This week Justin and I speak with Liana Jones, an attorney with Lear & Lear, PLLC, to help us understand the ins and outs of oil & gas title opinions. We discuss everything you wanted to know about title opinions including, the role of the title attorney, why operators need title opinions, the types of title opinions that are relevant to oil and gas, why royalty interests are put in suspense by an operator and why this is not necessarily a bad thing, and we also talk about some issues that can come up with title opinions and what you need to know as a mineral interest or royalty owner.
This was a really interesting conversation and I learned a lot. I know a bit about title opinions before but thanks to Liana’s easy to understand explanations I feel like my depth of knowledge has been expanded greatly.
Using the embedded player above, you can download the episode to your computer or listen to it here! Be sure to also subscribe on iTunes!
About Our Guest
Ms. Jones’ background is in natural resource law and transactional practice, with an emphasis on oil and gas title. Her primary interest pertains to public lands and complex title issues. In her spare time she enjoys outdoor recreational activities to include backpacking, cycling, skiing, and snowboarding. Her practice includes natural resources and public lands law with emphasis on mineral law, oil and gas law and litigation; complex title examinations; administrative hearings and appeals; public land law; and timber and logging law.
Admissions:
Utah Supreme Court
Supreme Court of Colorado
Oil & Gas Title Opinions and the Role of the Division Order Analyst
In this episode we discuss title opinions, title defects and curative measures, why interests may be placed in suspense by an operator, the nuances of title in Texas, and more:
- What is a title opinion
- Why do operators need title opinions
- What is the typical process that an operator follows to prepare a title opinion
- What are the types of title opinions relevant to oil and gas
- The roles of Title Attorneys, Landmen, and Division Order Analysts, and how they work together.
- How the Division Order Analyst uses the Division Order Title Opinion to prepare the pay deck and to ultimately generate Division Orders.
Title Defects and Curative Measures
In previous episodes we’ve mentioned an interest being in pay status or funds being held in “suspense” by the operator. What are some of the reasons that a title attorney may recommend to put an interest in suspense?
- Why having your interest placed in suspense is not necessarily a bad thing.
- What are some of the common title defects that she’s seen that are the reason that an interest is placed in suspense.
- Why one operator can make one determination but another operator can make a different determination on the same title.
- What a mineral or royalty owner should do if they think the Net Revenue Interest shown on a division order is wrong.
- When to consider hiring a title attorney to help you if you think you should be getting paid a different amount.
- What happens from an operator or title attorney point of view when a royalty owner responds to the Division Order by saying that they don’t think that it is correct.
Oil & Gas Leases and Post-Production Deductions
One of the issues that has been a hot topic in the past few years is post production deductions and interpretation of leases.
- How conservative or aggressive can operators be in interpreting leases.
- How operators approach specific lease wording today vs. blanket deductions that may have been taken a few years ago.
- How frequently title opinions are updated by most operators.
- The burden of proof in proving title – is it on the operator or the mineral owner?
Unique Mineral Title Issues in Texas
No discussion on Mineral Title would be complete without a discussion about Texas. Texas can be particularly challenging given the long history of oil and gas in the state and the volume of case law.
- Liana tells us what case law is and how it can influence one title attorney coming up with a different answer than another title attorney on the same tract of land.
- Some of the challenges her firm has seen with title in Texas and particularly in the Permian Basin where there has been so much activity over the past 5 years.
The Million Dollar Title Opinion
We wrap up with the million dollar question… That is, the million dollar title opinion question. Yes, you read that correctly! Some extremely complex title opinions with hundreds or thousands of owners can run more than 1,000 pages long and cost over a million dollars to prepare. Sure gives you an appreciation of all the things that go into just getting title clearance to be able to drill a well.
Resources Mentioned in this Episode
- National Association of Royalty Owners
- National Association of Division Order Analysts
- Posts on Shale Basins:
How to Contact Liana
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