"Royalty" Reservation in Ohio

My question for a family member in Guernsey County is this:  If there were a "reservation of one half of all the royalty" written in the deed at the sale of a parcel of land, and the leases and wells in effect at that point in time have since been plugged, abandoned, and leases released, would the reservation hold water on future royalty generation from a more recent lease?  I have asked plenty of competent lawyers and I get conflicting answers so please don't bother suggesting I get a lawyer even though thats what will ultimately happen.  If you want to suggest a particular lawyer that has solved this issue, then I am all ears.  It is obviously a bit grey and needs some more opinions given on the subject. 

 

Exact Statement in Deed:  "Excepting and reserving unto grantors herein, their heirs and assigns, the one half of all the oil and gas royalty from said premises from and after (Deed Written Date).  It being the intention to convey to grantees all of the royalty in the oil and gas except a one half thereof."

 

Since they are reserving the "royalty", some attorneys have told me that is a reservation of royalty for a lease/well at the time of the deed but once that well is plugged and the lease released, then it no longer applies to future royalties from future leases.  They said someone cant reserve a royalty on a future lease agreement.  Other attorneys have told me that it does apply to royalties on future lease agreements.  If it were a reservation of oil and gas rights, this would obviously be a different ballgame.

 

Thanks for any input you may have.

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Permalink Reply by Ben Elmore on December 28, 2012 at 12:08pm

That language suggests to me to be a reservation in perpetuity of half the royalty granted in any oil and gas lease, whether existing at the time or in the future.  I'd have to look at Ohio law, but I don't imagine it is much different than Texas law, which allows such a reservation.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on December 28, 2012 at 2:23pm

I'm with Ben.  Sounds like a pretty clear reservation.  What lawyers had an issue understanding this?  Were they O&G attorneys or were they regular attorneys who are conveniently now "experts" in the field?

Permalink Reply by Bernie Horabik on December 28, 2012 at 3:08pm

I agree guys.  The reservation stands and is perpetual. 

Permalink Reply by jeff on December 28, 2012 at 4:12pm

Yep... perpetual. Keys words: heirs and assigns, from and after (date), intention to convey all of the royalyies. IMHO you've got a solid case.

J.

Permalink Reply by TheMap on December 29, 2012 at 8:55am

So what if there is no "heirs and assigns" clause and only lists a single person as holder of the reserved portion.   My deed has such a reservation that was placed when there was no lease in effect - it states "Excepting and reserving to XXXXX one third of all royalty for oil found and produced upon said premises, ans also one-third royalty or portion received for gas found upon said premises" The person died in 1940.  Since she is dead and the clause does not state heirs and assigns, does the reservation expire or does it just go to/.thru her estate to any heirs.  I am in PA.

Permalink Reply by Lance Nimmo on January 26, 2013 at 6:30pm
Good question. Ever get an answer?
Permalink Reply by Tom McConnell on December 28, 2012 at 5:37pm
Thanks for the input from all. Anyone else feel free to add to the discussion.
Permalink Reply by Bob McClelland on December 29, 2012 at 9:20am

This is a royalty interest only,called a Perpetual Non-Participating Royalty.  With a Perpetual Non-Participating Royalty you have no right to do any act or thing to discover and produce the oil and gas; you have no right to grant leases; and you have no right to receive bonuses or delay rentals.You should be aware that the transferring of a royalty interest does not give you the sole right to enter into an oil and gas lease.  The following case is directly on point with your question.

 

Court of Appeals of Ohio,

Seventh District, Monroe County.

THELMA M. BUEGEL, et al, Plaintiffs-Appellees,

v.

CORBIN A. AMOS, et al, Defendants-Appellants.

CASE NO. 577. | June 5, 1984.

 

“It seems that an interest may very well be designated 'royalty'

though not limited to an existing or any particular lease

and not embracing title to oil and gas in situs - constituting

simply a definite beneficial interest in future production

from premises decribed (sic) (see discussion supra, Section

1). Such an interest when entirely unlimited as to time or

lease is called perpetual nonparticipating royalty, in case no

right to participate in future leases is granted or reserved.”

Annotation, 4 A.L.R. 2d 505. (Emphasis added.)

 

“The distinguishing characteristics of a 'non-participating

royalty interest' are: (1) Such share of production is not

chargeable with any of the costs of discovery and production;

(2) the owner has no right to do any act or thing to discover

and produce the oil and gas; (3) the owner has no right to grant

leases; and (4) the owner has no right to receive bonuses or

delay rentals.” (Emphasis added.)

Permalink Reply by Jim on December 29, 2012 at 11:20am

I think the key word in the reservation is the word "the" as it appears after "heirs and assigns".  The word "the" would indicate they are referring to the present lease.  Remove the word "the" and the reservation would indicate a perputual reservation.  But on the other hand, did the grantors receive the one half oil and gas royalty as grantees from a prior deed transfer.  Since attorneys do not agree on this, it will probably end up in court.

Permalink Reply by hunter4440 on December 30, 2012 at 8:27am

I have a similar situated of which I reserved the oil and gas royalties only in a parcel of which I was the Grantor. Not real sure why I made the reservation the way I did and should have reserved all oil and gas minerals instead. Of course, I didn't think much of it until the Utica play became a reality and I needed clarification. After a lot of research I did Ohio cas law that reads: that the royalty reservation, with an existing , valid, lease already in place at the time of the transfer would be treated as a royalty reservation only. However, if no lease existed at the time of the transfer, then the royalty reservation would be construed as an oil and gas mineral reservation, along with the royalties for the same. I shared the same with a landman and he said that he was already aware of the same. I saved case law at the time but have managed to lose it. Once I find it I will post it for your review. 

Permalink Reply by hunter4440 on December 31, 2012 at 10:16am

an interesting perspective though may not pertain to Ohio law:

http://oilandgas.uslegal.com/5-transfers-by-landowners-and-mineral-...

Permalink Reply by 0llbnp780fs53 on December 30, 2012 at 5:32pm

My reading (I am not a lawyer) is that the seller reserved 1/2 interest in all royalties produced from oil or gas.  They do not cite a specific lease agreement.  NOW, I'm not sure how other hydrocarbons would be affected... obviously other things like coal would belong to the purchaser.

Are you talking to the current owners or the royalties?  Isn't there a way to clear abandoned royalty rights?

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