Texas Journal of Oil, Gas & Energy Law
The twenty-first century oil and gas boom in the Lone Star State stimulated the industry and enriched Texas landowners. However, the technologies credited with igniting this boom, hydraulic fracturing and horizontal drilling, could not prevent the historic boom-to-bust cycle. Instead, the production unleashed from shale plays in Texas and other states created a world-wide glut, sinking oil prices from highs above $100 to a low of $26 per barrel. Yet, thanks in part to plays in West Texas, "Shale 2.0" is underway. The booms have blessed and cursed Texas, leading to a variety of legal disputes. Disputes that have plagued Texas courts for decades include those involving ownership rights in the mineral estate. In fact, Texas courts have produced a robust body of law regarding the interpretation of mineral and royalty deeds.
This article addresses the Texas Supreme Court's recent contribution to that jurisprudence in Wenske v. Ealy. Wenske addressed this narrow issue: who bears the burden of a pre-existing non-participating royalty interest (NPRI) in the chain of title when a warranty deed conveys a fractional share of the minerals to a grantee? The grantors argued that the burden passed exclusively to the grantees. A five-justice majority of the Texas Supreme Court disagreed. Instead, the opinion held that the plain language of the deed required the grantors, who had expressly reserved a fractional share of the minerals, to share the burden of the prior NPRI reservation in proportion to their interest in the mineral estate.
Laura H. Burney, The Texas Supreme Court's Evolving Mineral-Deed Jurisprudence in the Shale Era: The Implications of Wenske v. Ealy, 14 Tex. J. Oil Gas & Energy L. 1 (2019).