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Oil/Gas/Acreage discrepancy on Mineral Lease and Division Order

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Question
Hello, I have a mineral lease question.

I inherited a house on a residential corner lot in Tarrant County. I sold the house and retained the mineral rights.

The Tarrant County Clerk records have a 3 year 2008 Lease Memo, with my mother as Grantor. The Lease Memo states that the lease is on 0.44170365 acres.

The Property Tax records state that the lot is 0.324 acres.

The Division Order I recently received lists the BPO Net Acres = 0.2495 and the BPO Lease NRI/RI = 0.2500.  APO acreage and NRI is blank.

I think the net acreage on the Division Order may be wrong, because it was my understanding that the leased acreage goes out to the middle of the street on both streets for a corner
lot. Also, it doesn't match the acreage on the Lease Memo filed with the County Clerk.

What is the correct acreage for the Division Order, and if it is wrong how can I get it corrected? I should add that I signed it and returned it before this discrepancy occurred to me.
Thank you very much.

Answer
The proper way to handle this is to send a certified letter to the operator rescinding the Division Order that you signed and ask them to correct the acreage subject to the unit.   A short list of the relevant abbreviations and additional information:

BPO - Before Payout:  Payout occurs when all the operator's expenses have been returned for drilling, completion and maintaining the lease.  This is not relevant to you as indicated by the fact that APO is blank.  

RI - You have a Royalty Interest which remains the same BPO or APO

APO  - After Payout: After they get their money back.

Property tax records do not include your interest in the roadways which probably should be credited to you.  That credit is dependent solely upon whether the dedication of the easements and roadways was not a deed but rather a simple dedication.  I would, even without checking, rely on tradition to know that it is an easement and you own the minerals under the road as you have mentioned.

I would use the following formula to correctly determine your division of interest revenue amount:

Number of acres in Unit - "A"
Your number of acres (.044170365)
Your royalty amount (.25) {probably identified above by the NRI/RI = .25

So... "A"x .044170365 x .25 = your division of interest decimal factor.

Tell them you rescind the prior Division of Interest (DOI) form dated _______________ and ask them to provide you a new DOI form with the corrected revenue numbers.  

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Cliff Williams

Expertise

I will try to answer any question you have. Even if I reject a question, I still will give a shot at what I would do in your position. The only questions I will not take a shot at would be a highly technical engineering or geological question. I am beginning to see quite a few questions from land men and other oil companies and that doesn't matter to me either. I will attempt to help.

Experience

I am an oil and gas attorney that has been in the business for more than 20 years. I have held a series 22 and 63 securities license, been in oil and gas operations, land man, division order analyst all prior to obtaining my law degree. Today, I typically write title opinions verifying ownership of oil and gas minerals, assist landowners in negotiations on oil, gas and mineral leases, easements and conveyances. I also assist oil and gas companies with the sale of working interest ownership as well as common business law issues.

Organizations
State Bar of Texas, Member of the Tarrant County Bar and the Dallas County Bar Associations.

Publications
Multiple oil and gas topical columns on ezine.com.

Education/Credentials
I have a B.S. degree which I rely upon more than my Business Mgmt degree or Law degree...

Awards and Honors
Husband and father of 26 years

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