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Transfers of Aging Federal Oil and Gas Properties

Thomas Beron, T. Calder Ezzell, Jr., Proceedings of 56th Annual Rocky Mountain Mineral Law Institute (2010)

As exploration and development associated with federal oil and gas leasing continue to mature both onshore and offshore, so do the complexities and legal framework involved for those seeking to buy or sell older federal leases. The complicated weave of federal and state laws alone provides ample grounds for caution. When the properties consist of older leases that have produced for a number of years, the potential issues multiply rapidly. Title, environmental, and plugging issues associated with older properties compound an already difficult task. This chapter provides advice and tips for those seeking to acquire mature federal onshore1.1 and offshore oil and gas properties, as well as some words of caution for sellers.
At the outset, it is important to acknowledge that the term “aging” in this context is necessarily imprecise. The age of an oil and gas property implies only its potential for problems. For example, one could reasonably expect that a 50-year-old lease held by an original and financially stable lessee should present few title problems. On the other hand, a 10-year-old lease held by multiple lessees involving numerous conveyances of ownership, depth segregations, financings, bankruptcies, etc., has the potential to be a title examiner's nightmare. In addition, either of these scenarios could present a myriad of environmental problems depending on the managemen