For purposes of this rule only, the term "mineral interest"
means an interest in or under an oil, gas, or mining lease, fee, or
title, including real property from which the minerals have not been
severed, or contracts relating thereto. The offer and sale of a mineral
interest, at an auction, by the seller itself, or a registered dealer
or agent acting on behalf of the seller, is exempt from the securities
registration requirements of the Texas Securities Act, Section 7,
if all of the following conditions are met.
(1) Auctioneer. The auctioneer or associate auctioneer
through which the mineral interest is offered or sold must be licensed
as a dealer under the Texas Securities Act and licensed by the Texas
Department of Licensing and Regulation in accordance with Texas Occupations
Code, §1802.001 et. seq.
(A) Intent. The seller did not acquire the mineral
interest with a view to resale, unless the seller was forced to acquire
the mineral interest in a package in order to obtain other properties
in the package.
(B) No fractionalization of mineral interests.
(i) The seller has the full right and authority to
sell the mineral interest, and is selling 100% of its mineral interest,
except that retention by the seller of a royalty or overriding royalty
or the horizontal severance of the property is permissible as indicated
in clause (ii) of this subparagraph.
(ii) The seller must not be creating undivided interests
out of its mineral interest for the purpose of resale. Where all the
seller owns is a partial interest (such as a royalty, overriding royalty,
or undivided fractional working interest), this requirement is met
if the seller sells all of that interest. However, the seller shall
not be considered to be fractionalizing its interest in sales where
the seller retains only a royalty or overriding royalty, or where
the seller horizontally severs the property by retaining all of its
existing rights in certain formations or depths under the whole property.
(3) Not applicable to investment contracts. The mineral
interest offered or sold does not constitute an investment contract.
(A) Knowledge and experience. The purchaser or its
representative is engaged in the business of exploring for or producing
oil or gas or other minerals as an ongoing business. By reason of
this knowledge and experience, the purchaser or its representative
has evaluated the merits and risks of the mineral interest to be purchased
at auction and has formed an opinion based solely upon his knowledge
and experience and not upon any statement, representation, or printed
material provided or made by auctioneer or seller. If a purchaser
representative is used, such purchaser representative:
(i) has no business relationship with the seller;
(ii) represents only the purchaser and not the seller;
(iii) is compensated only by the purchaser.
(B) Financial ability. The purchaser has sufficient
financial resources in order to bear the risk of loss attendant to
the purchase of the property.
(C) Suitability. In all sales to purchasers in this
state, the seller or any person acting on its behalf shall have reasonable
grounds to believe and after making reasonable inquiry shall believe
that the purchaser satisfies the requirements set forth in subparagraphs
(A) and (B) of this paragraph. This requirement could be met by obtaining
a document signed by the purchaser to the effect that the purchaser
meets these conditions.
(5) Auction. For purposes of this rule only, auction
shall mean the sale of the seller's mineral interest by public outcry.
(6) Information not prohibited. The use of statistical
information in trade journals and data bases as well as auction pamphlets
concerning the mineral interests to be offered pursuant to this rule
is not prohibited.
|Source Note: The provisions of this §139.12 adopted to be effective August 23, 1991, 16 TexReg 4352; amended to be effective June 12, 2002, 27 TexReg 4936; amended to be effective February 24, 2016, 41 TexReg 1225