Due Diligence & Title Opinions Flashcards
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Read the first 7 Due Diligence & Title Opinions flashcards as text
Which document is typically the starting point when examining oil and gas title in a new area with no prior production history?
Answer: The original patent or grant from the sovereign
Title examination must trace ownership back to the original sovereign grant or patent, which is the root of title.
A 'Runsheet' prepared during a title examination primarily serves to:
Answer: Chronologically document all instruments affecting title
A runsheet is a chronological abstract of all recorded instruments affecting the property, used as the foundation for the title opinion.
When a title opinion identifies a 'curative requirement,' this means:
Answer: A defect exists that must be corrected before the title can be relied upon
A curative requirement identifies a specific title defect and the action needed to remedy it before the company can rely on the title.
In a title opinion, which section typically outlines the conditions that must be met before the company can drill or operate?
Answer: Requirements section
The requirements section of a title opinion lists specific actions or documents needed to cure defects before operations can proceed.
A 'skeleton title opinion' differs from a full title opinion in that it:
Answer: Provides a preliminary review based on limited records for early decision-making
A skeleton opinion gives a quick preliminary assessment based on available records so the company can make early acquisition or leasing decisions before a full search.
Which of the following BEST describes the 'Duhig Rule' as applied in title opinions?
Answer: A rule of construction where a grantor cannot convey more than they own, with shortages charged against the grantor's reservation
The Duhig Rule holds that when a grantor conveys land and attempts to reserve a fractional mineral interest, any shortage in title is charged against the reservation, not the grant.
During due diligence on an acquisition, the landman discovers that a prior lease expired before production was established. This creates a concern about:
Answer: Whether a new lease is needed to cover the acreage
Once a lease expires without production, the mineral rights revert to the lessor, so a new lease must be obtained to hold those rights.