Court Opinion

ID: 4136101
Source: CourtListenerOpinion
Date Created: 2017-02-18 02:09:50.602847+00
Date Added: 2024-06-11T14:35:32.807061
License: Public Domain

Ahk-a-    il.-a
   WXLL.     WILSON
AX-l-G-         GENX!XXAL           truly   11,   1960

          Honorable Bill Allcorn                         Opinion NO. W-878
          Commissioner
          General Land Office                            Re:   Authority under
          Austin 14, Texas                                     Article 6008b, V.C.S.,
                                                               for the extension of
                                                               term leases by enter-
                                                               ing into a secondary
          Dear Mr. Allcorn:                                    recovery program.
                    You have requested the opinion of this office with
          respect to the authority of the Commissioner of the General
          Land Office and the School Land Board to extend a State mineral.
          lease beyond its principal term of 25 years by the execution and
          approval 0f.a unitization agreement under the provisions of Ar-
          ticle 6008b, V.C.S.
                    The lease In question was executed in 1940, pursuant
          to the Sales Act then In force, for "a period of five years and
          as long thereafter as any minerals ;,. . are produced therefrom
                 not to exceed 25 years . . . . The primary and principal
          ieks'legally were sus ended from 1941 to 1947 and its explra-
                                 , 1971. The lessee asserts the advlsa-
          tion date is December isi
          bility of the institution of a water flood operation In the field
          as a means of conservation and increasing the ultimate recovery
          and proposes unitization under Article 6008b with other tracts
          composing the field. Apparently, the expenditure of substantial
          sums will be necessary to carry out the proposed secondary re-
          covery program and It is estimated that field depletion will not
          occur until 1981, or some ten years after the expiration of the
          principal term of the lease in question.
                    Supposedly, the program will not be instituted unless
          the proposed unitization agreement legally can extend the prln-
          cipal term of the lease to the duration of production. It is
          contended that the Act wherein'lt states that unitization agree-
          ments for secondary recovery programs may provide "for the ex-
          tension of leases covering any part of lands committed to the
          unit .     so long as production of oil or gas In paying quanti-
          ties is'hid from any part of the lands or leases committed there-
                 .", supplies the requisite authority. Art. 6008b, Sec. 1,
          &:s:
Honorable Bill Allcorn, page 2 (WW-878)

          This Department In ~~-185 rendered the opinion that
& lease Gould not be extended beyond its principal term by the
execution and approval of a unitization agreement 'pursuant to
the provisions of'Atit.5382c, despite the fact that this statute
authorized such &n agreement to contain a ~provlslonthat the
lease "with respect to the lnteiest~of the State, shall remain
in force'as ldnn as oil or zas . . . is vroduced from the unit
In paying quantities and royalties paid to the State thereon."
(Article 5382c, Sec. 2(s).)
       ' Without deciding, because unnecessary, whether this
statute, passed in 1951, supersedes the pertinent provlslons
of Article 6008b, It is to be noted that the portion of the
latter statute, quoted above, Is not substantially different from
Its cdunterpart in Article 5382~.  The statutory provision for
"extension"'of a lease for so long as production obtains is, In
our opinion, simply another way of saying that the lease shall
"remain in force'.for such productive period. Neither is it of
piirticularImport, as we view the matter, that Article 6008b re-
lates to secondary recovery operations, while Article 5382~ pre-
siunablyQertalns to primary or initial mineral development. The
fact remains that in both instances, If the statutes are given
the effect contended for, and assuming that production will con-
tinue beyond the principal tern'of the lease, the State, without
having received a bonus or other direct consideration therefor,
till1have disposed of at least a,Bnt.ial     portion of Its re-
versionary interest rather than committing to the unit merely Its
royalty Interest as authorized by the unitization statutes.
          We therefore believe, aid you are so advised, that for
the reasons therein set forth, the answer to the present question
Is controlled by our former Opinion No. ~~-185.  Although the
Commissioner and the School Land Board are authorized to enter
into and approve a unltlzation agreement for secondary recovery
operations, they cannot thereby legally extend the lease beyond
Its principal term of 25 years.

                              SUMMARY
         Under present law the State cannot, by entering
    into a unitization agreement under Article 6008b,
    V.C.S., extend a term mineral lease beyond lts'prln-
    cipal term of 25 years.
                                          Yours very truly,
                                          WILL WILSON

JHR:bh
Honorable Bill Allcorn, page 3 (W-878)

APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
Leon F. Pesek
Virgil R. Pulliam
John C. Steinberger
REVIEWED FOR THE ATTORNEY GENERAL
BY:
        Leonard Passmore