Texas Oil and Gas Attorney Blog
The Eastland Court of Appeals in Texas recently decided Ovintiv USA Inc. v. High Noon Resources LLC and XTO Holdings, 2026 WL 1992100 (Tex.Civ.App. Eastland 2026, no pet.), a case involving a double fraction royalty and executive rights.
The Court was construing two deeds. One deed conveyed “one-fourth (1/4th) of the usual one eighth (1/8th) royalty (and Grantors shall be entitled to 1/4th of the 1/8th royalty irrespective of the amount of royalty actually provided for in any lease) …”. The Court held that this language conveyed a 1/32 royalty. The parties in this suit were successors to the original grantees and grantors in the deeds.
In the second deed, the grantors conveyed all their mineral interest but retained a partial interest in the executive rights. First the Court noted that a grantor can keep part of its mineral estate either by reserving it or by granting only the part it wants to convey. The Court held that in this deed, where the grantor who held executive rights only conveyed the minerals but did not expressly reserve them, the executive rights were not conveyed are severable from the other attributes of the mineral estate and may be held as a naked right.
It appears that the holding on executive rights conflicts with an El Paso Court of Appeals decision on whether a conveyance of a fractional mineral interest includes the executive rights unless they are expressly reserved. The Texas Supreme Court will hopefully resolve the conflict.