2022 Q2

2022 Q2

National Association of Division Order Analysts April May June 2022

PERSONAL ATTENTION • ETHICAL STANDARDS • PROFESSIONAL SERVICE

PURCHASING ROYALTIES ACROSS THE NATION

Quick, no-obligation offers

Royalty valuations

Mineral rights appraisals

Free estate and title transfer consults

Pro bono Medicaid & social services appraisals

[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 MMXXII • No 2

www.NADOA.org

Contents Feature

Articles

Legal Updates 1776 Energy Partners v Freeport-McMoran Oil & Gas............7 Ammonite Oil & Gas v RR Comm’n of Texas............................9 Ohio Clarity on Distinction between Reservation & Exception.......................................................11 Ohio Dormant Mineral Act ‘Reasonable Diligence’ Standard. ..............................................................12 Texas 10 Year Adverse Possession Statute................................13 Legislative Updates West Virginia...........................................................................22 Unclaimed Property Texas Voluntary Disclosure Program.......................................23 Unclaimed Property Reporting................................................24 Ohio Unclaimed Reporting and Webinar...............................27 National Niche...........................................................................28 Institute Update.........................................................................35

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

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

In This

Order Analysts P O Box 1656 Palm Harbor, FL 34682

Issue

President’s Corner..............................................................1 Decimal Points...................................................................2 Membership Recognition Nominations...............................3 Certification....................................................................... 5 Cob Webs............................................................................6 Follow NADOA..................................................................7 New Members...................................................................29 Counterpart Connection...................................................30 In Memory........................................................................33 Ellis Rudy Memorial Scholarship......................................46 2022 NADOA Board & Committee Chairs.......................48 Calendar of Events...........................................................49

Subscription: By membership to NADOA, at $75.00 per year. News Magazine Editor Rona L. Erickson, CDOA Kaiser-Francis Oil Company [email protected] 918.491.4319

Graphic Design, Paul Beach

On the Cover: San Antonio Sunset, Courtesy of the City of San Antonio.

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

President’s

Corner

Michele Lawton, CDOA 2022 NADOA President

Happy Spring NADOA! Time is flying by this year. The NADOA Board and Institute Committee are really working hard to plan a great Institute in San Antonio. Now that we are seeing travel open up for everyone we are hoping to have an awesome in person showing this year for the 49th Annual Institute. Our hotel is the Marriott Rivercenter right on the Riverwalk. There are so many great restaurants and things to see in downtown San Antonio. This year we are having Institute in October so the weather in Texas should be perfect for strolls along the Riverwalk and visiting the Alamo. Plan to come in early and stay through the weekend to enjoy everything the city has to offer. Although we have a great city location this year, NADOA is all about education for our members. Stephanie Moore and Armando Lopez, our Institute co-chairs, have enlisted some great committee chairs who are bringing us exceptional speakers. There will be Wednesday classes again this year featuring Unclaimed Property and CDOA Review. I always learn something new no matter what the topic is. Don’t miss out on this educational opportunity! I am really looking forward to our Wednesday reception and Thursday night event to get some quality networking time while having fun. I enjoy getting to put faces with the names of members at different companies that I e-mail with for work but have never met in person. We are a small niche in the oil and gas industry making networking important to keep up with all the challenges our careers bring.

Hurry and get registered for our early bird pricing of $625.00 through June 30!

I am looking forward to seeing everyone In San Antonio for some fun and education! Let’s Float Down the River of Education together!

See you all soon!

1

G rowth T hrough E ducat i on - A pr i l / M ay / J une 2022

NADOA

Decimal Points

Regional Reporters ABADOA Steptoe & Johnson PLLC [email protected] CAPDOA OPEN DADOA OPEN DALWORTH Lewis Box, CDOA [email protected] HADOA Emily Sheffield [email protected] PBADOA Rosanne Kidder [email protected] SADOA Joe Anderson [email protected] Arkansas Jackie Clotfelter, CDOA [email protected] Kansas Amy Flaming [email protected] North Dakota Kimberly A. Backman [email protected] New Mexico Zachary P. Oliva [email protected] Louisiana Margaret Patton [email protected]

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

2022 NADOA Article Deadlines

July 8...........................Special Institute Edition

August 12...................................Third Quarter

November 11............................ Fourth Quarter

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

2022 News Magazine Team

Kim Bowman Associate Editor, Photography

Rona Erickson CDOA, Editor

Susan Bradley CDOA Associate Editor

Michelle Davila Associate Editor

Cheryl Hampton Associate Editor

2

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

2022 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/her career. 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? Consider nominating someone or an organization for an NADOA Membership Recognition Award. A nomination form is included in this issue of the NADOA News Magazine or is available on the NADOA website: http://www.nadoa.wildapricot.org/page-1709232

I would like to nominate ___________________________________________________ for the NADOA Membership Recognition Corporate Award. Presented to the group or company that has contributed to NADOA’s growth and development, the Division Order profession, and/or 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 individual 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.

Send nominations to: Member Recognition Awards Committee, c/o Sonya Turner ([email protected]) Nominations will be accepted through July 1, 2022

3

G rowth T hrough E ducat i on - A pr i l / M ay / J une 2022

2022 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 Sonya Turner ([email protected]) Nominations will be accepted through July 1, 2022

4

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

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

CANDIDATES FOR RECERTIFICATION

Kaitlin LaFlamme – Littleton, CO Lauretta Randle – Shreveport, LA

Tanya Ward – Plano, TX

2022 CERTIFICATION COMMITTEE

Chairman

Lewis Box, CDOA

[email protected]

Riverbend Energy Group

Recertification Credits Sherry Werth, CDOA

[email protected]

Independent

Recertification Applications

Darryn McGee, CDOA

[email protected]

Coterra Energy Inc.

Applications & Candidate Publications Stephanie Moore, CDOA

[email protected]

Callon Petroleum Company

Review Manual/Forms

Lewis Box, CDOA

[email protected]

Riverbend Energy Group

Testing

Bonnie Didrickson, CDOA

[email protected]

Independent

Policies

Megan McKee, CDOA

[email protected]

Range Resources

CDOAs with July renewal dates be sure to submit your 2021 employment credits using the Certification Self-Service portal on the NADOA website. This is a pre-approved drop down item. TIME TO RECERTIFY? If you are a CDOA whose certification expires July 1, 2022, you should receive your Re-Certification Application electronically by the end of June. If you do not receive your application, please contact Darryn McGee, CDOA at [email protected].

5

G rowth T hrough E ducat i on - A pr i l / M ay / J une 2022

Trusted Legal Counsel to Energy Companies

Oil & Gas | Utilities | Mining | Renewables

For more information visit steptoe-johnson.com

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

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

using the Webinar link in the Members Only section on the homepage. Please send suggestions for NADOA webinar topics/speakers to Webinar Chair, Yoli Bazan,

Cob Webs

CDOA, [email protected] Upcoming NADOA Webinars:

Educational webinars can be approved for 1 (one) CDOA certification point. NADOA webinars, Steptoe & Johnson PLLC

June 29, 2022: CDOA Information for the Non-CDOA by Yoli Bazan, CDOA http://www.nadoa.wildapricot.org/ event-4837608 July 20, 2022: Federal Leasing Issues Across All Oil Producing States by Brent Chicken http://www.nadoa. wildapricot.org/event-4837618 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 www.Steptoe- Johnson.com and enter Webcasts in the search feature. Visit www.kolawllp.com/events for further information. If you are aware of other educational webinars, please advise NADOA News Magazine editor, Rona Erickson, CDOA ( [email protected] ), Associate editor, Susan Bradley, CDOA ( [email protected] ) or 2022 NADOA Education Chairs, Norma Dooley, [email protected] or Kimberly Bowman, [email protected] . Kiefaber & Oliva LLP – LANDMAN EDUCATION SERIES –

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 ( srw6886@ gmail.com ). 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 ). Webinars are free for NADOA members and $15.00 for non- members. Links to recorded webinars are available to NADOA members by

6

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

I s your company’s server blocking NADOA emails? Do you have issues logging into the NADOA website?

WILD APRICOT Download the Wild Apricot for Members App to see your NADOA membership details, get quick access to the NADOA Membership Directory or register for NADOA events.

Legal

Updates 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. How Safe is Your Harbor?: Suspense of Production Payments in the Wake of 1776 Energy Partners, LLC v. Freeport-McMoran Oil & Gas LLC

Texas

decision reversed the trial court’s grant of summary judgement and remanded the case back to the trial court for further proceedings regarding fact issues. Between the years of November 2011 through March 2012, Appellant 1776 Energy Partners, LLC (“1776”) and Appellees Freeport- McMoran Oil & Gas, LLC and Encana Oil & Gas (USA), Inc. (“Freeport” and “Encana”) entered into five joint operating agreements for the development of their oil and gas leases. Freeport and Encana were designated as operators of the contract areas. 1776 participated as a non-operator and was entitled to its proportionate share of the net proceeds from the production of oil and gas. 2 1 1776 Energy Partners, LLC v. Freeport-McMoran Oil & Gas LLC , No. 04-20-00468-CV, 2021 Tex. App. LEXIS 10157 (Tex. App. Dec. 29, 2021) 2 Id. at 2.

In 1776 Energy Partners, LLC v. Freeport-McMoran Oil & Gas LLC , the Court of Appeals of San Antonio examined whether production payments under various joint operating agreements were properly held in suspense without interest under the “safe harbor” provisions of Texas Natural Resources Code Section 91.402(b) (a/k/a the “Texas Suspense Statute”). 1 Specifically, it examined whether creation of a constructive trust pursuant to a judgment amounted to “a dispute concerning title that would affect distribution of payments” pursuant to Section 91.402(b)(1)(A). For the reasons discussed below, the Court found that as a matter of law, creating a constructive trust pursuant to a judgment did not create a suspense-worthy title dispute affecting distribution of payments under the joint operating agreements. Consequently, the operators were not entitled to withhold payments on production without accruing interest. This

G rowth T hrough E ducat i on - O c tober / N ov ember / D e c ember 2021 7

that would affect distribution of payments.” 9 Ultimately, the Court determined that the judgement did not create a dispute concerning title that would affect the distribution of payments as set forth under the joint operating agreement. The Court reasoned that with or without the judgement, payments would still be owed to 1776, either in their own right as the owner of “legal title,” or as constructive trustee for Longview’s “use and benefit” until title was assigned to them under the judgement. 10 Because the assignment never occurred, legal title always remained in 1776 11 . The Court also applied Section 91.402(b)(1)(B) (ii) of the Suspense Statute which states that payments may be withheld without interest beyond the time limits set out in Section 91.402(a) if there is “a reasonable doubt that the payee has clear title to the interest in the proceeds of production.” 12 On this issue, the Court determined that there was a genuine issue of material fact as to whether Freeport and Encana’s doubts about 1776’s title being clear were reasonable, and remanded the case to the trial court for further findings. 13 This case reminds us that the courts rely on a strict interpretation of statutory language, and that specifically, not every title “dispute” is enough to invoke the “safe harbor” provision of the Texas Suspense Statute. For safe harbor protection, the title dispute must rise to the level that it affects the distribution of payments, and that in this case, a constructive trust created pursuant to a judgment does not meet the standard.

In 2011, 1776 was sued by Longview Energy Company (“Longview”) for breach of fiduciary duty. Longview prevailed at the trial court level, and was granted a constructive trust over their “equitable interest” in 1776’s rights to receive payments on production under the joint operating agreements. 3 1776 was ordered to assign the interests to Longview within thirty days of the judgement, but until said assignment was executed, 1776 was to retain the legal title to the assets as constructive trustee for Longview’s use and benefit, retaining no equitable interest. 4 1776 appealed the judgement, and posted bond to delay the enforcement of the order until the case had gone through appeal. As a result, no assignment from 1776 into Longview was ever executed. The case ultimately made its way to the Texas Supreme Court, where judgment was rendered in favor of 1776 in December of 2017. 5 While the case was on appeal, Freeport and Encana placed 1776’s production payments in suspense. 6 1776 filed suit claiming that Freeport and Encana wrongly withheld the payments on production, and that 1776 was entitled to statutory interest on the withheld payments. 7 Freeport and Encana moved for summary judgement arguing that they were, as a matter of law, entitled to place the payments in suspense without accruing interest pursuant to the safe harbor provisions of the Texas Natural Resources Code Section 91.402(b) because the judgement against 1776 created a title dispute. 8 The trial court agreed, granting their motion for summary judgement and dismissing 1776’s claims with prejudice. 1776 appealed, and the case was heard in the 4th District Court of Appeals, San Antonio. For the Appellate Court, the issue hinged on the specific language of the safe harbor provision and whether the facts of this case amounted to “a dispute concerning title that would affect distribution of payments.” Specifically, Section 91.402(b)(1)(A) states that payments may be withheld without interest beyond the time limits set out in subsection 91.402(a) if there is “a dispute concerning title

3 Id. at 2-3. 4 Id. at 3. 5 Id. at 4.

6 Id. 7 Id. 8 Id. 9 Id. at 5-6 10 Id. . 11 Id. at 8-9. 12 Id. at 6. 13 Id. at 10-11.

8

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

_____________________________________________ www.kolawllp.com The content of this publication and any attachments are not intended to be and should not be relied upon as legal advice or to create a lawyer-client relationship. © 2022 Kiefaber & Oliva LLP. All rights reserved. This publication may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Houston (principal office): 815 Walker St., Suite 1140, Houston, Texas 77002, 713-229-0360 | Columbus: One East Livingston Avenue, Suite B, Columbus, Ohio 43215, 614-349-4525 | Oklahoma City: 9520 N. May Avenue, Suite 219 Oklahoma City, OK 73120, 405-757-8797

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

Brad Gibbs Partner, Houston [email protected]

Emily Sheffield Senior Attorney, Houston [email protected]

Ammonite Oil & Gas Corp. v. R.R. Comm’n of Tex.

Texas

The facts here are simple: Ammonite offered to pool 16 units, subject to a mutually agreeable JOA where EOG Resources would act as operator. Ammonite proposed a 10% charge for risk attached to the working interest, a payment to EOG that would compensate them for the risk of drilling additional wells in the forcibly pooled unit. EOG’s expert testified that Ammonite’s offer did not adequately compensate EOG for the risk and that a 100% charge for risk was the proper amount due to the limited permeability of the rocks within the Eagle Ford shale. The expert further noted that unconventional drilling and completion techniques often result in wells that are not commercially successful. Since the Eagle Ford shale requires substantial investment in acreage, the number of wells EOG would have to drill to potentially recoup costs, the expert argued, would be excessive.

In Ammonite Oil & Gas Corp. v. R.R. Comm’n of Tex , the San Antonio Court of Appeals heard an appeal regarding the Mineral Interest Pooling Act (MIPA). Under MIPA, the owner of a mineral estate may ask the Texas Railroad Commission (TRC) to force other tracts owners within both the same proration unit and within a common reservoir to pool their interest with that of the applicant. To invoke MIPA, an applicant must 1) “make a fair and reasonable offer to the owner/operator(s) of the other well(s) to voluntarily create a pooled unit prior to filing an application under MIPA;” 2) file a MIPA application to force pooling; 3) make a showing that the forced pooling would prevent the drilling of unnecessary wells, protect correlative rights, or prevent waste. The Act does not define what constitutes a fair and reasonable offer, meaning that the TRC is charged with determining the nature of a fair offer. In other words, the TRC decides on a case-by-case basis whether an offer meets the definition of fair and reasonable. If the offer is not fair, then the TRC is said to lack jurisdiction over the issue and must dismiss the case.

Further findings that the TRC took into account included:

1) A showing that none of EOG’s well drained Ammonite’s tracts. 2) Ammonite actually agreed in its voluntary

9

G rowth T hrough E ducat i on - J uly / A ugus t / S ept ember 2021

pooling offers that a greater than 10% charge for risk was reasonable. 3) Ammonite failed to provide survey >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36 Page 37 Page 38 Page 39 Page 40 Page 41 Page 42 Page 43 Page 44 Page 45 Page 46 Page 47 Page 48 Page 49 Page 50 Page 51 Page 52 Page 53 Page 54

Made with FlippingBook - Online catalogs