| lease. (xii) The state's share of the bonus payment and the filing fee prescribed by §3.31 of this title, (relating to Fees) shall be submitted along with the certified copy or copies of the lease. (3) State as sole lessor of Relinquishment Act lands. (A) Leasing procedure when surface owner's rights (including the right to receive any part of the bonus, royalty and other consideration relating to the lease) have been waived. A surface owner may lease Relinquishment Act land from the state by complying with Texas Natural Resources Code, §52.190, and any other relevant laws or regulations. (B) Leasing procedure when surface owner cannot be located. If a potential lessee cannot locate a surface owner, the procedures set out in Texas Natural Resources Code, §52.186, shall be followed. The land will then be leased by sealed bid as provided in paragraph (1) of this subsection. The state will receive all the consideration paid under such a lease except as provided in Texas Natural Resources Code, §52.186(b)(4), which concerns certain rights available to surface owners (and to owner's of an undivided interest therein) who appear within two years after a lease has been executed on their land and who are able to satisfy the conditions of the statute. (C) Leasing procedure when surface owner's agency rights are forfeited. (i) When a surface owner's agency rights have been forfeited, the land shall be subject to lease by sealed bid as provided in paragraph (1) of this subsection. The surface owner shall not be entitled to share in the proceeds of such lease. Upon expiration or termination of such lease, the surface owner's agency rights will be ipso facto reinstated. (ii) If no lease is executed within one year of forfeiture, the surface owner's agency rights may be reinstated at the commissioner's discretion. (4) Leasing the state's free royalty interests. (A) Lands affected. These leasing procedures apply to free royalty lands. (B) Leasing by executive right holder on behalf of the state. The holder of the executive or leasing rights on free royalty land shall act as the state's agent in executing oil and gas leases covering the state's free royalty interest. In executing this lease, the executive right holder owes the state a duty of good faith and any other common-law duties which an executive right holder owes to a nonexecutive mineral interest owner. A free royalty interest bears no costs of production, including the costs of sale, treatment, transportation, gathering, compression, or delivery. (C) Filing with the GLO. Leases covering the state's free royalty interest are not effective until a certified copy is filed with the GLO. (5) Leasing of highway rights-of-way by the SLB. (A) Definitions. As used in this paragraph, the terms "adjacent mineral owner", "highway right-of-way" and "tract", have the following meanings unless the context clearly indicates otherwise. (i) Adjacent mineral owner: a person that owns the right to explore for, develop, and produce oil and gas from a tract of land adjoining a highway right-of-way. (ii) Highway right-of-way: a tract of land owned by the state that was or may be acquired to construct or maintain a highway, road, street, alley, or other right-of-way. (iii) tract: a highway right-of-way subject to lease under this paragraph. (B) Lands affected. (i) A tract may be leased if the state owns the minerals under it and if the tract is not within 2,500 feet of a well which was capable of producing oil or gas in paying quantities as of January 1, 1985. A tract may also be leased if the state owns the minerals under it and if the oil or gas is leased to facilitate the drilling of a horizontal well. (ii) In its discretion, the SLB may establish the size and the outer boundaries of each tract to be leased; however, the lease extends only to the center of the width of the particular highway right-of-way adjacent to the property in which the lessee is the mineral owner. (iii) The SLB may refuse to lease a particular tract, either on its own or upon the request of the highway department. (iv) Tracts subject to the Relinquishment Act shall be leased by sealed bid under paragraph (1) of this subsection. (C) Preliminary leasing procedures. (i) The SLB may initiate the leasing of tracts by providing notice to adjacent mineral owners in accordance with paragraph (6)(C)(iv) of this subsection. (ii) Any outside party, including the adjacent mineral owner, may apply to lease a tract by sending the following materials to the GLO: (I) a written description of the tract sufficient for it to be located on the ground and a map showing the tract's boundaries and dimensions; (II) the names and addresses of all adjacent mineral owners, as reflected in the tax assessor-collector's records and county clerk's records in the county or counties where the tract is located; (III) an affidavit stating either that there was no well capable of producing oil or gas in paying quantities within 2,500 feet of the tract as of January 1, 1985, or that the lease is necessary to facilitate the drilling of a horizontal well; and (IV) the processing fee required by §3.31 of this title, (relating to Fees). (iii) An applicant who is also an adjacent mineral owner must also submit the following: (I) a written waiver of the notice to which the applicant as an adjacent mineral owner is entitled; and (II) if the applicant is a lessee of the adjacent tract, (-a-) certified copy or a reproduction of a certified copy of any recorded lease or leases on the land adjacent to the tract. If the lease has not been recorded, an applicant must submit a copy of the lease along with an affidavit stating that it is a true and correct copy of the lease on the adjacent land; and (-b-) a notarized affidavit stating the consideration paid for any lease or leases on the adjacent land. (iv) The GLO shall notify each adjacent mineral owner, by registered mail, of the proposed leasing of the tract. An adjacent mineral owner may waive this notice by providing a written waiver to the GLO. If the person who initiates the leasing process cannot determine the identity or address of an adjacent mineral owner from the county records, notice shall be by publication as provided in Texas Natural Resources Code, §32.201(d). (D) Preferential leasing right of adjacent mineral owners. (i) General rule. Each adjacent mineral owner is entitled to lease to the center of the tract in the same proportion as his or her ownership in the adjoining land. The preferential right to lease under this paragraph must be exercised by the adjacent mineral owner within 120 days of the actual notice (as defined by Texas Natural Resources Code, §32.201(d)) of the intention to lease, or such right is forfeited. (ii) Examples. (I) if the adjacent mineral owners on opposite sides of a tract differ, each is entitled to preferentially lease to the center of the tract, thereby leasing one-half of the tract. (II) if the adjacent mineral owner on both sides of a tract is the same person, he or she may lease the entire tract. (III) when the mineral ownership of leased or unleased land adjoining one side of a tract is owned in cotenancy among several adjacent mineral owners, each shall have a preferential right to lease to the center of the tract in proportion to his or her interest in the adjoining land. (iii) Lease terms. Each lease issued on a tract shall grant the lessee the authority to pool the acreage in accordance with Texas Natural Resources Code, §32.202. A certified copy of the unit designation or the pooling agreement must be filed with the GLO. Each lease shall also provide for the payment of compensatory royalty in accordance with Texas Natural Resources Code, §32.203. The additional terms of a lease depend on whether lands adjacent to the tract are leased. If the adjacent land is unleased, the SLB shall set the terms of the lease. If the adjacent land is leased, the tract shall be leased upon terms at least as favorable to the state as those of the most favorable lease held on the adjoining land. (iv) Lease approval and payments. A lease will not be issued until the SLB approves the lease and receives the bonus payment and the 1.5% sales fee provided by Texas Natural Resources Code, §32.110. If the adjacent mineral owner does not tender such sums within 120 days of receipt of notice under paragraph (4)(C)(i) of this subsection, the preferential right to lease is forfeited. (v) Waiver. Any adjacent mineral owner may waive the preferential right to lease by filing with the GLO a written waiver executed and acknowledged by the mineral owner or their duly authorized agent. (E) Leasing after forfeiture or waiver of preferential leasing right. Cont'd... |
