The retirement was finally done, at least, insofar as closing the office. I emptied six rooms, 900 square feet, of all evidence of my 40 years’ occupation and practice of law. All the old typewriters, printers, computers, desks, chairs, etc. that were so familiar and served me well – gone. It’s odd the sentiment and attachment felt for inanimate things. The books, OMG, the books, the foundation of my knowledge, the tools of my trade, although some were just for show. All gone. The contents of ten legal sized four-drawer metal file cabinets were emptied into large bins which, along with more than 40 legal-sized boxes of files, were unceremoniously hauled out and shredded. It’s impossible to describe the emotions, watching 40 years of life’s work dumped into a truck and shredded. All those hours, days, weeks and years of work, rendered into tiny disparate strips of paper. Maybe they’ll be recycled and reborn as Starbucks cups. Or maybe birthday and get-well cards, printed on the back: “Made from 100% recycled career of John C. Chappell, Attorney at Law.” Having my routine ripped out has been more of a shock than expected. Life used to be: get up, breakfast, drive to post office for mail, drive to office, work, work, work, drive home, supper, more work or, with luck, some family time, bed; repeat, repeat, repeat… The vacuum created by the loss of routine and familiarity has been a shock. Don’t miss the profession, though! Don’t get me started about why I’m so happy to put the legal profession behind me. I’ll just say, it’s not the profession it was when I entered it.
Author Archives: John C
Retirement
Trying hard to become retired but neither clients nor judges nor fate is cooperating much. Days tick off relentlessly as the Feb. 28 deadline to vacate the office looms like a grizzly awakened from hibernation who has spied his first meal of spring. Deadlines imposed by indifferent authorities creep forward relentlessly, competing for time against financial challenges and puzzles that for years were content to lie dormant but have chosen this time to turn urgent and threaten dire consequences. Not to mention other obligations ranging from those spawned by dad’s demise to the grind of simply dealing with life’s mundane daily challenges. I take little breaks when possible to read books, a recent one of which took an analytical look at the saying, “what doesn’t kill you makes you stronger”. The author noted that such things could leave you disabled or otherwise in a condition other than stronger, however much someone might argue about strength of character. So, I’d just as soon skip a third heart attack, thank you very much. Wish me luck. And, if anybody wants some impressive-looking law books to decorate their walls, I have quite a lot for the taking, as well as a few desks, chairs, etc.
Whenever I get this retirement behind me, I’ll likely add more thoughts about it here. There are several things I’d like to say about the legal profession, and about oil & gas, and about government agencies, and about politics, and about probably a few other things. For now, though, I just need to get this retirement thing behind me.
Net Royalty Acres Anyone?
When you’re talking about a “royalty” interest you’re talking about something that’s created by a piece of paper called a lease. When you’re talking about a “mineral” interest you’re talking about something that’s created by nature under the land. When you’re talking about land you’re generally talking about acres. So, what are you talking about when you’re talking about “royalty acres” or “net royalty acres” or “mineral acres” or “net mineral acres”? I’ve heard all those terms used, and I’ve seen numbers associated with them, inconsistently. One of those numbers is the number “8” or, inversely, “1/8”. I have a problem with automatically using an “8” when talking about royalty acres or mineral acres, because it assumes a lease with a 1/8 royalty. Not all leases have a 1/8 royalty; it might be 3/16 or 5/32 or even 1/4.
What I learned (which I don’t claim was right) was that “royalty acres” was the product of multiplying the number of acres (of mineral interest) by the royalty specified in the lease. If you own 80 acres and the royalty is 1/8, you have 10 royalty acres; or if the royalty is 3/16, you have 15 royalty acres. But if you only own a 1/2 interest in the 80 acres of minerals you have 40 mineral acres, and you have either 5 net royalty acres or 7.5 net royalty acres depending on whether the royalty is 1/8 or 3/16. The landman, however, is calling it 5 net mineral acres. The landowner asks what that means and is told it’s 1/8 of 40 acres. But, the landowner responds, I thought you said the royalty is 3/16!
I recognize that a lot of people have been accustomed for a lot of years to think in terms of 1/8 when thinking about oil and gas leases and “mineral acres” or “net mineral acres”. When putting a value on a mineral interest, one could argue that royalty interest is irrelevant, as there may not even be a lease. On the other hand, if there is a lease and you’re thinking of selling your mineral interest, would you think it’s more valuable if it’s generating a 3/16 royalty than if it’s generating a 1/8 royalty? But, you might argue, if there’s a lease then you’re selling your royalty interest and, of course, you’d want more for a 1/8 royalty than a 3/16 royalty. And here, if you practice law, is where you roll your eyes around because you know about all the litigation that’s been spawned because of documents entitled “Royalty Deed” that were actually a mineral deed but messed up because they were thinking about that 1/8 and so the grantor conveyed “my entire 1/8” interest.
It’s getting worse each passing year because the “new” kids working in the division order departments of the crude buyers don’t have a clue about net mineral acres or net royalty acres and will tell a landowner who calls up with a question about their division order that the decimal number on it is their net revenue interest (NRI). So then they call the lawyer who drew up their dad’s will but has never seen an oil and gas lease and god only knows what they’ll be told.
I’d favor banning the use of “net mineral acres” and “net royalty acres”. When I see either of those terms in a lease that’s been presented to a landowner client, I have to call the landman or lessee’s lawyer to verify what he/she intends to mean by it. Then I’ll probably draw up something to add to it in order to avoid confusion in the future.