Oil and Gas Leases: Assignments Royalty and Royalty Interests: Overriding Royalty Trespass to Try Tide: Texas

摘要

In August 1975, Tompkins executes a lease of 76.18 acres in Panola County with Little Wolf, Inc.. In December 1975, he executes a 64.56 acre lease with Miller. In 1979 portions of both leases are included in pooled unit Snyder Oil Co., through mesne conveyances, becomes the owner of both of the Tompkins' leases. In February 1995, Snyder agrees to sell a pacakge of leases, including the Tompkins leases to Enron Oil & Gas. In August 1995, Enron assigns its interest in the Tompkins leases to Sunwest. In April 2002, Sunwest executes a farmout agreement with Classic. The drill-to-earn farmout agreement reserves an overriding royalty interest. Classic drills a producing well on the excluded acreage. Classic refuses to pay Sunwest for its overriding royalty interest (ORRI). Sunwest files a declaratory judgment action asserting ownership of the ORRI in the excluded acreage. Several defendants argue that Sunwest did not receive any interest in the excluded acreage from its predecessors in interest The District Court, after finding that the two relevant assignments are ambiguous, grants Classic's motion for summary judgment Held: affirmed. The issue is whether the assignments from Snyder to Enron and from Enron to Sunwest include interests in the excluded acreaage. Both the Snyder and Enron assignments contain the same language in their respective Exhibit A's that describe the interests to be conveyed. Because both instruments refer to the pooled unit the Fifth Circuit agrees that the assignment only convey the grantor's interests in the Tompkins leases insofar as they are part of the named pooled unit In both Exhibit A's there are different types of references where excluded acreage is included in the legal description. The court also rejects the claim that an outstanding net profits interest mat clearly burdened both the pooled and excluded acreage had become merged with the leasehold estates when the NPI was conveyed because the description of the NPI refers not to the pooled unit but to both of the Tompkins leases. Finally, the court rejects Sunwest's claim that this case should have been filed as a trespass to try title action and not a declaratory judgment action.