OIL & GAS ALERT: Recent Texas Legislative Developments

    20 December 2007
    1. An abstract of judgment in favor of the State or a State agency continues to constitute a lien until it has been paid or until the 20th anniversary of the date the abstract is recorded.  The judgment may be renewed for one additional 20-year period (Section 52.006, Property Code, effective September 1, 2007).

    2. The Legislature has created a complication for E&P companies taking oil and gas leases in residential areas.  Section 5.016 of the Property Code says that a person may not convey an interest in real property (such as an oil and gas lease) that will be encumbered by a recorded lien at the time the interest is conveyed unless extensive disclosures are made.  A failure to comply will not invalidate the conveyance, but allows the purchaser to terminate the contract (such as an option to lease) “for any reason.”

    3. Adeed restriction or other covenant running with the land and applicable to the conveyance of residential real estate that requires a transferee of residential real estate or the transferee's heirs, successors or assigns to pay a fee for a future transfer of the property (including any lien in support thereof) is void and unenforceable; however this invalidity does not apply to a restriction or covenant in favor of a homeowners association, a tax exempt entity or a governmental entity (Section 5.017, Property Code).  This statute applies to transfer and contracts made on or after   This statute applies to transfer and contracts made on or after January 1, 2008 but the legislation is ambiguous because it does not say if such a charge made under an agreement entered into before January 1, 2008 but imposed after that date is valid or invalid.

    4. Under a new subchapter in the Natural Resources Code, the following obligation is imposed on well operators:  “Not later than the 15th business day after the date the commission issues an oil or gas well operator a permit to drill a new oil or gas well or to reenter a plugged and abandoned oil or gas well, the operator shall give written notice of the issuance of the permit to the surface owner of the tract of land on which the well is located or is proposed to be located.”  Such notice is not required if the operator and the surface owner have entered into an agreement providing for alternate notice or waiver.  This notice does not apply to plugging back, reworking, sidetracking, or deepening of an existing oil or gas well that has not been plugged and abandoned, or using a surface location on which is located an existing oil or gas well that has not been plugged and abandoned.  This new law applies only to permits issued on or after October 1, 2007.  The remedy for violation is unclear; the law says it cannot restrict or forfeit permits from the commission or “the right to develop the mineral estate in land.”  While this law should apply only to drillsites and not to the surface over horizontal wellbores, the notice is to “the surface owner of the tract of land on which the well is located or is proposed to be located.”  Where is a horizontal wellbore “located”?