CMM Title Research & Due Diligence 4

Question 1

Which instrument is most commonly used to establish that an oil and gas lease is still in force after the primary term has expired?

Accepted Answer

Affidavit of production or certificate of production

Answer

An affidavit or certificate of production (or producing operations) filed in the county records gives constructive notice that a lease is being maintained by production or operations beyond the primary term.

Question 2

A 'top lease' is executed when:

Accepted Answer

A new lease is executed on the same land before the existing lease expires, to take effect upon expiration

Answer

A top lease is a lease taken on land already covered by an existing lease, designed to become effective when and if the underlying lease expires or terminates.

Question 3

During title due diligence, which factor most directly determines whether a recorded instrument provides constructive notice to a subsequent purchaser?

Accepted Answer

Whether the instrument is properly indexed in the county records so it can be found by a reasonable search

Answer

Constructive notice depends on proper recordation and indexing; an instrument recorded but not findable in a reasonable search (a 'wild deed') generally does not impart constructive notice.

Question 4

A 'shut-in royalty' clause in an oil and gas lease allows the lessee to:

Accepted Answer

Maintain the lease in force by paying a flat fee when a well capable of production cannot market its gas

Answer

A shut-in royalty clause permits the lessee to keep the lease alive by paying a specified shut-in royalty when a gas well capable of production cannot sell gas due to market or pipeline issues.

Question 5

In the context of mineral title research, 'adverse possession' of a mineral interest requires which additional element compared to surface adverse possession in most jurisdictions?

Accepted Answer

Actual extraction or drilling activity on the mineral estate, not merely surface use

Answer

Most courts require actual use of the mineral estate—such as drilling or extracting minerals—for adverse possession of severed mineral rights because surface occupation alone does not constitute possession of the mineral estate.

(CMM) Certified Mineral Manager Practice Test

(CMM) Certified Mineral Manager Practice Test

CMM Title Research & Due Diligence 4