Oklahoma Drilling Title Opinion
Examination Process

The Rule

The Oklahoma Supreme Court established the "object of the verb" rule for distinguishing easements from fee conveyances. See St. Louis-San Francisco Railway Co. v. Humphrey, 446 P.2d 271 (Okla. 1968). If the object of the granting language is a tract of land rather than an easement, the document may pass fee title even if it states that the purpose is consistent with an easement.

Why It Matters in Title Work

If what appears to be an easement actually conveys fee title, the grantor's subsequent oil and gas lease over those same lands may be ineffective as to the burdened strip. Courts may allow extraneous evidence of the parties' intent. See Kansas, Oklahoma & Gulf Ry. Co. v. Doneghy, 249 P.2d 719 (Okla. 1952).

Practical Application

When examining Highway Deeds, Railroad ROW deeds, and pipeline ROW instruments, ask: does the granting clause convey "a right-of-way over and across" the land (easement language) or does it convey "the following described tract" for a specific purpose (fee language)? If the latter, flag for additional analysis and note in the title chain.

Oklahoma is a lien theory state. A mortgage is a lien, not a conveyance of real property. See Coursey v. Fairchild, 436 P.2d 35 (Okla. 1967). Under 46 O.S. § 301, an unreleased mortgage is not a title defect if 7 years have passed since its stated maturity date (use 10 years for pre-11/1/01 mortgages), or 30 years have passed since the recording date when no maturity date is shown. An assignment does not reset the 30-year clock, but an amendment does.

No Subordination Required

No subordination is required for mortgages encumbering only the working interest or only the surface. For each, note in a comment that it burdens only the lessee or the surface and does not need to be subordinated. For pooling orders, secure a subordination of any superior mortgage to interests acquired through the pooling order.

Quitclaim Releases

A quitclaim deed from a mortgagee to the mortgagor or a subsequent owner is sufficient to release the mortgage unless the mortgagee specifically excepts it. See OTS 24.1.

What the MTA Does

The MTA declares that a person has marketable record title if: (1) they have an unbroken chain of record title extending back at least 30 years, and (2) nothing appears of record purporting to divest them of title. It generally remedies title defects and lien claims that occur prior to the root of title. See OTS 30.1, 30.2.

Root of Title

The root of title is a conveyance, judicial ruling, or probate instrument recorded at least 30 years before the date of examination. Instruments executed only by severed mineral owners do not create a root of title.

Critical Limitation: Severed Minerals

The MTA does not apply to severed mineral interests. Once minerals are severed from the surface, the MTA cannot be used to terminate interests or cure defects in that mineral chain. It can cure defects in the surface chain even after severance, as long as those defects do not pertain to the severed mineral interest.

Preserving Pre-Root Interests

To prevent the MTA from terminating a pre-root interest, any reference within the 30-year chain must specifically identify the recorded transaction (e.g., "subject to the reservation in Book 123 at Page 456"). A general reference such as "subject to previous reservations" is insufficient. See OTS 30.12; 16 O.S. § 72(a).

General Effect

The SLTA bars adverse claims arising from certain title defects if the underlying conveyance or decree has been of record for at least 10 years. Effective 10/27/1961. Unlike the MTA, the SLTA applies even to defects in the mineral chain, making it a broader curative tool for certain instrument-level defects. See OTS 29.1, 29.2.

Specific Coverage

The SLTA protects a purchaser for value from claims arising out of instruments recorded at least 10 years ago involving: conveyances by incompetents without recorded determinations of incompetency; corporate conveyances by an unauthorized officer; instruments under a terminated recorded POA; non-delivery of conveyances; and guardian's and personal representative's conveyances confirmed by court.

Held by Production (HBP)

Oklahoma has no statute requiring the recording of an affidavit confirming production in paying quantities. The examiner must independently verify through Pangaea and OCC well data whether any lease past its primary term has been extended by production. Note that OCC data is indexed against the subject section and may not reflect production from horizontal wells perforated in an adjacent section.

Statutory Pugh Clause

Oklahoma's statutory pugh clause operates to limit HBP status to the specific formation or depths from which production is occurring. Review it carefully, including its effective date, to determine which depths in a given lease remain HBP and which may have terminated. Consult the managing attorney if the effective date creates uncertainty for leases executed near that date.

Depth Clause Issues

Some leases contain express depth clauses limiting coverage to formations above or below a named formation. Write an appropriate Objection and Requirement and reflect the limitation in the Numbers. Whether to tabulate assignments of depth-limited leases depends on the client and the specific opinion; confirm with the reviewing attorney.

Entirety Clauses

In producing sections, supplemental DTOs, and DOTOs, watch for entirety clauses that may have come into play since the last opinion. An entirety clause can affect whether a pugh clause becomes operative when a portion of the lease is unitized.

Purpose

The Oklahoma Corporation Commission has authority to force pool interests in a common source of supply when owners cannot agree on voluntary participation. A pooling order compels all owners within a spacing unit to participate in the well on one of several election options, ranging from fully participating (bearing costs in exchange for a full working interest) to taking a smaller royalty-only interest.

Elections

Each respondent is required to make an election within a set number of days after the order becomes final. Elections determine how each unleased mineral owner's interest is treated in ownership calculations. In the title examination, there is no requirement to verify that all relevant parties were properly included or notified; simply tabulate the respondents and their elections as shown in the order.

Sharing of Pooled Interests

Verify with the operator/client whether any other participating parties are sharing in pooled interests. If verification is not possible, attribute all pooled interest to the operator. Add a standard DOTO objection requiring the client to obtain a Division Order to confirm ultimate ownership allocations.

Subordination of Mortgages to Pooling

When a pooling order is applied, secure a subordination of any superior mortgage to the interests acquired through that pooling order. This is sometimes overlooked but is necessary to protect the operator's leasehold.

Structure

Each Objection and Requirement has a standard structure: a numbered Objection paragraph identifying the title defect, affected tracts, and relevant instrument numbers, followed by a numbered Requirement paragraph telling the client what curative action is needed.

Header Requirements

Each objection must have a descriptive header. Confirm the form requirements for the specific client; some require NMA totals in each header, others require tract number references. See the OK Body form for boilerplate examples organized by topic.

Use Fractions

Use fractions rather than percentages in objections wherever possible. Fractions are more precise and avoid rounding ambiguity.

Depth Limitation Objections

For depth-limited opinions, ensure the depth limitation is mentioned on the Cover Sheet, reflected in the Numbers, and addressed in the appropriate comment. Do not omit any of these three.

HBP Objections

The standard HBP objection calls on the client to satisfy the examiner that each HBP lease was extended into and continues in its secondary term by production in paying quantities, resulting from operations conducted within the primary term with due diligence until production was obtained, and that said production has been continuous and in paying quantities to the date of the opinion.

Unrecorded Agreements

Where assignments are made subject to unrecorded agreements not produced for examination, a standard objection should call for those agreements to be produced or for the client to satisfy itself that they do not affect title as set forth in the opinion.