Justice Lisa Soto
Following on the heels of the Texas Supreme Court’s decision in Van Dyke v. Navigator Group, 668 S.W.3d 353 (Tex. 2023), the El Paso Court of Appeals has held that a deed conveying “3/16ths of one-eighth of all the oil and/or gas or other minerals produced . . . under the lease” conveyed a 3/16th floating royalty rather than a fixed 3/128th interest.
Similar to the Van Dyke case, Powder River Mineral Partners, LLC, et al. v. Cimarex Energy Co., et al. (No. 08-23-00058-CV; delivered December 15, 2023) arose from a dispute over the construction of a 1947 mineral deed. In that year Chapman conveyed to May an undivided 3/16ths interest in oil, gas, and other minerals to be produced from a 120-acre tract in Reeves County. The deed further provided that in the event the land was “loaned for the mining of oil and gas or other minerals”, May, the grantee, would receive “3/16ths of one-eighth of all the oil and/or gas or other minerals produced . . . under the lease.” Fast forward to the present, where Cimarex, the lessee-operator, has been paying royalties to May’s successors based on a fixed 3/128th interest. One of the successors, Powder River, sued Cimarex for underpayment, alleging that the 1947 deed granted the May successors a floating 3/16ths interest. The Chapman interests (grantor) moved for summary judgment, which the trial court reversed. The Mays appealed.
In an opinion by Justice Soto, the court of appeals reversed. Citing Van Dyke, the court began with the proposition that “at the time the parties executed the deed at issue, the term one-eighth as included in conveying instruments ‘typically did not bear its arithematical meaning.’” When confronted by a double fraction in a deed of similar vintage, as the court observed, SCOTX has held that there is a presumption that “1/8th” conveys the entire mineral estate, not just 1/8th of it. A party seeking to rebut the presumption must show the instrument itself intended something different. The Chapman interests could not jump this hurdle because the terms of the deed would make no sense if 1/8th were construed as anything other than the entire interest, 3/16ths of which had already been conveyed by the granting clause. In other words, the case came out the same way as Van Dyke.
We wonder how many more deeds like these are out there and whether operators are paying based on the double fraction or not. What will be more interesting is whether a case will arise in which a deed is of recent enough vintage that the presumption does not apply and a double fraction simply means a double fraction.
