Austin, TX (Law Firm Newswire) January 11, 2012 - Leslie v. Veteran’s Land Board is a very recent Texas Supreme Court case that clarifies some of the confusion about the obligations that executive rights holders owe to mineral rights owners who lack executive rights.
In instances where mineral or royalty interests have been separated from the right to execute a lease, whoever holds the right to execute a lease is called the executive rights holder. Other mineral or royalty owners who do not have the right to execute a lease are called non-executive interest holders.
“The Leslie case fires a warning shot across the bow of executive rights holders,” notes Austin oil and gas attorney Gregory D. Jordan. “As the Texas Supreme Court held, inaction on the part of executive rights holders may not be tolerated, and when the executives refuse to lease, their inactions should be assessed to see if they have breached their duties to the other parties.”
In the Leslie case, a land developer, Bluegreen, developed a large residential subdivision called Mountain Lakes. Bluegreen purchased some of the minerals in the 4,100 acre subdivision and all of the executive rights. But then it created restrictive covenants to control what types of homes could be built and how the property could be used, including restrictions on oil and gas drilling and production.
“This included covenants against commercial oil drilling, operations and refining, and mining and quarries,” said Jordan, commenting on the case. “As the Barnett Shale is an extremely lucrative formation in this area, companies wanted to lease the land. But as the Texas Supreme Court found, the developer breached its duty to the non-executive mineral rights owners via the restrictive covenants that prevented production.”
Mountain Lakes is reported to be located above $610 million worth of minerals that companies cannot access from outside the development. The Texas Supreme Court ruled that the restrictive covenants should be cancelled so that such minerals can be produced. Austin oil and gas lawyer Jordan notes, “The Texas Supreme Court has now made it very clear that executive rights holders will not be able to prevent leases on property they control through exercise of self-interests.”
Owners of non-executive mineral rights or those who have concerns about development of minerals on their property should contact an experienced Texas oil and gas attorney. To learn more about the Austin oil and gas lawyer Gregory D. Jordan visit, please go to www.theaustintriallawyer.com or call (512) 419-0684.
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