Assignments and Conveyances
In transactions involving oil and gas interests, the task of defining just what is being assigned and conveyed, using fractions correctly, and understanding issues related to property descriptions, warranties, and reservations can be like navigating a dirt road filled with potholes after a rainstorm. This paper explores the basics of assignments involving minerals, leasehold interests, and royalty and offers suggestions on how to successfully draft agreements creating and conveying such interests.
I. Formal Requirements for Conveyances and Statute of Frauds
Regardless of whether the particular interest being assigned is classified as a real or personal interest, recordation statutes in many states and the statute of frauds in most states necessitate certain basic requirements for conveyance of oil and gas interests. These include: (1) the agreement must be in writing; (2) it must contain words of grant; (3) the parties to the transaction must be identified; (4) there must be an adequate property description; and (5) the agreement must be properly executed. The assignment must also be delivered by the grantor or his agent to the grantee.1
Because conveyances of oil and gas interests involve interests in real property, compliance with recording statutes becomes the primary way to avoid loss of an interest to a bona fide purchaser. Generally, unless it i
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This article appears in:
Oil & Gas Agreements: The Exploration Phase