New Mexico State Lease Recording Requirements

The New Mexico State Land Office ("SLO") is the government agency responsible for leasing oil, gas and other minerals owned by the State of New Mexico. The Oil, Gas and Mineral Resources Section of the SLO has two separate divisions: the Oil, Gas, and Minerals Division ("OGMD") and the Royalty Management Division ("RMD"). The OGMD administers monthly oil and gas lease sales and issues minerals leases. The RMD collects the royalty checks if production is achieved. The procedures for leasing state owned minerals are set forth in Chapter 19, Article 10 of the Annotated Statutes of New Mexico ("NMSA"), titled Lease of Oil and Gas Lands. NMSA § 19-10-1 authorizes the commissioner of public lands ("commissioner") to execute oil and gas leases in the name of the State of New Mexico. NMSA §§ 19-10-2, et seq. set forth the numerous technical requirements for leasing, including the classification of states lands, lease provisions,…
More

Avoiding Unintended Consequences Caused by Retained Acreage Clauses

Retained acreage clauses permit the lessee to retain acreage around a producing well in the event of a forfeiture of a lease. Typically, retained acreage clauses become the subject of litigation when the lease contains a continuous drilling obligation and the lessee has ceased its drilling. The retained acreage clause permits a lessee in that situation to retain a specific portion of the acreage surrounding a producing well and requires that the lessee release all acreage not subject to the retained acreage clause. Frequently, retained acreage clauses in leases will specify the number of acres per well that an operator is entitled to retain after the continuous development program has ended. However, many oil and gas leases tie the acreage subject to the retained acreage clause to the "field rules" for a given oil and gas field,[1]which may result in the retained acreage clause operating in way that it is…
More

Off-Lease Drilling Locations and Claims of Subsurface Trespass (Part Two)

In Lightning Oil Co. v. Anadarko E&P Onshore LLC, No. 04-14-00903-CV, 2015 Tex. App. LEXIS 8673 (Aug. 19, 2015), the San Antonio Court of Appeals concluded that a mineral estate owner was not entitled to prevent an adjacent mineral estate owner from drilling horizontal wells crossing through the other party's mineral estate to access the adjacent mineral estate. This decision addresses the issue of subsurface trespass, while an earlier decision, Lightning Oil Co. v. Anadarko E&P Onshore, No. 04-14-00152-CV, 2014 Tex. App. LEXIS 11844 (Oct. 29, 2014), discussed here, denied Lightning's application for injunctive relief. The dispute in Lightning Oil arose from Anadarko E&P Onshore's ("Anadarko") attempt to drill horizontal wells that would enter and cross through Lightning Oil Co.'s ("Lighting") mineral estate. Lightning owned the mineral estate to land known as the Cutlass Lease, a severed mineral estate under a portion of Briscoe Ranch. Id., at *2. Adjacent to the surface estate overlying the Cutlass…
More