2021 Q2

2021 Q2

National Association of Division Order Analysts April / May / June 2021

PERSONAL ATTENTION • ETHICAL STANDARDS • PROFESSIONAL SERVICE

PURCHASING ROYALTIES ACROSS THE NATION

Quick, no-obligation offers

Royalty valuations

Mineral rights appraisals

Free estate and title transfer consults

Pro bono Medicaid & social services appraisals

[email protected] • 1-800-950-6954 • www.LegacyRoyalties.com

A RELATIONSHIP OF TRUST

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

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

Legal, Engineering, Land & Division Order Expertise On Staff

Known For Integrity and Fair Dealing

NADOA Member 30 Years

1-800-880-0940 | [email protected] | www.RudyEnergy.com Russell T. Rudy Energy, LLC - Buying Oil & Gas and Mineral Interests Nationwide Since 1983

Volume MMXXI • No 2

www.NADOA.org

Contents Feature

Articles

Institute Insights. ...............................................................................................9 Legal Updates PA Supreme Court halts Unfair Trade Practices lawsuit. .............................18 NY Oil Companies prevail in NYC Global Warming Appeal.......................19 TX Supreme Court Cases ConocoPhillips Co. v. Ramirez ........................................................................19 Yowell v. Granite Operating Co. ......................................................................20 BlueStone Natural Resources II LLC v. Walker Murray Randle et al ...................20 Endeavor Energy Resources, LP v. Energen Resources Corp. et al ............................21 Sundown Energy LP, et al v. HJSA No. 3 Ltd. P’ship ........................................21 Bryan CWagner, et al v. Apache Corporation ...................................................22 Legal Watch BlueStone Nat. Res. II, LLC v. Nettye Engler Energy, LP ..................................22 Parker v. Jordan ..............................................................................................23 Lyle v. Midway Solar, LLC . .............................................................................25 Legislative Update. ..........................................................................................26 Conservation Commission Communications Colorado .........................................................................................................26 New Mexico ....................................................................................................27 Title Examination – Curing Title with Affidavits...........................................27 National Niche – Federal Watch......................................................................38 Colonial Pipeline Ransomware Attack............................................................45

NADOA 2021 Officers President Lewis Box, CDOA 1st Vice President Michele Lawton 2nd Vice Presiden t April Luedecke, CDOA Treasurer Michelle Harris-Fairclough, CDOA Corresponding Secretary Vicki Danielson, CDOA Recording Secretary Maryann Maimo, CDOA, CPLTA The NADOA News Magazine is a quarterly publication of the National Association of Division

Order Analysts P O Box 1656 Palm Harbor, FL 34682

Subscription: By membership to NADOA, at $75.00 per year.

In This

Issue

News Magazine Editor Rona L. Erickson, CDOA Kaiser-Francis Oil Company [email protected] 918.491.4319 Associate Editor Cheryl Hampton [email protected]

President’s Corner. .................................................................................1 Decimal Points.......................................................................................3 Division Order $al.................................................................................3 2022 Board Nominations.......................................................................5 Certification...........................................................................................6 2021 Membership Recognition. ..............................................................7 Leadership Lines...................................................................................38 Counterpart Connection.......................................................................40 New Members.......................................................................................44 2021 NADOA Board/Committee Chairs...............................................47 Calendar of Events. ..............................................................................48

Graphic Design, Paul Beach

On the Cover: Marriott Harbor Beach Pool

All rights reserved. No part of this publication may be reproduced/copied without written permission. Editorial disclaimer: The contents of this newsletter are intended for member use only and any other use without permission from the NADOA Board of Directors is strictly prohibited. Articles published herein represent the view of the authors; publication neither implies approval of the opinions expressed nor accuracy of the facts stated and NADOA accepts no liability for misprints.

President’s

Corner

Lewis Box, CDOA 2021 NADOA President

Can you believe this year is already half over? Where has all the time gone? I don’t know about you, but it seems like just yesterday we were all still navigating work from home and zoom school. Hopefully you and yours have stayed healthy and happy through this pandemic. It looks like we are finally seeing the light at the end of this very long tunnel. I need to give a special shout out to Jennifer Kegans, Norma Dooley & the Institute Committee. The whole committee has been working tirelessly to get Institute up and running this year. We plan on having a fully in person conference with no capacity restrictions. Don’t forget to grab the early bird special registration before prices increase July 1st. Also keep your eye on airfares. We’ve been seeing round trip flights for as low as $150 roundtrip out of DFW! Hopefully with the pandemic in our rear-view mirror things will start returning to something resembling normalcy. Oil prices have been stable, and I’ve seen an uptick in job postings on LinkedIn and regional association job boards. I don’t know about ya’ll but my desk has been covered up for months! I hope every one of you is staying healthy and I look forward to seeing all of your smiling faces in Fort Lauderdale in September!

1

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

w

essentially, clients value five things in a law firm

strong relationships

clear communication

budget certainty/ lean staffing

know-how

results

TOP LISTED IN THE U.S. IN ENERGY LAW BY THE BEST LAWYERS IN AMERICA ® Sharon O. Flanery Chair, Energy and Natural Resources Department [email protected]

THIS IS AN ADVERTISEMENT steptoe-johnson.com

Contact us today : (405) 608-1900 [email protected] TheTitleLawGroup.com

Title Opinions

Client Referrals

Curative Issues

Have confidence knowing we can help draft the documentation you need to mitigate your company’s business risks.

For your mineral or royalty owners that need more specific help, we would be happy to serve them and clear interests held in suspense, probates, quiet title actions, and more!

Let us save you time and money by calculating the interests you need for your decks and find the magic number 1. We can help you with DOTOs, Drilling, and Acquisition Title Opinions.

This is an advertisement .

2

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

NADOA

Decimal Points

Regional Reporters

Rona Erickson, CDOA Editor

Cheryl Hampton Associate Editor

ABADOA

Steptoe & Johnson PLLC [email protected]

NADOA online Job Bank has new postings. Visit http://www.nadoa.wildapricot.org/page-662233 Remember to keep your NADOA directory information updated. Due to all the changes taking place in our industry and the world, it is more important than ever to maintain professional contacts and receive the educational benefits of membership in NADOA.

CAPDOA

OPEN

DADOA OPEN DALWORTH Lewis Box, CDOA

[email protected]

HADOA

Emily Sheffield [email protected] Angie Coady, CDOA [email protected]

MAADOA

2021 NADOA Article Deadlines

PBADOA

OPEN

SADOA

Joe Anderson [email protected]

Special Institute Edition. .....July 2, 2021

Arkansas

Jackie Clotfelter, CDOA [email protected] Kimberly A. Backman [email protected]

Third Quarter. ....... September 24, 2021

Fourth Quarter......... November 5, 2021

North Dakota

New Mexico

Zachary P. Oliva [email protected]

If you have a suggestion for someone to act as a Regional Reporter to help NADOA keep abreast of current legislation and legal issues for your region, please submit the name or the name of the firm.

Louisiana

OPEN

3

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

As a way of getting better every day, in 2021 NADOA Website Committee welcomes Local Division Order Associations to use the GoToWebinar forum for their 2021 events to foster more educational opportunities at the local level. If your organization is interested, please email the 2021 Webinar Committee at [email protected]. Steptoe & Johnson PLLC – Visit: https://www.steptoe-johnson.com and click on News for details. The Steptoe webcasts are recorded. To access previously recorded webcasts, go to Steptoe- Johnson.com and enter Webcasts in the search feature.

Cob Webs

Educational webinars can be approved for 1 (one) CDOA certification point. NADOA webinars, Steptoe & Johnson PLLC webcasts and Kiefaber & Oliva LLP webinars are pre-approved. Please check the certification page to determine if other webinars are pre-approved or need to be submitted for approval to the NADOA Certification Committee. Contact Sherry Werth for approvals ( [email protected] ) OR cdoa@ nadoa.org. Certification points should only be applied for after completing the event. If you are unable to attend an event due to unforeseen circumstances, it is an ethics violation to apply for the credit. NADOA - Webinar information and registration links will be posted on the website (www. nadoa.org). Links to recorded webinars are available to NADOA members by using the Webinar link in the Members Only section on the homepage. For webinar questions or comments, contact [email protected]

Kiefaber & Oliva LLP - Visit www.kolawllp.com/events for further information.

Locke Lord LLP - Visit www.lockelord.com and click on News & Events for details.

National Association of Royalty Owners (NARO) - Visit https://www.naro-us.org/ log in and go to the events page. Free for NARO members; $25 fee for non members. If you are aware of other educational webinars, please advise NADOA News Magazine editor, Rona Erickson ([email protected]), Associate editor, Cheryl Hampton (champton@ limerockresources.com), or 2021 NADOA Education Chairs, Yoli Bazan or Stephanie Nguyen ([email protected] )

SEE CALENDAR OF EVENTS FOR TOPICS AND DATES

4

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

5

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

CANDIDATES FOR CERTIFICATION Publication of the following “Certified Division Order Analyst” applicant(s) fulfills the requirement as stated in the Voluntary Certification Policy, III C.2 which states: “… applicant’s name will be published in the NADOA Newsletter or other official publication of NADOA.” This allows the NADOA membership an opportunity to present objections to the certification of the applicant. Any objection to the certification of the applicant must be in writing and signed by a NADOA member or non-member who qualifies his knowledge and objection of the applicant. All such letters will be considered confidential and must be received by the NADOA Certification Committee at the following address within thirty (30) days following the last day of the month in which the Newsletter or other official publication of NADOA was published NADOA Certification Committee P O Box 1656 Palm Harbor, FL 34682 If the objection warrants denial of the certification or temporary withholding of certification, the applicant will be notified by Certified Mail.

2021 CERTIFICATION COMMITTEE

CANDIDATES FOR RECERTIFICATION Esther Cardwell – Oklahoma City, OK Marisa Craig – Oklahoma City, OK Kyle Fogarty – Spring, TX Kodi Forman – Oklahoma City, OK Sarah E Hall – Houston, TX Margaret Lopez – Houston, TX April Luedecke – Houston, TX Steven Selberg – Tulsa, OK Rose Nguyen Shelton – Houston, TX

Chairman Yolanda “Yoli” Bazan, CDOA [email protected] Hilcorp

Recertification Credits Sherry Werth, CDOA [email protected] Independent

Recertification Applications Darryn McGee, CDOA [email protected] Cimarex Energy Applications & Candidate Publications Stephanie Moore, CDOA [email protected] Callon Petroleum Company Review Manual/Forms Lewis Box, CDOA [email protected] Comstock Resources Testing

Jennifer S Smith – Denver, CO Shelby Welch - Midland, TX Debbie Wortham – Tulsa, OK

EX T EX Division Order Services, LLC 4865Ward Road, Suite 200 Wheat Ridge, CO 80033 303-463-8799 303-463-8808 extexllc.com Fax Division Orders, Revenue Distribution, 1099’s Dennis Pade Boyd Sanstra Chris Pennels President Vice President Vice President

Bonnie Didrickson, CDOA [email protected] Independent Policies Megan McKee, CDOA [email protected] Range Resources

6

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

NADOA Membership Recognition Michelle Harris-Fairclough, CDOA Do you have a great mentor that you’d like to thank? Do you know an organization that is promoting the advancement of the Division Order profession?

Nomination categories and an example form are included in this issue of the NADOA News Magazine or are available on the NADOA website: http://www.nadoa.wildapricot.org/page- 1709232 Deadline: June 18, 2021

Consider nominating someone or an organization for an NADOA Membership Recognition Award.

2021 Nominations for NADOA Membership Recognition

I would like to nominate ___________________________________________________ for the Ellis Rudy Memorial Lifetime Achievement Award. This award is presented to the NADOA member who has exemplified the Division Order profession through demonstrated leadership contributions to the industry and the profession during his or her career. I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Corporate Award. This award is presented to the group or company that has contributed to NADOA’s growth and development, the Division Order profession and the industry during the past year. I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Award for Education. This award is presented to the NADOA member who has dedicated their time and service to the betterment of Division Order Professionals through influence and mentorship. I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Award for Interaction. This award is presented to the NADOA member or affiliated organization who has had a positive community impact and extraordinary service and dedication in leading and promoting the Division Order profession. I would like to nominate ___________________________________________________ for the Russell Schetroma Memorial Speaker’s Award. This award is presented to the NADOA member who has made a difference in the lives of our members by contributing to the growth, development and education of our association or industry during the past year.

7

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

2021 Nomination Form for NADOA Membership Recognition

2021 Nomination Form for NADOA Membership Recognition

I would like to nominate ___________________________________________ for the NADOA Membership Recognition Award for Interaction . This award is presented to the NADOA member or affiliated organization who has had a positive community impact and extraordinary service and dedication in leading and promoting the Division Order profession. Please detail the nominee’s involvement in NADOA, the services they have performed and/or contributions they have made (You may attach a separate sheet if necessary). Please detail the nominee’s involvement in NADOA, the services they have performed and/or contributions they have made (You may attach a separate sheet if necessary).

___________________________________________________ Signature ____________________________________________________ Please Print Name ____________________________________________________ Email Address

Send nominations to: Member Recognition Awards Committee c/o Michelle Harris-Fairclough ([email protected]). Nominations will be accepted through June 1 8, 2021.

8

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

9

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

t

Time is rapidly approaching for our 48 th Annual NADOA Institute, “SUN, SAND & SUCCESS”, which will be held at the Marriott Harbor Resort & Spa Hotel in Fort Lauderdale, FL, from September 8 through 10, 2021. After visiting the hotel in January 2020, we can honestly say you’re not going to want to MISS OUT on this one. The hotel is fabulous, the staff is delightful and great to work with, the food delicious and the outdoor layout is spectacular. The Institute Committee has been hard at work to ensure you walk away smarter with the classes we have planned, full from the wonderful food and smiling from the Wednesday and Thursday evening events. We want to extend a great big “ THANK YOU” to this year’s Institute Committee for their dedication and hard work. It’s been an honor to work with each and every one of you. It’s a true learning experience to see what goes on to put Institute together if you have never served on a committee.

For any of you who would like to get involved, we can always use VOLUNTEERS to help during Institute. Please contact Betty Davidson ( [email protected] ) or Brenda Pirozzolo ( [email protected] ).

Now’s the time to start putting that bug in your boss’s ear to let them know you want to join us in Fort Lauderdale. Registration is OPEN! Visit www. nadoa.org to register for Institute and make your hotel reservations. See you in September . Update – the Governor of the State of Florida announced he was re-opening the State effective July 1, 2021 . We will provide more COVID information in the Special Institute Edition of the magazine. Something else to keep in mind: you never know what kind of new friends you might make.

Norma Dooley Jennifer Kegans Institute Co-Chairs

10

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

Institute Program By Jennifer Kegans It has been a long year, but we are back and ready to educate the masses. The 2021 Program Committee has been working hard and is finalizing the lineup for this year’s speakers and topics. With help from April

Luedecke, Sandi Rupprecht, and Quint Withers we were able to secure some fantastic presenters. We are excited to welcome back some familiar faces along with some new ones too!

Wednesday Classes Gary Joseph – Sovos – Escheat Pam Wentz & Meghan Hartley– Georgeson – Unclaimed Property Policies Eli Murray – Advanced Calculations Breakout Sessions Thursday and Friday Quinn Moore – KPMG- Asset Recovery Jason Lucas, Tim McKeen, Andy Graham – Steptoe & Johnson PLLC – Appalachia Alyce Hoge – Earth, Wind, & Fire: Environmental Laws for Land

Professionals as well as Lease Provisions Roberto Seda – Seda Law Firm - Oklahoma Pam Wentz & Meghan Hartley - Georgeson – Unclaimed Property Reporting Challenges Eli Kiefaber – Kiefaber & Oliva LLP David Terry – Comstock Resources Inc Gerald Hendrick & Drew Poe – Retirement & Tax Benefits Andrew Graham – Steptoe & Johnson PLLC- Ethics Eli Murray – Dorchester Minerals LP - PPA’s and the Effect on DOA’s & Revenue

Paul Strickland – Hargrove, Smelly, & Strickland – Louisiana Succession Scott Petry – Petry, Rosie, & Sinex – Allocation Well Twists and Turns Erin Raughton – Headington

Diana Prulhiere – Steptoe & Johnson PLLC – Colorado Donna King - Working from Home; the New Norm Be on the look-out for updates and do not wait to register before the Early Bird pricing ends June 30, 2021. We cannot wait to see you in sunny Fort Lauderdale, Florida.

11

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

Donations for the NADOA Annual Institute in Fort Lauderdale, Florida are still being accepted. Please visit www.nadoa.org for additional information regarding Institute. Please pass the donation form to the appropriate person in your company or contact Vicki Danielson or Melissa Fontana to assist you with your company’s Corporate Donation. 2021 Corporate Donation Form Link

12

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

REGISTRATION Debbie McKee, Co-Chair Valerie Wible, Co-Chair

We are looking for volunteers to assist with Registration for our upcoming NADOA 48th Annual Institute, to be held September 8 – 10, 2021. The Institute will be held at the lovely Marriott Harbor Beach Resort in Fort Lauderdale, Florida, which is located right on the beach.

We will need volunteers for Tuesday, September 7, from 1:00-5:00 pm, Wednesday, September 8, from 7:00 am- noon & 1:30-5:30 pm, and possibly early morning Registration on Thursday September 9.

If you plan to attend and wish to volunteer to work Registration (which is a GREAT way to meet new people by the way), please contact Debbie McKee at 405-570-9702 or [email protected]; or Valerie Wible at 405-748- 9454 or [email protected].

…is a line from a Beach Boys song. Does it make you think of sunny days and beaches? Well, that is exactly what you are in for at Institute this year! We will be in Fort Lauderdale where it is easy to “get around!” If you want to rent a car there are 12 rental companies at Fort Lauderdale’s Hollywood International Airport (FLL is the code name if you are looking in Expedia. com or other websites that ask for a destination) and they are located directly across from Terminal 1 where many major airlines arrive. Although there is not a shuttle provided by the Marriott Harbor Beach Hotel, there are plenty of other shuttle services to and from the airport, along with taxis, Uber and Lyft. The hotel is only a 12 minute drive from the airport and the fares are relatively inexpensive, especially if you are arriving with a group. Getting there is easy too. A quick check at Expedia revealed that fares from DFW and Houston International are as low as $157 roundtrip right now. Low fares are available from Denver International, too. Your best bet? Download the Hopper App and let it do the watching for you for the best price. Just enter

your flight information, select “Watch This Trip” and the app will send you a message when fares are at their lowest. If you want to take the scenic route, Amtrak also makes a stop in Fort Lauderdale. The station is one of Florida’s most historic and beautiful train stations built in 1926 in the Mediterranean Revival style. Go to www.amtrak.com for information on routes and pricing. Now here is the icing on the cake or as we say in Louisiana, “Lagniappe.” If you’ve been itching to get cruising again, Institute is the place to be in September. Fort Lauderdale is a main port for cruise lines, particularly to the Caribbean. And what perfect timing, too! Most cruise lines are fully opening for business again starting September 1st. You can come to Fort Lauderdale, catch up with great friends, meet new ones, get a great education and then go on a well- deserved vacation the very next day!

See you in sunny Fort Lauderdale!

Susan Bradley, CDOA Transportation Chair

13

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

Vendor Fair

NADOA would like to welcome all vendors to this year’s 48th Annual Institute Vendor’s Fair!

We hope you join us this year on the sandy beaches of Ft. Lauderdale, FL! We still have slots available. If you are interested in attending as a vendor this year, please follow this link to the Registration Form & Vendor Agreement: http://www.nadoa.wildapricot.org/resources/ Documents/2021%20Institute/2021%20NADOA%20 VendorRegForm.pdf

GREETERS NEEDED for NADOA Institute On Wednesday September 8 & On Thursday September 9, 2021 Please Join Us At The Beautiful Marriott Harbor Beach Resort In Ft Lauderdale, FL TO VOLUNTEER PLEASE CONTACT: BETTY DAVIDSON at 713-739-6622 OR [email protected] BRENDA PIROZZOLO at 972-310-2953 OR [email protected]

A big thank you to the following confirmed vendors:

Georgeson – https://www.georgeson.com/ Land Information Services – https://www.lislv.com Russell T Rudy Energy – https://rudyenergy.com Sovos Compliance LLC – https://sovos.com/ Quorum – https://www.quorumsoftware.com There is still time to reserve limited space at the upcoming 48th Annual NADOA Institute Vendor Fair.

Contact Lewis Box to confirm your space now!! [email protected] [email protected] Work: 972-668-0631 or Cell: 325-234-5741

Information Don’t miss out on NADOA’s 48th Annual Institute and experience Sun, Sand and Success in 2021 to be held September 8 – 10 in Fort Lauderdale, Florida. Mark your calendars to come early and stay late and enjoy the wonders of Fort Lauderdale. It’s a perfect vacation destination before and after Institute. Things to Do: https://www.sunny.org/things-to-do/top-10-things-to-do/ Restaurants: https://www.sunny.org/dining-and-nightlife/restaurants/ Fort Lauderdale video: https://www.youtube.com/watch?v=Eeq5Wi3O1co

14

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

Hospitality Stephanie Moore and Connie Wilcoxson

September 8 at the “Come and Go” Welcome Reception. Come on by and grab some goodies for your room and say hi to friends from 4 - 6 pm then enjoy your evening on the town! NADOA’s BIG event will take place Thursday evening and it’s going to be a totally . We will be hosting a fabulous dinner along with TABLE TRIVIA, Costume and Dance contests, DJ, music videos and more, and it’s all about the 1980’s. There will be PRIZES for the winners! Don’t be like ET and phone home from this Vacation in paradise, book your flight and register for some Sun, Sand, and Education and bring a friend! Make sure you’re ready to have the .

The NADOA Board and Institute Committee would like to invite you to the upcoming 48th Annual NADOA Institute, September 8 – 10, 2021. We hope you are ready for some great educational topics as well as some FUN!!! This year’s Institute will be held at the BEAUTIFUL Fort Lauderdale, Florida Marriott Harbor Beach Resort and we want you to bring your dancin’ shoes! If you are ready to Flashdance after this past year, join us in Walkin’ on Sunshine and gorgeous beaches and cut . Just in time for the summer and NADOA’s awesome Institute, Covid guidelines are relaxing all over the country and the NADOA Hospitality committee is planning some 1980’s style fun with social distancing in mind. Join us Wednesday,

15

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

We want everyone to be part of the 2021 NADOA INSTITUTE in Fort Lauderdale, FL and if you can’t be there in person then the next best thing is sending your company’s promotional items!!! We are planning on 300 to be in attendance but any quantity you can donate is greatly appreciated. Please use the link below to access the donation form: http://www.nadoa.wildapricot.org/resources/Documents/2021%20Institute/ GOODY%20BAG%20FORM%20Q1.pdf

If you have any questions, please contact either Sonya Turner at [email protected] or Mary Sons at [email protected]

16

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

NADOA 2021 INSTITUTE COMMITTEE

NAME

POSITION

EMAIL

NORMA DOOLEY JENNIFER KEAGANS

INSTITUTE COORDINATOR INSTITUTE COORDINATOR

[email protected] [email protected]

LUCRETIA JONES LISA BUFFALOE ARMANDO LOPEZ

HOTEL- CO-CHAIR HOTEL- CO-CHAIR

[email protected] [email protected] [email protected]

HOTEL

DEBBIE MCKEE VALERIE WIBLE

REGISTRATION- CO-CHAIR REGISTRATION- CO-CHAIR

[email protected]

[email protected]

QUINT WITHERS SANDI RUPPRECHT

PROGRAM- CO-CHAIR PROGRAM- CO-CHAIR SPEAKER PACKETS

[email protected] [email protected]

STEPHANIE MOORE CONNIE WILCOXSON

HOSPITALITY- CO-CHAIR HOSPITALITY- CO-CHAIR

[email protected]

[email protected]

PUBLICATIONS (GRAPHICS & E BOOK)- CHAIR

SONYA TURNER

PACKETS (GOODY BAGS)- CO-CHAIR PACKETS (GOODY BAGS)- CO-CHAIR

[email protected]

MARY SONS

[email protected]

SUSAN BRADLEY

PUBLICITY- CHAIR

[email protected]

LEWIS BOX

EXHIBITORS (VENDORS)- CHAIR

[email protected]

VICKI DANIELSON MELISSA FONTANA

CORPORATE DONATION- CO-CHAIR CORPORATE DONATION- CO-CHAIR

[email protected]

[email protected]

SUSAN BRADLEY

TRANSPORTATION CO-CHAIR

[email protected]

BETTY DAVIDSON BRENDA PIROZZOLO

INFORMATION CO-CHAIR INFORMATION CO-CHAIR

[email protected] [email protected]

HEATHER LISTER MICHELLE DAVILA

DOOR PRIZES- CO-CHAIR DOOR PRIZES- CO-CHAIR

[email protected] [email protected]

RONA ERICKSON CHERYL HAMPTON

NEWS MAGAZINE EDITOR

[email protected]

ASSOCIATE EDITOR

[email protected]

17

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

Legal

Update Articles are not intended to be and should not be relied upon as legal advice or to establish any kind of an attorney-client relationship with the author.

PA Supreme Court Halts AG Lawsuit Against Oil and Gas Lessees Under UTPCPL

Pennsylvania

On March 24, 2021, in a 6-1 decision, the Pennsylvania Supreme Court halted a lawsuit against oil and gas lessees by the Pennsylvania Office of the Attorney General (OAG) under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL), 73 P.S. §§ 201-1—201-9.3, for alleged deceptive and anticompetitive practices in obtaining oil and gas leases from landowners, holding that the UTPCPL regulates the conduct of sellers and does not provide a remedy for sellers (i.e., landowners) against buyers (i.e., lessees). The UTPCPL is a consumer protection law against fraud and deceptive business practices. The Court cited the definition of “trade” and “commerce” under the statute, concluding that the UTPCPL prohibits unfair and deceptive practices in the conduct of “advertising, offering for sale, sale or distribution” of goods. The legislature chose to define trade and commerce as only acts of selling for purposes of the UTPCPL. This choice aligns with the intended purpose of the UTPCPL in protecting consumers. In the leasing transaction at issue, the lessees were in the position of a buyer not a seller, purchasing rights to the landowners’ mineral estates in return for bonuses, royalties and other payments. Therefore, the lessees were not subject to regulation or claims under the UTPCPL. The OAG’s additional anti-trust conduct claims were moot as a result of this decision. As background, the OAG filed the action under the UTPCPL, and the lessees filed preliminary objections that they were not “sellers” under the terms of the UTPCPL because they acquired mineral rights

from landowners. The preliminary objections were overruled by the trial court, a decision subsequently affirmed in part by the Pennsylvania Commonwealth Court. If you have any questions regarding this decision, or how it could impact you, please contact one of the authors of this alert.

About the Authors:

Nathaniel I. Holland, MEMBER

Phone: (814) 333-4906 Email: [email protected]

Jon C. Beckman, MEMBER

Phone: (814) 333-4913 Email: [email protected]

Brian J. Pulito, MEMBER

Phone: (814) 333-4905 Email: [email protected]

18

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

Oil Companies Prevail in New York City Global Warming Appeal

New York

In an April 1, 2021 ruling in favor of BP Plc, Chevron Corp, ConocoPhillips, Exxon Mobil Corp and Royal Dutch Shell Plc, the 2nd U.S. Circuit Court of Appeals in Manhattan said the regulation of greenhouse gas emissions should be addressed under federal law and international treaties. This ruling rejected New York City’s effort to hold the five major oil companies liable to help pay the costs of addressing harm caused by global warming by suing under state nuisance law for damages caused by the companies’ “admittedly legal” production and sale of fossil fuels, and said the city’s federal common law claims were displaced

by the federal Clean Air Act.

“Global warming presents a uniquely international problem of national concern,” Circuit Judge Richard Sullivan wrote for a three-judge panel. “It is therefore not well-suited to the application of state law.”

The Appeals court decision upheld a July 2018 dismissal by U.S. District Judge John Keenan in Manhattan.

City of New York v Chevron Corp et al, 2nd U.S. Circuit Court of Appeals, No. 18-2188

Legal Updates Texas Supreme Court

Texas

owners of the minerals, executed an extension of a 1983 Enron (EOG) lease of the minerals under Las Piedras Ranch. This lease was subsequently transferred to ConocoPhillips. Leon Oscar Sr. died in 2006, survived by three children – Leon, Jr., Minerva and Rosalinda. In 2010, they sued ConocoPhillips and EOG for an accounting and to establish their title to 1/4 mineral interest in the Ranch. They asserted that the oil and gas lease signed by Leon Oscar Sr. was not binding on them as remaindermen following Leon Oscar’s life estate, and that EOG and ConocoPhillips owed them an accounting and payment for 1/4 of the net profits from oil and gas production from the Ranch, from the date of first production. They also sued for prejudgment interest and attorneys’ fees. Rosalinda eventually dismissed her claims. Respondents settled with EOG for $50,000 prior to the trial court’s final judgment. In 2015 the trial court

ConocoPhillips Co. v. Ramirez , No. 17-0822 Instrument interpretation regarding the Las Piedras Ranch in Zapata County, TX was the focus of this case. “Las Piedras Ranch” had been for many years the subject of agreements and conveyances that dealt with the surface and specifically excluded the mineral estate, which was to remain undivided. The minerals were owned by the Ramirez family. One member of that family was Leonor, who died in 1988, owning all of the surface estate and a 1/4 mineral interest in the Ranch. Her will devised to her son Leon Oscar Sr. “all of my right, title and interest in and to Ranch ‘Las Piedras’ … during … his natural life,” and on his death “to his children then living in equal shares.” Her residuary estate was devised equally to her children, Leon Oscar Sr., Ileana and Rodolfo, which at the time the children believed included the mineral estate. In 1990, Leonor’s three children, treated as equal fee

19

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

signed a final judgment in favor of Leon Oscar Jr. and Minerva against ConocoPhillips awarding plaintiffs title to the minerals and $11.1 million for their share of net profits on production from the Ranch, plus $951,546 in prejudgment interest and $1,125,000 in attorneys’ fees. In 2017, the San Antonio Court of Appeals affirmed. 534 S.W.3d 490. The Texas Supreme Court reversed the court of appeal’s judgment and held the bequest of Las Piedras Ranch to Leon Oscar Sr. for his lifetime with the remainder to his children only included the surface estate. The mineral interest under Las Piedras Ranch passed via the residuary clause to Leon Oscar Sr., Rodolfo and Ileana. ConocoPhillips Co. v. Ramirez, 599 S.W.3d 296 (Tex. 2020) Yowell v. Granite Operating Co. This case revolves around a 1986 lease on which there was an overriding royalty reservation. The ORRI reservation was subject to an anti-washout provision in the event the lease was terminated: “in the event Assignee obtains an extension, renewal or new lease or leases covering or affecting all or part of the mineral interest covered and affected by said lease or lease, then the overriding royalty interest reserved herein shall attach to said extension, renewal or new lease or leases; and an appropriate recordable instrument shall be executed to evidence Assignor’s overriding royalty interest therein.” The Yowells ultimately obtained this override by assignment and Upland Resources Inc. (Upland) became the owner of the leasehold interest. In 2007, Amarillo Production Company obtained top leases on the property, and sued Upland, the current lessee, to terminate the bottom leases due to lack of production. In connection with a settlement of that litigation, after releasing its interest in the underlying leases, Upland changed its name to Granite Operating Company, and Amarillo assigned the leases to Granite, reserving a 5% ORRI, which it then assigned to Peyton Oil & Gas and PAC Production, in the proportions of 2% and 3% respectively. Granite later assigned the leases to Apache.

In 2013, the Yowells filed suit to recover their ORRI, which they claimed automatically attached to the new leases. Apache and PAC contended that the language purporting to attach the ORRI to new leases violated the Rule. The Amarillo Court of Appeals held that the provision violated the Rule Against Perpetuities and was not subject to reformation under section 5.043 of the Texas Property Code and, even if it were, it would decline to reform it under section 5.043 due to the Yowells’ nearly six-year delay in filing suit. The Texas Supreme Court reversed and held that the ORRI is a real property interest; an “anti- washout” clause extending overriding royalty interests (“ORRI”) to new, future leases was invalid under the Rule Against Perpetuities and that the document creating the ORRI must be reformed, if possible, in accordance with Tex. Prop. Code § 5.043. The court drew an important distinction between applying the Rule Against Perpetuities to anti-washout provisions vis-a-vis new leases and applying the same to renewals or extensions, noting that ORRIs extending to renewals or extensions of leases do not violate the Rule Against Perpetuities. One key takeaway for parties considering applying anti-washout language to potential new leases is to ensure that that any such language is crafted to comply with Rule Against Perpetuities, as has become commonplace for top leases. The Supreme Court also held that the four- year residual statute of limitations did not bar the Yowells’ request for reformation. The parties did not agree whether or how to reform the ORRI under the statute and the issue was remanded back to the court of appeals. Yowell v. Granite Operating Co., No. 18-0841, 2020 WL 2502141 (Tex. May 15, 2020) BlueStone Natural Resources II LLC v. Walker Murray Randle et al , The issue in this case concerned competing clauses between the printed oil and gas lease, which contained language that indicated that the royalties would be calculated on the market value at the mouth of the well and an addendum. The operator and the mineral owner agreed to an addendum that stated that royalties would be computed and paid

20

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

on “the gross value received” by the operator. The addendum also stated that if the addendum was in conflict with the printed lease provisions, then the addendum would control and prevail. Once production was obtained on the well, the operator proceeded to deduct post-production costs. The mineral owner sued. The operator argued that the “at the well” language is the only lease language that provides a valuation point, so nothing in the addendum can be considered contradictory to that portion of the printed lease’s royalty provision. BlueStone further argued that it should be permitted to “net back” to the well by deducting all post-production costs. In partially affirming the appeals court judgment, the Supreme Court disagreed with BlueStone’s arguments and held that BlueStone’s deduction of post-production costs was improper because there was, in fact, a conflict and the mineral lease explicitly resolves the conflict in favor of the gross‑proceeds calculation. The Court further noted that the lease’s plain language limited the “free use of gas” clause to operations on the lease and was not intended to expand to off-lease uses that may benefit the lease. The case was remanded to the trial court to determine damages, if any, for off-premises compressor-fuel use. BlueStone Nat. Res. II, LLC v. Randle, et al, No. 19-0459, 2021 Tex . Endeavor Energy Resources, L.P. v. Energen Resources Corp. et al. Texas courts are generally very hesitant to find a provision in an instrument is ambiguous, as it creates uncertainty and promotes future litigation, so the outcome in this case is highly unusual. The lease at issue allowed Endeavor Energy Resources, L.P. to retain its leasehold interest in the parcel only by drilling a new well every 150 days, with the exception that Endeavor could “accumulate unused days in any 150-day term... in order to extend the next allowed 150-day term between the completion of one well and the drilling of a subsequent well.” At issue on appeal was how to calculate the number of “unused days.” Energen and Quinn argued that the contested provision unambiguously allowed unused days

earned in any term to be carried forward only once to the next 150-day term. The trial court agreed, and the court of appeals affirmed. The Supreme Court reversed, holding that the disputed continuous drilling clause was ambiguous and thus unable to be enforced and could not serve as a special limitation automatically terminating a lease. The court rendered judgment for Endeavor on the question of title and remanded the case to the trial court for further proceedings. Endeavor Energy Res., L.P. v. Energen Res. Corp., No. 18-1187, 2020 WL 7413727 (Tex. Dec. 18, 2020)

Sundown Energy LP, et al. v. HJSA No. 3, Ltd. P’ship

A unanimous Texas Supreme Court affirmed the trial court’s grant of partial summary judgment, holding that the definition of “drilling operations” contained in the contract applied to the continuous drilling program provision. With an over $40 million investment at stake, the parties disputed the interpretation of the lease’s continuous development obligation. The lease provided that to maintain the full lease after the end of the primary term, the lessee had to engage in continuous development operations every 120 days, with the clock starting with the completion or abandonment of one well and running until “drilling operations” are commenced on an “ensuing well.” Sundown contended that “drilling operations” is defined by the lease to include drilling, reworking, or other operations on an existing well. Further, Sundown contended that “ensuing well” does not mean a “new well,” but rather the next well on which it conducts “drilling

Avoid headaches from explaing the ins and outs of royalty ownership to your interest owners...

• Fact-filled pamphlets and books • Royalty management seminars • Royalty owner helpline • Web site education resources

...Let us help!

National Association of Royalty Owners 7030 S Yale Ave. Suite 404, Tulsa, OK 74136 www.naro-us.org Phone: 918-794-1660 Fax: 918-794-1662

21

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1

operations,” including operations on an existing well. Per the lease, “drilling operations” were defined: “… [1] actual operations for drilling, testing, completing and equipping a well (spud in with equipment capable of drilling to Lessee’s object depth): [2] reworking operations, including fracturing and acidizing; and [3] reconditioning, deepening, plugging back, cleaning out, repairing or testing …” On appeal, HJSA argued, and the court of appeals agreed, that the continuous drilling obligation required the drilling of a new well. The Texas Supreme Court reversed the court of appeal’s judgment in part , rendered judgment that Sundown was not obligated to reassign the contested acreage and remanded to the trial court for further proceedings. Sundown Energy LP, et al. v. HJSA No. 3 Limited Partnership, CAUSE NO. 19-1054 Bryan C Wagner, et al v Apache Corporation The Supreme Court affirmed the judgment of the court of appeals reversing the decision of the trial court concluding that indemnity claims fell within an exception to an arbitration clause and that

the non-signatory assignees were bound by the agreement under a theory of assumption, holding that Plaintiffs’ request for a declaratory judgment was subject to mandatory arbitration. As president of Wagner Oil Company, Bryan Wagner signed a purchase and sale agreement (PSA) purchasing several assets from Apache Corporation. The PSA contained an indemnification provision and an arbitration clause. Later, third- party surface landowners filed lawsuits against Apache, seeking damages for alleged environmental contamination caused by Apache’s operation of the assets before they were sold. Apache filed a demand for arbitration against Plaintiffs, including Wagner Oil and Wagner, for indemnity and defense. Plaintiffs then filed a declaratory judgment action seeking a declaration that Plaintiffs were not parties to the PSA and therefore not subject to the arbitration and indemnity clauses. The trial court denied Apache’s motion to compel arbitration. The court of appeals reversed. The Supreme Court affirmed, holding (1) the indemnity disputes over third party-claims fall within the scope of the arbitration clause and outside its exception; and (2) the Wagner Oil signees were bound by the arbitration clause. Bryan C. Wagner, et al v. Apache Corporation, CAUSE NO. 19-0243

Legal

Watch

BlueStone Nat. Res. II, LLC v. Nettye Engler Energy, LP

costs for transportation, gathering and compression, regulatory fees, and severance taxes. After learning that BlueStone was deducting these postproduction costs from its royalty interest, Engler sued. The appeals court rendered judgment in favor of BlueStone, finding that a non-participating royalty interest (“NPRI”) described as “free of cost in the pipeline” was free of production costs but burdened by postproduction costs. The court held “that the royalty interest by its express terms creates a standard royalty subject to postproduction costs.” This case is currently before the Texas Supreme Court waiting on a final decision.

In 2004, BlueStone’s predecessors leased the land and numerous producing wells were drilled. The NPRI was credited as free of post-production costs and paid accordingly. In 2016, BlueStone acquired the operating rights for the wells from Quicksilver. Unlike Quicksilver, BlueStone interpreted the NPRI to be a standard NPRI free of production costs but subject to postproduction costs. BlueStone thus began to pay royalties to Engler based on the value of gas produced as calculated at the point where the gas entered the pipeline attached to the well rather than the point of sale. Under this valuation point, BlueStone deducted postproduction costs related to delivering the gas to market, namely

22

N a t i o n a l A s s o c i a t i o n o f D i v i s i o n O r d e r A n a l y s t s

Conveying Future Interests: What You Don’t Say is as Important as What You Do Say

In Parker v. Jordan, 1 the El Paso Court of Appeals interpreted a 1998 warranty deed to determine the extent of the interests conveyed by the deed. The deed, which claimed to convey all right, title and interest, was silent on whether it also conveyed a remainder interest that was owned by the grantor. Ultimately, the Court held that because the remainder interest was a vested future interest and not a present interest, the remainder interest could not be conveyed without clear and express language in the deed. Thus, because the deed was silent as to the remainder interest, the Court held that the deed did not convey the remainder interest. The action was between a mother, Kathy Parker (“Kathy”), and her daughter Elise Jordan (“Elise”). In 1998, Loyd Parker, III (“Loyd III”) (Kathy’s husband and Elise’s father), executed a warranty deed which conveyed to Elise and Allison, his second daughter, “all of [his] right, title and interest in and to” 2 the described tracts of land. It is undisputed that, prior to signing the warranty deed, Loyd III owned a 1/8 mineral interest in addition to a 1/8 remainder interest pursuant to a life estate that was still in effect at the time the warranty deed was executed. The 1998 deed did not make express reference to either the 1/8 mineral interest or the 1/8 remainder interest; rather, the deed appeared to convey to Loyd III’s daughters all of Loyd III’s right, title and interest. After the conveyance, however, Loyd III filed a gift tax return which indicated that “[t]he property given to the two donees represents one sixteenth of the entire land in the tract for each of the donees.” 3 The gift tax return made no mention of the remainder interest. Further, in 1999, all three parties executed leases and division orders recognizing Loyd III as remainderman of the life estate and indicating that the two daughters each owned a 1/16 mineral interest. For almost ten years following the 1998 warranty deed, Loyd III and his two daughters continued as though each daughter owned a 1/16 mineral interest, and as though Loyd III retained his remainder interest. In 2006, the life estate related to Loyd III’s remainder interest was extinguished and Loyd III inherited his remainder interest. Again, for nearly ten years, Loyd III and both daughters continued as they had before, with

both daughters acknowledging their individual 1/16 mineral interests, and with Loyd III acknowledging the interest he acquired as remainderman. In 2013, however, a new entity took over the existing leases and issued a division order crediting Elise with ownership of a 1/8 interest instead of a 1/16 interest, thus appearing to credit Elise with a portion of Loyd III’s remainder interest. Elise clarified that she only owned a 1/16 interest, Loyd III confirmed his ownership pursuant to the remainder interest, and all three parties signed a new option division agreement acknowledging their respective ownerships. The dispute arose after Loyd III’s death in 2014, at which point Kathy, Loyd III’s wife, inherited all of his property including the remainder interest. Until 2015, Elise continued to acknowledge her 1/16 interest and Kathy’s inherited interest, and Elise continued to accept payments accordingly. In 2016, however, there was another new lessee and another round of division orders. As in 2013, the division order credited Elise with ownership of the remainder interest. Although Elise again attempted to correct the division order, the lessee responded that all three parties must stipulate as to the correct division of interests. Instead, Elise signed the division order indicating that she owned a higher percentage of the interests. One month later, Kathy filed suit. After determining that Kathy’s suit was not barred by the statute of limitations, 4 the Court recognized that in Texas, deeds typically will be construed to confer the greatest possible estate that the instrument will allow. Thus, usually, a deed will convey whatever interest the 1 Parker v. Jordan, No. 08-19-00121-CV, 2021 Tex. App. LEXIS 458 (Tex. App.—El Paso Jan. 21, 2021). 2 Id. at *5. 3 Id. 4 The Court determined that the case was not barred by the four-year statute of limitations because “Kathy did not or could not have discovered the alleged mistake until Elise claimed an interest to the remainder in 2016.” Further, “it is undisputed Kathy could not have acquired the remain- der interest until Loyd III’s death in 2014, and Elise did not manifest her belief she acquired the remainder interest via the gift deed until 2016.” Id. at *17-*18.

23

G r o w t h T h r o u g h E d u c a t i o n - A p r i l / M a y / J u n e 2 0 2 1