Query
 Production Reports Query
Production Data Query allows you to search for
production on a specific lease or by a more general
method like by operator or county.
Production Reports Query allows you to query for a
specific lease or a specific operator. The results of the PR
Query is only for reports filed after February 11, 2005 and
only includes those reports that have been accepted by
the RRC mainframe system.
22
Specific Lease Query
Use the Specific Lease Query if you want
production data for one lease, and you have the
district number and lease number.
23
Specific Lease Query Results
24
Production Report Queries
Some reports posted on Commission records may not
be immediately available for query through this system
due to internal processing.
25
Query Results Production by Lease
26
Before We Go On
Are there any questions?
27
Live Demonstration
Back in the good old days..

28
Public GIS Viewer
29
Last Thing
What happens if a lease or pooled unit is not
reporting production or sales?
30
Severance Query Results
31
Severances By Lease
32
Thank You
Lorenzo.Garza@rrc.texas.gov
33
North Dakota Update
on the Law
B.J. Black
Member
Objectives
• Recent Developments in North

Dakota Mineral Law
• Shore Zone Mineral Rights
Kittleson v. Grynberg
Petroleum Co.
876 N.W.2d 443 (N.D. 2016)
Kittleson v. Grynberg Petroleum Co.
• 1991 lease
• Dispute over post-production
deductions
• “Market Value at Well” vs “No Deduction”
language
• Royalty Clause: Lessee to pay Lessor market
value at the well. . . Provided however, that there
shall be no deductions from the value of Lessor’s
royalty of any required processing, cost of
dehydration, compression, transportation, or
other matter to market such gas.
• Market Value at Well
• Work-Back/Netback method
• See Bice v. Petro-Hunt, L.L.C (768 N.W.2d 496)
• No Deduction
• General provision vs specific provision
• Result
• Grynberg wrongfully deducted post-
production costs
• Kittleson entitled to royalty without deduction
• Take away
• Clarity in drafting
• Comply with the plain meaning of lease
provisions
Maragos v. Newfield
Production Company
2017 WL 3223751 (2017)
Maragos v. Newfield Production
Company
• Maragos Trust claimed 1/8 of 1% royalty interest

• Newfield relied on division order title opinion and
did not pay Maragos Trust
• Trust sought relief from Newfield for underpayment
• Division order or not?

• See Acoma Oil Corp v. Wilson (471 N.W.2d 476)
Maragos v. Newfield Production
Company
• Result
• District court summary judgement in favor of Newfield
reversed
• District court to determine interest held by Maragos
Trust
• Cannot rely on division order if Maragos Trust not a
party
• Take away
• Include all parties in division order when possible
• Suspend payment until title dispute settled
Ogren v. Sandaker
893 N.W.2d 750 (N.D. 2017)
Ogren v. Sandaker
• 1958 conveyance of royalty interest
• Dispute over interest conveyed
• Fractional royalty
• 1/8 royalty
• Fixed share of production
• Fraction of royalty
• 1/8 of the royalty
• Varies with size of landowner royalty
Ogren v. Sandaker
• Hysaw case (TX)
• Fractional Royalty Language
• Undivided one-sixteenth royalty interest of any oil,
gas or minerals that may hereafter be produced
• Undivided 1/24 of all the oil, gas and other minerals
produced, saved, and made available for market
• Fraction of Royalty Language
• 1/16 of all oil royalty
• One-half of the usual one-eight royalty
Ogren v. Sandaker
• Conveyance Language:
• All right, title and interest in and to the seven-eights
(7/8 share) royalty, of all of the oil and of all the gas
produced and saved
• Intent Language:
• Intent of the Assignors to assign to each of the seven
assignees an equal, but undivided, one-seventh
division of the seven-eights share of royalty being
assigned herewith so that each assignee receives and
undivided one-eight share of the total royalty
Ogren v. Sandaker
• Result
• Conveyance language similar to fractional
royalty but intent language clarifies meaning
• District court correctly read conveyance and
intent language together and held conveyance
was fraction of royalty
• Take away
• Read entire document carefully
Black Stone Minerals
Company v. Brokaw
893 N.W.2d 498 (N.D. 2017)
Black Stone Minerals Company v.
Brokaw
• Lyman Brokaw acquired 160 acres by tax deed
• Lyman and wife, Martha, vested with fee simple
absolute by virtue of quiet title action
• Lyman conveyed “undivided full interest” to
North American Royalties, Inc.
• Dispute over interest conveyed to North
American Royalties, Inc. (1/1 vs 1/2)
Brokaw
• Conveyance to multiple parties presumed to as
tenants in common (N.D.R.C. § 47-0208)
• Interest owned by tenants in common presumed
to be equal
• Rebuttal presumption
Brokaw
• Result
• Lyman and Martha held property as tenants in
common in equal shares
• Conveyance by Lyman of undivided full interest
conveyed 1/2 interest
• Take away
• Unless evidence to contrary, presume tenants
in common in equal shares
Shore Zone Mineral
Rights
Reep v. State
841 N.W.2d 664 (N.D. 2013)
Reep v. State
• Dispute over mineral rights in shore zone area
• Shore zone
• Area between ordinary high and low
watermarks of navigable waters
• Interpretation of N.D.C.C. § 47-01-15
Reep v. State
• N.D.C.C. § 47-01-15
• Except where the grant under which the land
is held indicates a different intent, the owner
of the upland, when it borders on a navigable
lake or stream, takes to the edge of the lake or
stream at low watermark.
Reep v. State
• Result
• N.D.C.C. § 47-01-15 is a rule of interpretation
and not a self executing grant
• State acquired minerals under shore zone
upon admission to Union
• Minerals held in trust for the public
• Upland owner holds minerals to low water
mark only if State granted those interests to
upland owner
EEE Minerals, LLC v.
State
318 F.R.D 118 (D.N.D. 2016)
EEE Minerals, LLC v. State
• Details
• Filed to determine ownership of oil and gas under and
adjacent to the Missouri River
• Originally filed in 2014
• Amended complaint filed in April 2016
• Outcome
• Dismissed for failure to join an indispensable party
(United States)
• Sovereign immunity
Statoil & Gas LP v.
Abaco Energy
897 N.W.2d 1 (N.D. 2017)
Statoil & Gas LP v. Abaco
Energy
• Details
• Statoil sought determination of the proper distribution
of oil and gas revenues from wells on land adjacent to
the Missouri River and under Lake Sakakawea
• Outcome
• Dismissed for failure to join an indispensable party
(United States)
• Sovereign immunity
Senate Bill 2134
• Signed by Governor Burgum on April 21, 2017
• Created Chapter 61-33.1 of the North Dakota
Code
• Clarifies mineral ownership under Lake
Sakakawea
• Defines high water mark of the Missouri River
channel as it existed before the Garrison Dam
Senate Bill 2134
• Survey Process
• Starting Point: 1950’s survey by U.S. Army Corps of
Engineers
• Wenck Associates selected for survey
• Expected completion in February 2018
• Results to be published in March 2018
• Survey Goals
• Determine if any portion of Corps survey does not
reasonably reflect the ordinary high water mark of the
historical Missouri riverbed channel
Thank You!
B.J. Black
Steptoe & Johnson
United Center
1085 Van Voorhis Road
Suite 400
Morgantown, WV 26507
Office: 304.598.8120
william.black@steptoe-johnson.com
Organizational Jujitsu: How Effective
Senseis (Teachers) Get the White Belts
on Track
NADOA 44th Annual Institute • November 8 – 10, 2017
PRESENTATION | NADOA November 2017

GRATITUDE
• Participants & attendees
• Companies & organizations
• Hotel staff and personnel
• Family, friends and supporters
• NADOA staff and Board members

A TRUE STORY…
• Getting into a verbal and almost physical
altercation with your exes’ spouse
• Protecting your kid, disapproving over how
your child is disciplined for disobedience
• Feel obligated to protect and speak on your
kid’s behalf
• How far will you go, what is the end result

PEOPLE: WEIRD & DIFFICULT
Education Personality
Culture History
Upbringing

Education
Personality
History • Baggage
Upbringing
+ Culture
????????

• Surprise! We all have baggage
• Perception of others
• How are we perceived
• Biggest problem: You Won’t Let Go/Release

• Hence: Organizational Jujitsu

ORGANIZATIONAL JUJITSU
• Jujitsu: Japanese • A social unit of people
martial art of the that is surrounded and
Samurai which focuses managed to meet a
on flexibility, blending, need or to pursue
redirecting movements collective goals
and flowing

APPLIED JUJITSU
• Your sensei is your teacher / mentor
• Every sensei starts off as a white belt – a
student without knowledge, a beginner
• Every leader starts off as a beginner, entry
level employee at some point
• All great people started off in need of
teaching, guidance and challenge

APPLIED JUJITSU
Principles of Jujitsu
• Flow, redirect energy
• Yield, move, blend
• Don’t meet force with force
• Patience, calm and be alert and aware
• Never fight, only defend

APPLIED JUJITSU
• In the work place:
– Listen actively
– Provide space for people to open up
– Reacting is clumsy; learn to respond
– Show flexibility and willingness to move and work
– Let others know your boundaries
– Others need to communicate their boundaries too
– Allow others to save face and experience dignity

APPLIED JUJITSU
• In the work place:
– Win by yielding and being non-confrontational
– Distinguish between drama vs threats
– Create space & safe spaces for yourself and others
– Stay centered, remain focused & breathe
– Don’t carry other people’s burdens

LOCKSMITH
• Problem: You lost your key to your house
• Solution: Call a locksmith
• How it works: A) The parts of the lock have to
“align” with the key to fall in place and then
open B) The best locksmiths know how to
“feel” the lock’s inner workings and not force
things to work

LOCKSMITH
• Regarding people, leadership is the KEY
• Remember most locks work on the same
principle
• Most people can be effective and productive if
the right type of leadership is applied

• Values 101: More than words on your website
• Maya Angelou: “People don’t remember your
words but they do remember how you made
them feel”
• If you keep having interpersonal problems, are
you living your values?
• People hate/despise hypocrisy

• Legendary College Football Coach Lou Holtz
– Can I trust you?
– Do you care about me?
– Are you committed to excellence?

• My rules for maintaining my black belt
– Have a black belt mind but with a white belt spirit
– Honesty and integrity
– Stay open (ideas, opportunities, mind)
– Transparency beats everything
– Assumption is a no no

• Goals: You drive the goals, the goals shouldn’t
drive you
– Goals are a measure not the endpoint
– You learn as much from hitting as you do from
missing the goals
– Goals partially inform your methods and
approaches
– Focusing only on goals means you won’t see other
items of valuable

THE VALUE OF A.I.R.
• Accountability – Who does this belong to?
• Indispensability – Keep you vs stuck with you
• Responsibility – Alright, who did it?

THE VALUE OF A.I.R.
• Your black belt test:
– Giving and receiving mentoring (growth buddies)
– Crafting great questions is a “craft”
– Learn and practice the craft of questions
– Remember jujitsu: Being held or are you allowing
yourself to be held?
– The harder you hold onto things the more likely
you are to damage them

PARABLE OF THE BUILDER
• We are all building something
• Can we live with what we create
• Are others able to live with our creations
• Tearing down is fast and easier than building
but sometimes, we have to tear it down and
restart

QUESTIONS/DISCUSSION
• Remember, ask actual questions
• Let’s not try and stump the teacher
• Arguing or contrarianism isn’t allowed
• I encourage you to keep working and to
• FIND YOUR INNER BLACK BELT

THANK YOU
• Dr. Nguyen “Tom” Griggs
• LEAD CONNECT GROW LLC
• www.ntgriggs.com
• Find Your Inner Black Belt
• Let’s connect! Facebook, Twitter, LinkedIn

DEDUCTION OF POST PRODUCTION
EXPENSES
Robert (Eli) Kiefaber

The Esperson Building
808 Travis Street, Suite 1030
Houston, Texas 77002
Telephone: 713.229.0360
Email: rkiefaber@kolawllp.com
2
Firm Overview
• Oil and Gas • Licensed In:
• California
• A/D
• Colorado
• Contracts • Kansas
• Regulatory • Louisiana
• Title Opinions • New Mexico
• North Dakota
• Transactions • Ohio
• Oklahoma
• Texas
3
Robert “Eli” W. Kiefaber
• Board certified in Oil, Gas and Regular speaker at:

Mineral Law •Annual Review of Oil & Gas Law
•NHAPL
•HAPL
• Selected as Rising Star by Texas
•AAPL
Super Lawyers magazine
•Other oil & gas industry groups
• Lives in The Woodlands with his Education:

wife, Susan, and their 3 children •Kenyon College – B.A. (1999)
and 2 dogs •Marquette University Law School,
J.D., with honors (2002)
Licensed in Ohio, Oklahoma, Colorado,

Texas
4
Overview
• Historical Overview of Deduction of Post-
Production Expenses
• Heritage Resources and Non Deductions Clauses
• Recent Developments in caselaw regarding

deduction of post-production expenses
5
Historical Overview
• Under an oil and gas lease, the physical location
of the “property” is the wellhead on the leased
property.
• The wellhead is the location where the lessee

reduced the oil or gas to its physical possession
• Thus, historically, the wellhead, being the

physical location of the property rights, was the
location for calculating the value or price of the
production under the oil and gas lease.
6
The Oil and Gas Lease

• The oil and gas lease will contain one (or more) royalty
clauses in which the lessee agrees to pay the lessor a royalty
• Royalty clauses may address:

▫ Royalty based on “proceeds”
▫ Royalty based on “amount realized”
▫ Royalty based on “market value”
▫ Value of gas sold at the well
▫ Value of gas used off the leased premises
• The lessee acquires title to all of the oil and gas it produces
and the lessor and other royalty do not acquire title to the
production. As a result, if the lessee fails to comply with the
terms of a royalty clause, the lessor may sue for breach of the
lease, but does not have a cause of action for conversion.
7
Types of Royalty Clauses

• Market Value
▫ The lessee covenants to pay royalties on gas, produced from
said land and sold or used, the market value at the well of
one-eighth (1/8) of the gas so sold or used.
• Net Proceeds
▫ The royalties to be paid by lessee on gas produced from said
land and sold on or off the premises, are one-eighth (1/8) of
the net proceeds at the well received from the sale thereof.
• In Kind
▫ The lessee covenants to deliver to the credit of the lessor, in
the pipeline the equal part of one-eighth (1/8) of the oil
produced and saved
8
Where is the Royalty Calculated?

• Traditionally, many oil and gas leases required that
the lessee calculate the market value or price of its
production “at the well” or “at the wellhead”
• Other royalty clauses required broader terms, such

as “in the field of production” and other clauses
require the value to be calculated at a point
downstream (value or consideration received by
Lessee at the point of delivery of such gas)
9
Implied Covenant to Market

• The Implied Covenant to Market
▫ Imposes upon the lessee the duty to market hydrocarbons
produced from a well and to obtain the best price and terms
possible for the sale of production.
▫ Serves as the basis for the “first marketable product doctrine”

(Oklahoma, Colorado, Kansas, West Virginia)
▫ Texas courts have concluded that the implied covenant to market

does not permit courts to rewrite a lease agreement contrary to
the parties intent, even if the a contrary interpretation would
produce a more equitable agreement.
• Texas does not follow the first marketable product doctrine

10
Deduction of Costs
• By definition, royalty is paid free of the costs of exploration,
drilling and production of oil and gas (the “production costs”)
• Post-production costs/activities add value to the production

in its raw state at the location of the wellhead prior to a final
sale.
• Post-Production costs include:

▫ Dehydration and separation
▫ Compression
▫ Removal of substances to make the production marketable
▫ Gathering costs
▫ Marketing
526
11
General Rule for Deduction of Costs

• The general rule is that royalty clauses based on
“proceeds” or “amount realized” or “market value at
the well” permit deduction of post-production costs
from gas sales before paying royalties.
• Royalty, by definition, is a share of the “production.”

The lessee is solely responsible for bearing all costs
necessary to achieve “production.”
• Generally, the lessee was entitled to pay royalties on

the basis of the value or price of its production at the
wellhead, not a location downstream of the
wellhead.
527
12
Market Value at the Well

1. Comparable Sales Method
 Lessee determined the market value of its production
at the wellhead by averaging the prices that the lessee
and other producers are receiving at the same time and
in the same field, for oil or gas of comparable quality,
quantity and availability
2. Workback or Netback Method
 Lessee determined the market value of its production
at the wellhead by taking the sales price that it received
for its production at a downstream point of sale, then
subtracting the reasonable post-production costs that
the lessee incurred after extracting the production.
528
13
Net Proceeds or Amount Realized

• Lessee calculated the royalty payments on the basis of
the actual price of its production, measured at the
wellhead.
• If the lessee sold its production to a third party

purchaser at the wellhead, then the lessee had to pay
lessors their proportional royalty share of the actual
price that the lessee received for its production.
• If the lessee sold its production at a point downstream

of the wellhead, then lessee calculated the royalties
owed under a workback method.
529
14
Heritage Resources, Inc. v.

NationsBank
• The Texas Supreme Court construed the phrase
“market value at the well” in a lease that also
contained language prohibited the deduction of
post-production costs.
• The operator was selling the gas and deducting the
transportation costs and paying royalty on the net
amount as “market value”
• The Texas Supreme Court affirmed the operator’s
practice and held that when royalty is based on
“market value” any subsequent language prohibiting
deduction of post-production costs is surplusage
and cannot be enforced.
530
15
Anti-Heritage Clauses
• Following the Heritage decision, many lessors
sought to avoid the application of Heritage and
the deduction of post-production costs and
included anti-Heritage clauses
• The inclusion of anti-Heritage clauses and the

industry practice of deducting transportation
and other post-production costs has led to a
wave of royalty litigation
531
16
Post-Production Deduction Caselaw

• Warren v. Chesapeake Exploration, L.L.C., 759 F.3d
413 (5th Cir. 2014)
▫ The lease provided for royalties based upon “the

amount realized by Lessee, computed at the mouth of
the well.”
▫ Lessors included a no deductions clause and an anti-
Heritage provision
▫ The Fifth Circuit concluded the lease permitted post-
production deductions and that Heritage still
permitted the operator to net-back to a wellhead price.
532
17

• Potts v. Chesapeake Exploration, L.L.C., 760 F.3d 470
(5th Cir. 2014)
▫ The lease provided for royalties based on the “market value

at the point of sale” and that all royalty “shall be free of all
costs and expenses related to marketing.”
▫ Chesapeake sold the gas to a Chesapeake affiliate at the
wellhead and was paid a weighted average of sales proceeds
minus the post-production costs incurred to bring the gas
downstream.
▫ The Court explained that “market value at the point of sale”
was unambiguous and required the operator to value
production wherever the gas was sold.
533
18

• French v. Occidental Permian Ltd., 440 S.W.3d 1 (Tex. 2014)
▫ Oxy injected CO2 purchased from Kinder Morgan to attempt to

increase the amount oil production.
▫ Oxy contracted with Kinder Morgan to build a processing facility
to remove CO2 and H2S so the gases could be reinjected.
▫ Plaintiffs asserted that the removal of the CO2 was a production
activity and should not be deducted from royalty
▫ The Court focused on a Unitization Agreement that authorized
reinjection of gas and expressly provided that no royalties would
be due on unitized substances.
▫ The Court concluded that Oxy’s decision to have the gas
processed and NGLs extracted benefitted both parties and under
the Unitization Agreement Plaintiffs were required to share in the
cost of the CO2 removal.
534
19
Texas Supreme Court’s View of

Post-Production Deductions
• Chesapeake Exploration, L.L.C. v. Hyder, 483 S.W.3d
870 (Tex. 2016)
▫ The provision in dispute provided for a “perpetual, cost-free

(except only its portion of production taxes) overriding
royalty of five percent (5.0%) of gross production obtained”
from directional wells drilled from the surface of the lease
but bottomed on other land
▫ The lease also contained an anti-Heritage clause.
▫ The meaning of “cost free”
▫ The Court concluded that an anti-Heritage clause did not
free the royalty of post-production costs
535
20
Texas Courts Interpret Hyder

• Burlington Res. Oil & Gas Co. LP v. Tex. Crude Energy, LLC, 2017
Tex. App. LEXIS 1753 (Tex. Ct. App. – Corpus Christi Mar. 2, 2017)
▫ Lessees who held overriding royalty interests argued that they were
entitled to overriding royalties without deduction of post-production
expenses
▫ General Rule – overriding royalties usually bear post-production costs
such as taxes, transportation and processing, unless modified by the
parties
▫ Whether post-production expenses were permissible focused on whether
lessees elected to take overriding royalties in kind or in cash based on the
language in the royalty provision
 If royalties were taken in kind, then value was market value at the well
(deduction of post-production expenses)
 If royalties were taken in cash, then the value is based on the amount
realized in an arm’s length sale (no deduction of post-production
expenses)
536
21
Questions?
Robert (Eli) W. Kiefaber

The Esperson Building
808 Travis Street, Suite 1030
Houston, Texas 77002
Telephone: 713.229.0360
rkiefaber@kolawllp.com
www.kolawllp.com
537
Pretending to Produce:
The Origins and Development of Pooling and Unitization in the US
Presented by:
Andrew Graham
538
The Rule of Capture
• Pierson v. Post, 3 Cai. R. 175 (N.Y. 1805)
– Pursuit alone gives no right to property in
ferae naturae
– Rather, the first to mortally wound or capture
is in rightful possession
– What does a fox hunt have to do with oil and
gas?
539
The Rule of Capture
• Westmoreland & Cambria Natural Gas Co. v. De Witt, 18
A. 724 (Pa. 1889)
– Compares oil and gas to a fox as ferae
naturae
– Oil and gas is fugacious and “it is wild and will
run away”
– Thus, leading to . . .
540
The Rule of Capture
541
The Rule of Capture
542
The Rule of Capture
543
The Rule of Capture
544
The Rule of Capture
545
The Rule of Capture
546
The Rule of Capture
547
The Rule of Capture
548
The Rule of Capture
• Fundamental principle of oil and gas law
• No liability for capturing oil or gas that drains
from another’s lands.
• The owner of mineral rights in drill site
acquires title to all oil and gas produced from
wells drilled on land
– Even though some of OG may have migrated from
adjoining lands
549
Correlative Rights
• A corollary to the rule of capture
– The right to capture OG from potentially
producing formations under one’s property is
subject to duty to exercise the right without
negligence or waste
– Meant to counteract the unintended
consequences of the rule of capture
550
Pooling
• Bringing together small tracts or fractional
mineral interests for the drilling of a single
well for primary production on a spacing
unit
Lease A
551
Unitization
• Combining leases and wells over a
producing formation for field-wide
operations
Select Field Area –
operated as one unit
B D D G
G
A
C C E F
E
552
Unitization
• Almost always associated with pressure
maintenance or with secondary or tertiary
recovery operations rather than primary
recovery operations
553
Communitization
• Pooling of federal, state, or Indian leases
with other leases to form units
554
Confusion of Terms
• Pooling and unitization are not the same
thing
• However, like “excepting” and “reserving,”
some have given up trying to distinguish
between the terms
555
Policy Behind Pooling & Unitization
• Encourages efficient land use
• Ensures mineral development for owners
of small tracts whose mineral would not
otherwise be developed
• Ensures that non-consenting owners
cannot impede development of co-
tenants’ or neighbors’ minerals
556
Policy Behind Pooling &
Unitization
557
Policy Behind Pooling &
Unitization
558
Conservation
• States have attempted to promote the
greatest ultimate recovery of OG from a
reservoir by regulating against wasteful
drilling practices
– Control location of wells
– At times, control amount of production
allowed
559
Purposes of pooling
• Develop and operate given reservoir to
recover greatest amount of OG consistent
with reasonable economic practices
• Achieve equity among various interest
owners by permitting each to recover fair
share of OG or proceeds
560
Common Law of Pooling &
Unitization
• A owns 100% of OG under Blackacre
• A owns 50% of OG under Whiteacre. B owns the other 50%
• A signs a lease with Oil Company for Blackacre
– Lease permits unitization
• A signs a lease with Oil Company for his interest in Whiteacre
– Lease permits unitization
• B refuses to sign a lease for his interest in Whiteacre
• Oil Company drills well on Blackacre and declares unit that includes
A’s interest in Whiteacre
• B files suit against A and Oil Company, claiming that he has an
equitable interest in the production from the well located on
Blackacre
561
Whiteacre
Blackacre
562
Spacing/density
• Spacing determines the minimum distance
a well must be from tract and lease lines.
– Acreage is assigned to a well in accordance with the spacing
regulations to form a “drilling unit”, which must be
designated before a well may be drilled
• Density prescribes the number of acres
attributed to a well after it has been drilled
563
Pooling/unitization
• Pooling/unitization clause in lease gives
lessee authority to commit the lease
property to pooling and unitization and
adjust the rights of the lessor and lessee
accordingly
564
Absence of pooling
• Without pooling clause in lease, lessee
cannot extend lease term without drilling a
well on the leased property
– Even if spacing rules do not permit drilling or
geological evidence does not suggest
successful drilling
565
Absence of pooling
• If lessee pools its interest under lease
without pooling clause with that of other
property owners, and drills a well on the
leased premises, the lessee must account
to lessor a full share of production, even
though pooling allocates only a portion of
production
566
Community leases
• A single lease covering two or more separately
owned tracts of land or fractional mineral
interests
– TX: strong presumption that parties intend to pool
their interests, apportioned on net acreage basis
– OK: Rebuttable inference of intent to pool
– NM: No inference raised
567
Source of voluntary pooling power
• Pooling can be obtained by either (1)
including a pooling clause in the lease, (2)
having the lessor enter into a later pooling
agreement, or (3) amending the lease to
add pooling clause
568
Effect of pooling clause
• Pooling clause modifies habendum clause
of lease by providing that production or
operations anywhere on the unit formed
will be considered production or
operations on the leased premises
– Constructive production/operations
569
Effect of pooling clause
• Pooling clause also requires lessor to
accept royalty proportionate to the
amount of the leased land included in the
pooled unit
– Protects lessee against double payment
570
Unitization clauses
• Unitization clauses are not as common as
pooling clauses in leases
– Only economically and technologically feasible in
relatively few circumstances
– Leases are focused on primary production
– Mineral owners frequently object to unitization
• Even more than they object to pooling
571
Pooling problems
• Good faith
• Strict construction of the lease
• Duty to pool
• Cross-conveyance
• Non-participating royalty owners
572
Good faith
• Courts require that lessee exercise pooling
power in good faith
– Lessee should not be able to pool part of one
lease with another solely for purpose of
maintaining leases
– Multi-lease poolings at end of primary term might
be viewed suspiciously
– Lessee must act in good faith, but is not fiduciary
573
Strict construction
• Pooling power must be exercised in
accordance with the lease terms
– Many pooling clauses require lessee to file
declaration of unit in public land records or
give notice of pooling to lessor
• If lease requires, lessee’s decision to pool isn’t
enough to create pooled unit, lessee must follow
the formal steps outlined in the pooling clause
574
Permitted/prescribed
• Pooling clauses will often limit the size of
pooled units to size permitted or
prescribed by governmental regulation
– Permitted: allowed by regulation
– Prescribed: required by regulation
575
Duty to pool
• Courts will sometimes require lessees to
exercise pooling power to protect lessors
from drainage
– Similar to requiring lessee to drill offset well to
protect lessor against drainage
576
Cross-conveyance
• Some states say that exercise of pooling
power affects a cross-conveyance of property
interests
– TX, CA, MS, IL
• Other states say exercise of pooling power is
purely contractual and does not affect cross-
conveyance of property interests
– WV, OK, KS, LA, MT
577
Nonparticipating royalty owners
• TX: NPRI owners must ratify exercises of
pooling power, even though they have no
right to execute leases
– Without right to ratify, NPROs are subject to
manipulation by executive
578
Anti-dilution
• Seeks to protect lessor by limiting the extent
to which the lessee can “dilute” royalty by
pooling
– Might require that all of the leased premises (or a
significant portion of it) must be included in
pooled unit
– Can also result in lessee including small amount
of acreage in unit and then releasing remaining
acreage
579
Pugh clause
• Lease clause that modifies usual pooling
language to provide that drilling operations
on or production from a pooled unit will not
preserve the entire lease
– Named for Lawrence Pugh, a LA lawyer
– TX: sometimes called Freestone rider
– OK and AR: Leases are subject to statutory version
– Can be either vertical or horizontal
580
Retained-acreage
• Divides lease as drilling units are formed,
so that production from one unit propels
lease into secondary term only for land
within production unit
– Sometimes called “continuous-development”
– Can be either vertical or horizontal
581
Other pooling considerations
• In order to pool, you must have at least
two leases with pooling clauses
• Pooling can be mineral-specific
• Pooling can be horizon-specific
582
Non-apportionment
• Royalties accruing under a lease on
property that has been subdivided after
the lease has been granted are not shared
by the owners of the various subdivisions,
but belong solely to the owner of the
subdivision where the well is located
– May be modified by entireties clause in lease
583
Whiteacre
Blackacre
584
Apportionment
• Royalties that accrue under a lease on
property that is subdivided after the lease
has been granted are shared by the owners
of the property proportionately to their
interest in the property, regardless of the
location of the drill site
– Followed in PA, CA, and MS
585
Whiteacre
Blackacre
586
Entireties clause
• A clause in an oil and gas lease that states
that the parties agree that royalties are to
apportioned in the event that the property
is subdivided after the lease is granted
– Avoids non-apportionment rule
587
Whiteacre
Blackacre
588
Well-spacing rules
• Spacing prevents over-drilling by limiting
the number of wells that can be drilled in a
given area
– Excessive drainage is avoided by requiring that
wells be located far enough from boundary
lines and from each other
589
Well-spacing rules
• Example:
– Texas requires, under TXRRC Rule 37, that
wells must be at least 1200’ apart and at least
467’ from property, lease, and subdivision
lines
– TXRRC Rule 38 sets the number of acres from
which the well is expected to produce
• This is called “density”
590
Well-spacing rules
• Generally, conservation commission will
consider both economic conditions and
physical/geological conditions in setting
spacing limits
– Some states, like Wyo., do not allow
commission to consider economics
591
Well-spacing rules
• Spacing commonly allow for 160-acre
drilling units for oil and 640-acre drilling
units for gas
– But, with horizontal wells, many states have
allowed for larger units—1280 acres or more
592
Well-spacing rules
• Conservation rules are based on
assumption that oil and gas reservoirs are
homogenous and that drainage is radial
– Results in “compensatory drainage”
– But, reservoirs are rarely homogenous and
drainage isn’t perfect
• Wells drilled at different times, produce at
different rates
593
Exceptions to well-spacing
• Commissions will make exceptions to their
usual rules to:
– Protect correlative rights of OG owners against
drainage; and
– Prevent waste of OG
• Exceptions are usually justified by
geological factors
594
Production allowable
• Conservation commissions have regulated
the amount of production in order to
prevent waste and protect correlative
rights
– Set daily/weekly/monthly limits on production
• Also called “prorationing rules”
595
Production allowables
• Maximum-effective-rate prorationing
– Setting limit supports scientifically-determined
rate of production for most efficient recovery
• Market-demand-prorationing
– Setting limit prevents wide fluctuations in
commodity price
596
Small-tract problem
• A owns minerals under tract too small, or too
weirdly-shaped, to conform with spacing rules
• Commission (esp. TXRRC) would grant A an
exception and allow well to be drilled that
didn’t conform with spacing rules
– But how much production is fair?
• Many states use compulsory pooling to
address this problem
597
Compulsory pooling
• Bringing together, by order of an
administrative agency, small tracts or
fractional interests to drill a well.
Compulsory pooling is undertaken to
comply with well-spacing requirements
and is usually associated with drilling a
single well.
598
Compulsory pooling
• New Mexico and Oklahoma first developed
compulsory rules in 1935
• Allows for conservation commission to
combine tracts in order to form a drilling
unit, even if some of the tract owners
object to the drilling of the well
599
Typical process
• When two or more tracts are included in
the same drilling unit, the owners may
agree to combine their interests and
develop jointly
– If they do not agree, the commission may
require them to do so
600
Typical process
• All orders from the commission are issued
only after there has been notice to
affected owners and a hearing at which
the owners can present their objections
601
Typical process
• The commission order is meant to afford
each owner the opportunity to recover his
fair share of the minerals
• The commission order is also meant to
prevent reasonably avoidable drainage
602
Typical process
• The commission will decide how to allocate
the costs related to drilling and producing the
minerals unless the owners can reach an
agreement amongst themselves
• Production allocated to a pooled owner is
considered to have been produced from the
owner’s tract, even if the well is elsewhere
603
Types of statutes
• Free-ride
– Non-consenting working interest owner will
be carried as to his share of expenses, without
penalty
• If well produces, costs are paid out of production
• If well is a dry hole, or fails to pay out, operator
bears full risk of costs
604
Types of statutes
• Risk-penalty
– Non-consenting co-tenant is carried during
drilling, but bears a specific percentage risk
penalty that is recovered from non-consenting
owner’s share of production
• Incentivizes voluntary participation in wells
605
Types of Statutes
• Option
– Non-consenting owner is given a choice of
options, usually including risk-penalty options,
before interest is pooled
• Silent
– Statute merely says commission must set “just
and reasonable” terms
606
Questions?
Andrew Graham
Andrew.Graham@steptoe-johnson.com
607
Texas Trusts, Wills and Probates Workshop
Andy Graham, Member Kacie Bevers, Of Counsel
(304) 598-8161 (281) 203-5770
andrew.graham@steptoe-johnson.com kacie.bevers@steptoe-johnson.com
I. Introduction – Death & Title

II. Estates
a. Intestate
i. Definitions
ii. Administration of Estate
1. Actions Required
2. Documents of Record
iii. Community vs. Separate Property
b. Testate
i. Definitions
ii. Administration of Estate
1. Actions Required
2. Documents of Record
c. Common Issues
i. Powers of Administrators & Executors
ii. Federal Estate Taxes
iii. Resident vs. Non-Resident Owners
III. Trusts
a. Definitions
b. Basic Operation
c. Types of Trust
d. Trustee Powers
e. Problems with Trusts in Title Examination
IV. Best Practices & Questions
White Hats and Black Hats:
The Oil and Gas Industry in
American Popular Culture
Presented by:
Andrew Graham
How your presenter was first introduced to the oil and gas industry
A PERSONAL VIEW
SPOILER ALERT
• Warning!
– The presenter will make no effort to keep
from revealing important plot points about
any of the movies, TV shows, or books
discussed in this presentation.
– Also, this presentation is comprehensive, but
not exhaustive. If the presenter fails to
mention your favorite bit of oil-and-gas-
related pop culture, please come up and
share it after the program.
Public opinion about the oil and gas industry
WHAT YOUR NEIGHBORS THINK

Total Neutral Total Net positive
Positive % % Negative % pct. pts.
Restaurants 66 27 7 +59
Farmers 55 23 20 +35
Groceries 54 28 18 +36
Accountants 45 40 12 +33
Real estate 44 31 21 +23
Airlines 41 30 26 +15
Banking 38 23 36 +2
Oil and gas 37 17 44 -7
Lawyers 31 28 39 -8
Healthcare 34 12 54 -20
Drug 28 19 51 -23
companies
Federal Gov’t 28 16 55 -27
How Hollywood has portrayed the oil and gas industry
AT THE MOVIES
Oilman as Underdog
Oil Workers Are Heroes
Oil “Documentaries”
Oil is Melodramatic
Oil is Melodramatic
Oilman as Swindler
Oilman as Swindler
Oil Is Deadly
The Evil Oilman
The Evil Oilman
The Evil Oilman
The oil and gas industry on the small screen
STAY TUNED
Oil is Soapy
Oil is “Unscripted”
The oil and gas industry in print
PAGE TURNERS
The oil industry shows up in some unlikely pop culture places
BROADWAY AND BUGS BUNNY

The oil and gas industry on the diamond, the gridiron, the rink, . . .
ROOT, ROOT, ROOT…

POP QUIZ
• Among the four major North American
pro sports leagues (MLB, NFL, NBA, and
NHL), what is the only team named in
honor of the oil and gas industry?
OILERS (33)
• Bartlesville, OK • Muskogee, OK
• Beaumont, TX • Nova Scotia (Halifax, NS)
• Cape Breton (Sydney, NS) • Odessa, TX
• Channel Cities (Ventura, CA) • Oil City, PA
• Chanute, KS • Olean, NY
• Corsicana, TX • Owensboro, KY
• Drumright, OK • Pampa, TX
• Duncan, OK • Refugio, TX
• Edmonton, AB • Sapulpa, OK
• El Dorado, AR • Seminole, OK
• Eureka, KS • Tennessee (Memphis, TN and Nashville,
TN)
• Findlay, OH
• Tulsa, OK
• Graceville, FL
• University of Findlay (Findlay, OH)
• Henderson, TX
• Ventura, CA
• Houston, TX
• Wichita, KS
• Lafayette, LA
• Laredo, TX
• Leavenworth, KS
DRILLERS (13)
• Artesia, NM • Lafayette, LA
• Bakersfield, CA • Mannington, WV
• Bradford, PA • Monroe, LA
• Edmonton, AB • Okmulgee, OK
• Hobbs, NM • Tulsa, OK
• Kilgore, TX • Wichita Falls, TX
• Wilson, OK
• GASSERS • REFINERS
– Amarillo, TX – Coffeyville, KS
– Blackwell, OK – Cushing, OK
– Borger, TX – Oil City, PA
– Mexia, TX – Olean, NY
– Ottawa, KS – Port Arthur, TX
– Shreveport, LA • ROUGHNECKS
• PRODUCERS – Beaumont, TX
– Ardmore, OK – Calgary, AB
– Bristow, OK – Tulsa, OK
– Independence, KS – Tyler, TX
– Taylor, TX – University of Findlay
– Tulsa, OK (Findlay, OH)
• SPUDDERS • GUSHERS/OIL GUSHERS
– Corpus Christi, TX – Beaumont, TX
– Sweetwater, TX – Kilgore, TX
– Wichita Falls, TX • JOBBERS
– Wink, TX – Wichita, KS
• NITROS • OIL CITYS
– Ranger, TX – Corsicana, TX
– Wellsville, NY • OILWORKERS
• CRACKER-CATS – Marion, OH
– Edmonton, AB • ROCKHOUNDS
• ESSOS – Midland, TX
– Baton Rouge, LA • STANDARDS
• GASBAGS – Baton Rouge, LA
– Iola, KS • WILDCATTERS
• GASLIGHTERS – Tyler, TX
– Iola, KS – Wyoming (Casper, WY)
• Football • Baseball
– American Association
– NFL
– Alabama-Florida League
– AFL
– California League
• Basketball – Central League
– CBA – Central Texas League
• Hockey – Cotton States League
– NHL – Dixie League
– East Texas League
– AHL
– Evangeline League
– ECHL
– Interstate League
• Soccer – Golden Baseball League
– NASL – Gulf Coast League
– United Soccer League – Iron & Oil Association
• Lacrosse – Iron and Oil League
– National Lacrosse League – Kansas-Oklahoma-Missouri L.
– Kentucky-Illinois-Tenn. L.
– Lone Star League
– Longhorn League
– Middle Atlantic League
– Middle Texas League
• Baseball, cont’d • Still more Baseball, cont’d
– Missouri Valley League – Texas League
– New York- Penn League – Texas-Louisiana League
– Texas-Oklahoma League
– Northern League
– Texas Valley League
– Ohio State League
– West Dixie League
– Oklahoma-Ark.-Kan. League
– Western Association
– Oklahoma-Kansas League – Western League
– Oklahoma State League – West Texas League
– Pacific Coast League – West Texas-New Mexico League
– Panhandle-Pecos Valley L. – West Virginia League
– Pa.-Ontario-New York L.
– Pennsylvania State Assoc.
– San Joaquin Valley League
– Sooner State League
– South Central League
– South Texas League
– Southwestern League
– Texas Association
Why aren’t there more songs about the oil and gas industry?
NEGLECTED ON MUSIC ROW

Your role in how the public views the oil and gas industry
WHAT ARE YOU SUPPOSED TO DO

ABOUT ALL OF THIS?
NADOA Code of Ethics
• NADOA members have a duty to promote
and represent NADOA
– “to the public at large and to his fellow
members”
– for “the purpose of establishing and
maintaining goodwill within the energy
industry, the public and [NADOA].”
• NADOA By-laws, Article VI, § 1
NADOA Code of Ethics
• Members must conduct business and
communicate in a professional, fair and
honest manner
– “[s]o as to maintain the respect of the energy
industry, the public and his peers”
• NADOA By-laws, Article VI, § 1
AAPL Code of Ethics
• Land Professionals must, at all times, promote
and represent the industry to the public in a fair
and honest manner in order to establish and
maintain goodwill between the industry and the
public
– AAPL Code of Ethics § 1
• The Land Professional must conduct all of his
dealings in a fair and honest manner to maintain
the public’s respect
– AAPL Code of Ethics § 1
AAPL Standards of Practice
• In addition to its Code of Ethics, AAPL’s
Standards of Practice expect that Land
Professionals will:
– Deal fairly and honestly with landowners, industry
associates and the general public in order to
preserve the integrity of the profession.
• Standard A
– Avoid any act or conduct which causes disrespect for
or lack of confidence in the member to act
professionally as a land professional
• Standard G
NALTA Code of Ethics
• NALTA members have a duty to promote and, in
a fair and honest manner, represent the OG
industry to the public in a way that establishes
and maintains goodwill between industry and
public
– NALTA Code of Ethics, Article V.3.
• Members must conduct their professional
dealings with fairness and honesty to maintain
public’s respect
– NALTA Code of Ethics, Article V.4.
Thank You!
Andrew S. Graham
Member
Morgantown, WV
andrew.graham@steptoe-johnson.com
304-598-8161
Material Disclaimer
These materials are public information and have been prepared solely for
educational purposes. These materials reflect only the personal views of the
authors and are not individualized legal advice. It is understood that each case
and/or matter is fact-specific, and that the appropriate solution in any case
and/or matter will vary. Therefore, these materials may or may not be relevant
to any particular situation. Thus, the authors and Steptoe & Johnson PLLC
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 Steptoe & Johnson PLLC. While every attempt
was made to ensure that these materials are accurate, errors or omissions may
be contained therein, for which any liability is disclaimed.
AFFIDAVIT OF ATTENDANCE
44th Annual Institute (2017) – Thursday/Friday Education Sessions (COMPONENT CODE)

TITLE OF EDUCATIONAL PROGRAM
NADOA9171
National Association of Division Order Analysts (NADOA)
PROGRAM SPONSOR
November 9-10, 2017 Webinar VALID THRU: 12/10/2017

DATE OF PROGRAM CITY/STATE
This program has been accredited for 13 RL, RPL or CPL recertification credit(s) (CEU), and/or * Ethics
credit(s) (CEU Ethics), for a total of 13 credit(s). (Number of credits accredited or claimed for 100% participation in
this educational program).
*1.25 credits are eligible for Ethics if you attended the Ginni Hanks “Heads I Win, Tails You Lose! Ethics in Negotiation”
presentation on 9/8/17, please contact certifications@landman.org if you would like to claim the Ethics portion of credits.
According to Certification Program Specifications Article XII.B:

Each RL, RPL, CPL and CPL Specialist must record their credits online using the component
code assigned to AAPL Educational Events and other preapproved programs within thirty
(30) days following the program.
Please follow these instructions to record your credits online within 30 days of event:
1. Go to “My Account” on www.landman.org
2. On the left, under Certifications, click “View and Add Continuing Education Credits”
3. Click “Add Continuing Education Credit”
4. Enter Component Code in the pop-up window and click Apply

5. If you need to record partial attendance, please edit the “# of credits” field to reflect
one credit per hour attended
6. Click “Save”
Do not return this form to AAPL. It is the member’s responsibility to enter their credits online.
800 Fournier Street, Fort Worth, Texas 76102 | Phone: 817.847.7700 | Fax: 817.847.7704 | E-mail: aapl@landman.org | www.landman.org
AFFIDAVIT OF ATTENDANCE
CMM Continuing Education Credit
Convention / Seminar / Workshop / Event
Name_____________________________________________________________________________
(Please type or print)
Mailing Address______________________________________________________________________
City________________________________________State__________________Zip_______________
Phone ( )_____________Fax ( )______________Email ________________________________________
Company / Family Trust_________________________________________________________________

(If your membership is under a company name or family trust)
NARO MEMBERSHIP#_____________________________(If you know it)
 For each convention / seminar / workshop/ event attended, please fill out separate forms. Additional
forms are available from the NARO website: www.naro-us.org
 Attach a Program Schedule from the event which includes the date, seminar content and speakers.
 Please complete the following: Date of seminar/workshop/event: November 9th & 10th, 2017
Sponsor: NADOA 44TH ANNUAL Institute
Credit Hours Earned: 12
8 hours for NARO National Convention OFFICE USE ONLY

7 hours for CMM Review Course
7 hours for NARO State Chapter Convention Credit Hours Earned:
6 hours maximum for related professional events
3 hours for one full-day approved event
1 hour for one half-day approved event
1 hour for NARO Webinar
Please sign, date and return this form, with attachment, to:
NARO Foundation
15 W 6th Street, Suite 2626 Tulsa, OK 74119
Fax: 918-794-1662 Email: rharris@naro-us.org
Signature__________________________________________________________ Date_________________________

Nadoa 2017 Ejournal PDF

Enviado por

Dados do documento

Título original

Direitos autorais

Formatos disponíveis

Compartilhar este documento

Compartilhar ou incorporar documento

Opções de compartilhamento

Você considera este documento útil?

Este conteúdo é inapropriado?

Direitos autorais:

Formatos disponíveis

Nadoa 2017 Ejournal PDF

Enviado por

Direitos autorais:

Formatos disponíveis

Topics include:

Allocation and Production Sharing Agreement in Texas Page 4

Anatomy of a Title Opinion (revised w/ comments) Page 56

Business Writing Page 241

CDOA Exam, “How to Study” Page 265

CDOA Section III Review Page 358

Division Order Calculations Page 482

Enhanced Recovery and Division Orders in Texas Page 535

Escheat and Unclaimed Property Workshop presented by Keane Page 585

Ethics In Negotiation – Heads I win, Tails you Lose Page 640

Table of Contents - continued

Leadership, “Are Leaders Born or Made” Page 694

Louisiana SONRIS Website, “How to Navigate” Page 695

Millennials to Seniors: How to Navigate Generational Challenges Page 729

North Dakota Update on the Law Page 780

Post-Production Costs- “Deduction of Post Production Expense” Page 833

Texas Trusts, Wills and Probates Page 924

Affidavit of Attendance Page 979-980

JANUARY 619,033,596 648,755,409 684,478,850 689,291,871 701,492,277 742,606,600 710,433,882

• If the fluids produced at the surface are

• If the fluids produced at the surface are

First reported form WS-1 adopted

* the data continues to suggest

FTP = first take point

UPDATED DRILLING AND DIVISION ORDER TITLE OPINION

Re: Elk Hills Well

Dear Mr. Landman:

In accordance with Company A Corporation’s (“Company A”) request, we have

Limited to those depths lying between the

Forks Formation and excluding the Madison

Containing 1274.122 acres, more or less

2. Supplemental Abstracts of Title compiled by Abstract Title Company (“ATC”)

The Supplemental Abstracts include:

(i) An Abstract Report, containing a listing of book, page and/or Reception

(iv) A summary of computer research conducted by ATC on an unknown date

3. United States Department of the Interior, Bureau of Land Management (“BLM”)

4. Online records of the North Dakota Industrial Commission, Department of

6. The North Dakota Department of Trust Lands website, available

TRACTS Commented [BC3]: Tracts should be designated when necessary

Containing 79.60 acres, more or less

Containing 80.00 acres, more or less

Containing 30.62 acres, more or less

Containing 35.10 acres, more or less

Containing 137.00 acres, more or less

Containing 132.00 acres, more or less

Containing 126.50 acres, more or less

Containing 120.00 acres, more or less

Containing 320.00 acres, more or less

Tract No. 10:

Containing 13.60 acres, more or less

Tract No. 11:

Containing 199.70 acres, more or less

Angela Granovsky, as Trustee of the Robert 50.000000%

Angela Granovsky, as Trustee of the Tracie 50.000000%

Percentage Lease Net Mineral

Christina Becker 2.500000% 13 1.99000000

Kevin T. Morris 2.500000% 14 1.99000000

Billy E. Morris 2.500000% 15 1.99000000

Elvira R. Parks 2.500000% 16 1.99000000

Angela Granovsky, as Trustee of the Tracie 3.150000% RI 12

Matt P. Frayser and Rosie Flora Frayser, as 1.995000% RI 8

Agnes M. Granovsky, as Trustee of the Agnes 1.995000% RI 9

Geraldine Granovsky, for life, 1.995000% RI 10