Leasing and Pooling State of Texas Oil and Gas Rights

1. Running head: LEASING AND POOLING STATE OF TEXAS 1
Leasing and Pooling State of Texas Oil and Gas Rights
Sara Caldwell
I certify that I have read A Student's Guide to Academic Integrity at the University of
Oklahoma, and this paper is an original paper composed by me for this course. Except where
properly cited and attributed, it has not been copied or closely reworded from any other
source and has not been submitted as a whole, or in part, for credit in any other course at OU
or any other educational institution. It has not been created or submitted for any other
purpose such as a job assignment at my workplace or any other agency.
LSTD 2700-404 Delivering an Effective Presentation
Professor Alayna Grady
April 10, 2015

2. LEASING AND POOLING STATE OF TEXAS
2
Leasing and Pooling State of Texas Oil and Gas Rights
Slide 1: The State of Texas owns vast land and mineral holdings. Proceeds from GLO leases
benefit the Permanent School Fund.
Slide 2: Oil and gas leasing is a primary function of the General Land Office.
Slide 3: Proceeds from state leases benefit the Permanent School Fund and exceed $12.3 billion
to date.
Slide 4: Public School Land is leased at a sealed bid sale and nominated prior to the sale through
a nomination process.
Slide 5: Between 1895-1931 the State of Texas sold surface and reserved minerals including oil
and gas through the Relinquishment Act.
Slide 6: The surface owner negotiates and executes the oil and gas lease and receives ½ of any
bonus, rental and royalty as compensation for acting as agent and in lieu of surface
damages. However, the lease is not valid until the GLO has approved the terms.
Slide 7: The State may have reserved a Non-Participating Royalty Interest or Free Royalty when
minerals were sold. The Free Royalty burdens the mineral owner's lease. The Free
Royalty gives the State a percentage of production, usually 1/6 or 1/8. A certified copy of
the lease must be filed with at the GLO. Due to the filing requirement, the public will
have access to the lease terms made with the mineral owner.
Slide 8: The State of Texas may own minerals underlying Highway Rights-of-Way. Adjacent
mineral owners have the preferential right to lease State highway ROW minerals.
Slide 9: Anytime a tract of State owned land is placed in a production unit with any other tract of
land, including another state-owned tract, the GLO must approve the combining or
pooling of the different tracts into a single production unit. Highway Right-of-Way leases

3. LEASING AND POOLING STATE OF TEXAS
3
contains pooling authority. Therefore, approval is unnecessary if the lease is a Highway
Right-of-Way lease.
Slide 10: An owner producing mineral from lands adjacent to a State owned riverbed tract might
be compelled to include the river tract with the adjacent production unit. In this instance
the State of Texas would be force pooling the lease.