~MEMO -

TO TITLE EXAMINERS

North Dakota Statutes:

Reservations to State of North Dakota in Deeds of conveyance and/or Patents from the State:
Prior to 3/13/39, State claims no minerals. From 3/13/39 to 2120/41, State claims 5% minerals. From 2/20/41 to 6/28/60, State claims 50% minerals. (Chapter

165 of 1941 Sessions

Laws)

From 7/1160 to date, State claims

100% minerals

(Original

Grant Land only)*

*Note: From 3/1/41 to date, on lands acquired by the State through Foreclosure, only 50% reservation applies, since these are not original Grant Lands. After 2/20/41, any 100% reservations made on foreclosed lands were declared unconstitutional by decision 1/31/52 (Convis -vs- State of North Dakota) Even if the particular If in question conveyance from the State does not address minerals, the statute applies.

as to State ownership,

the ND web site can be referenced.

http://www.land.state.nd.us/

Counties can NOT retain minerals (Reservations in County Deeds are invalid) Counties and/or the State do NOT claim minerals under Rights-of-way.

Also beware, that if a conveyance from the State of North Dakota is given pursuant to a Contract for Deed, the date of the Contract applies.

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For website information of producing or non-producing wells in

North Dakota

go to web site:

http://www.oilgas.nd.gov/findwells.asp These and other NO Web sites can be accessed thru: www.discovernd.com

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PATENT RESERVATIONS TO USA
All patents reserve ditches and canals, denoted: Act of March 3,1909 DIG

(35 Stat. 844) 30 U.S.C.A. Sec. 81; Reserves ALL COAL to the USA

Act of June 22, 1910 (36 Stat. 583) 30 U.S.C.A. Sec. 83; Reserves All COAL to the USA Act of June 25,1910

(36 Stat. 847) 43 U.S.C.A. Sec. 142; Is remedial legislation authorizing the President to
withdraw from settlement, location, sale, or entry of certain public lands where oil and gas discovery is being prosecuted by occupant or claimant.

Act of July 17, 1914 (38 Stat. 509) 30 U.S.C.A. Sec. 121-122; Reserves oil, gas phosphate, nitrate, potash, or asphaltic materials to the USA Act of December 29.1916 Act of June 14.1926

(39 Stat. 864) 43 U.S.C.A. Sec. 299; Reserves ALL COAL and OTHER MINERALS.

(RESERVES ALL MINERALS)

ONE SHOULD ALWAYS reference the Statute in the Patent when shown in the Title Memorandum as follows:
i.e. Reservations: or Reservations:

D/C D/C; Coal (1909 Stat.)

... ete ...

To stress the importance of including the full (PRECISE) language in reservations and/or conveyances of minerals, the following examples should be considered.
i.e. Be precise in every word of a reservation or intent clause ... etc. Example 1: DUHIG rule, Third Pary Reservation etc ...
At the time of this conveyance Oliver F. Stone was the owner of the surface and 60/BOths of the minerals

1.

Oliver F. Stone and *Betty Jean Stone, husband and wife -to"Erling Olsons of Tioga, North Dakota" ** Does hereby grant to the grantee, all of the following lands, to-wit: TOWNSHIP 158 NORTH, RANGE 96 WEST, 5TH PM Section 14: W'hSW% Reservations: "Reserving to the grantors an undivided 6/8ths interest in and to all of the Oil, gas, and other minerals. It being the intention of the grantor's to reserve sixty mineral acres." xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

WARRANTY

DEED

Dated: 3-30-66 Filed: 5-23-66 Book 159, Page 595

Note: There are numerous problems with this deed:

1. Implies a 3rd party reservation to Betty Jean Stone (Supreme Court case #10339, Malloy vs Boettcher) 2. The Grantee is not valid; maybe they intended to convey to Erling Olson and Viola Olson. Correction deed should be done ...

3. Under the DUHIG rule, since Stone had conveyed 20 MA prior to this deed, he had 60 MA left, under the DUHIG rule he would pass 20 MA to grantee and retain 40MA himself. If he intended to reserve the full 60 MA, then he should have said either of the following: .
A) Reserving all oil, gas and minerals or B) Excepting all prior reservations and/or conveyances of record and further reserving 60 mineral acres to the grantor. Must give Olson 20 mineral acres due to the DUHIG rule, which states that: Under any given reservation, all prior mineral reservations and/or conveyances must be included in the portion reserved. i.e. the reservation of 60 mineral acres must include the prior conveyances of 20 MA, therefore Olson would receive 80 less 60 (being 20 MA), leaving Stone with 40 MA. THE FOLLOWING WOULD BE ACCEPTABLE NOTATIONS:

*Note: As of the date of that certain WD, Book 159, Page 595 from Oliver F. Stone and Betty Jean Stone, hw to "Erling Olsons", the property was owned by Oliver F. Stone (individually). The reservation in said deed reserved to the grantor's a certain mineral interest which appears to create a 3rd party reservation in said Betty Jean Stone. Subsequently, Oliver F. Stone appears to have married a certain Ethel Stone, with no further mention of said Betty Jean Stone. A quit claim deed should be obtained from said Betty Jean Stone, if the intent was not to vest an interest in said Betty Jean Stone. The alternative is to obtain an oil and gas lease from Betty Jean Stone for half the interest shown above in Oliver F. Stone. **Note: WD, Book 159, Page 595 from Oliver F. Stone and Betty Jean Stone, hw to "Erling Olsons". For purposes of this report, have assumed the intent was to convey unto Erling Olson and Viola Olson. A correction deed should be obtained clarifying the grantee. i.e. A typical note should: 1. Set out the problem 2. Show assumptions made for purposes of the title report. 3. Set out the solution or recommendations to remedy the problem.

Example 2: 3rd party reservation

rd

Question of 3 party reservation (Supreme Court case #10339, Malloy vs Boettcher) At the time of the following deed, Marion Larson was the owner (Melgard had no interest)

2.

Marion Larson & Melgard Larson, w/h

-toFred Ferguson Does hereby grant to the grantee, all of the following lands, to-wit: TOWNSHIP 154 NORTH, RANGE 96 WEST, 5TH PM Section 9: W%NE:i4 Reservations: all oil, gas and other minerals in and under said land.

WARRANTY Dated: etc ...

DEED

xxxxxxxxxxxxxxxxxxxx THIS IMPLIES a 3

rd

party reservation to Melgard Larson.

The problem in the above deed is that the reservation was not reported properly by the title examiner. The Reservation actually reads: Excepting and Reserving unto Marion Larson all of her right, title and interest in and to all oil, gas and other minerals in and under and that may be produced from said described premises. Thus there is no 3rd party reservation since it specifically reserved to Marion. Without the specific reservation to Marion, Melgard, who is considered a 3 party to this deed, may very well have claimed a mineral interest. i.e. it is important to be specific in reporting the reservation language.
rd

Example

3: INTENT CLAUSE, needs to be complete

Mineral Deed, Marion Anderson owned 50% of the minerals MINERAL DEED Dated: etc ...

At the time of the following 3. Marion Anderson

-toFred Johnson Conveys an undivided half interest in the oil, gas, ... and other minerals in and under and that may be produced from the following described lands, to-wit: TOWNSHIP 154 NORTH, RANGE 96 WEST. 5 Section 9: NE:i4 ... containing 160 acres, more or less.
TH

PM

*Intent to convey an undivided 1/2 of all oil, gas and other minerals ... xxxxxxxxxxxxxxxx The way it is reported above implies that her full 1/2 interest was conveyed. The problem with the above intent clause is that the title examiner did not show the intent clause in its entirety. (it is not complete) INTENT CLAUSE actually reads: in and

Intent to convey an undivided 1/2 of all oil, gas and other minerals under the above lands of which I now own ... * This now becomes 112 of what she owns, being 1/4, rather than 1/2. i.e. it is important to be specific in the wording of the intent clause.

Example 4: INTENT CLAUSE overrides the Granting Clause

When Granting clause does not agree with Intent clause, Intent clause generally overrides granting clause. Where Marion owns all minerals and deed says nothing about the lot or lot sizes. Lets assume the Lots 1 and 2 contain only 30 acres each. i.e. the TRUE GROSS acreage of the tract is only 140* acres.

4.

Marion Anderson -toFred Johnson Conveys an undivided 1/2 interest in and to all of the oil, gas, ... and other minerals in and under and that may be produced from the following described lands, to-wit: TOWNSHIP 144 NORTH, RANGE 96 WEST, 5TH PM Section 1: NE% ... containing 160* acres, more or less Intent to convey an undivided 80 mineral acres.

MINERAL DEED Dated: etc ...

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The granting clause indicates 1/2 interest, being (1/2 of 140 or 70 MA) conveyed. The Intent clause would override the granting clause and therefore the deed would convey a full 80 MA of 140 acres. i.e. 80/140 Note: Must always consider the TRUE GROSS (140 acres in this case). Lot sizes should be obtained from the BLM 1 Government Survey, in order to obtain the true gross of the tract conveyed, and shown on cover sheet as follows: TOWNSHIP 144 NORTH, RANGE 96 WEST. 5 PM Section 1: NE% aka Lots 1(30.00), 2(30.00), S%NE%
TH

Example 5: INTENT CLAUSE overrides the Granting Clause

In this example, Ole Olson owned ALL minerals, except that in SE% Sec 10, a 5 acre tract had been previously deed to a School with no reservation, therefore Ole only owned 155 gross acres in said SE% Sec 10. and in said NW% Sec 11, Ole had previously sold a 15 acre tract with no reservation, therefore he only owned 145 gross acres in said NW% Sec 11 .

5.

Ole Olson -toPete Peterson Conveys an undivided 160/320 interest in and to all of the oil, gas, ... and other minerals in and under and that may be produced from the following described lands, to-wit: TOWNSHIP 144 NORTH. RANGE 96 WEST, 5TH PM Section 10: SE% Section 11: NW% ... containing 320 acres, more or less Intent to convey an undivided 160 mineral acres. xxxxxxxxxxxxxxxx Note: Must always consider the TRUE GROSS, in this case Ole only owned a total of 300 gross acres. Since he can not sell under lands he does not own, and with intent of 160 net acres conveyed, must take a proportionate share from lands under which he does own. Thus, rather than the granting clause, which implies 1/2 interest, must use the INTENT divided by the TRUE GROSS to arrive at the amount conveyed. i.e. Ole has conveyed 160/300 across lands which he owns. 160/300 0.5333334 is the decimal conveyed In SE-1O he owned 155 gross so: 0.5333334 * 155 = 82.6667 was conveyed In NW-11 he owned 140 gross so: 0.5333334 * 145 77.3334 was conveyed

MINERAL DEED Dated: etc ...

The alternative would have been to assume that since the intent was to convey 160, one would assume that 80 acres be taken from each quarter sec., however that is not how the intent reads. This example also illustrates the need to show all lands conveyed when an intent clause is used, as well as knowing how much is owned in all of the lands conveyed.

Example 6: INTENT CLAUSE overrides the Granting Clause

In this example, Ole Olson owned 1/2 of the minerals in NE% Sec 12 and in said SW% Sec 13, Ole Olson owned only 1/4 of the minerals

6.

Ole Olson

MINERAL DEED Dated: etc ...

-toPete Peterson Conveys an undivided 100/320 interest in and to all of the oil, gas, ... and other minerals in and under and that may be produced from the following described lands, to-wit: TOWNSHIP 144 NORTH, RANGE 96 WEST. 5TH PM Section 12: NE% Section 13: SW% ... containing 320 acres, more or less Intent to convey an undivided 100 mineral acres.

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Note: The conveyance of 100/320 0.3125 or 31.25%. Since Ole only owned 25% in said SW% Sec 13, he did not have sufficient interest to satisfy the intent clause on a proportionate basis. Therefore to satisfy the intent clause, one must take more than 100/320 from the said NE% Sec 12. i.e. Pete gets all Ole had in said SW% Sec 13, being 40 MA and the balance of the 100 MA, being 60 MA, coming from said NE% Sec 12 ... Leaving Ole with 20 MA left in said NE% Sec 12. This example also illustrates the need to show all lands conveyed when an intent clause is used, as well as knowing how much is owned in all of the lands conveyed.

Example 7: After Acquired Title

Warranty Deeds carry After Acquired Title, as long as the WARRANTY Clause is not stricken, Quit Claims generally do not, unless they contain words of GRANT AND WARRANTY. DEED A: In 1950, John Doe receives a WD from party A, which reserves all minerals to party A. DEED B: In 1960, John deeds the land to party B, with no reservation of minerals. DEED C: In 1970, John buys or inherits minerals from party A or other mineral owner. The After Acquired Title principal applies and the minerals acquired by John in DEED C would pass to party B, since he did not reserve the minerals in DEED B. THEREFORE, we need to show reservations in all deeds, whether the grantor owns minerals or not.

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NOTE on descriptions:

Always like Description throughout the MEMO shown as:

TOWNSHIP 144 NORTH, RANGE 96 WEST, 5TH PM Section 12: NE% Section 13: NW% EXCEPTION: To short cut descriptions on expires leases and other notations, the following format is acceptable: NE%-12; NW%-13-144-96

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ROYALTY -vs- MINERAL INTEREST

At times it may be difficult to determine whether a conveyance is of Royalty or Mineral interest.
A Mineral interest is usually conveyed with following language: Conveys a XXXX interest in oil, gas and other minerals in and under and that may be produced from: ... with right of ingress and egress to produce the same ...

A Royalty interest is usually conveyed with following language: Conveys a XXXX interest in oil and gas produced and saved from: (no ingress and egress)

Royalty conveyed can be hard at times to determine.

If there appears to be more than 12Y2% royalty conveyed, it begins to create a problem in the lease-ability of the property. Since the usual "Landowners Royalty" is based upon 12Y2%, anything beyond that amount starts to cut into the Leaseholders (oil company) interest. Royalty is usually conveyed by a Royalty Deed with the wording: For example: ... conveys 6%% royalty of oil and gas produced and saved from: (which is taken to mean 6%% of S/Sths and would be considered 1/2 of the usuaI12~% landowners royalty)

However, royalty is sometimes conveyed as "landowners royalty" which is based upon the usual 12~%. A typical deed may convey 50% of the landowners royalty, which would convert to 6v..% royalty, sometimes referred to as 6%% of 8/8ths. ROYALTY ACRES are also sometimes used to denote royalty interest. Royalty acres are also usually with respect to the usual 12Y2% landowners royalty. A typical % section containing 160 acres would contain 160 royalty acres. For example, SO royalty acres would be equivalent to 6v..% of S/Sths or 50% of the landowners royalty.

UNIFORM PROBATE CODE; N.DAKOTA Enacted in July 1975 Thru 1-1-1996

LAWS OF INTESTACY
Example 1: John dies with spouse and living issue (kids) Wife gets 1/2 Kids split other 1/2 If one of Johns kids (Peter) pre-deceased him, then Peters children split his share. (If Peter was married with no children, his wife qets nothinq) Example 2: Joe dies with no spouse or kids If parent or parents are living then goes to them If parents both dead then goes to his siblings in equal shares If one of his siblings (Mary) pre-deceases him then Marys children (if any) gets her share split equally (if Mary has a husband living, he gets none of her share)

NORTH DAKOTA LAWS OF INTESTACY

North Dakota is not a community property state. The rules of Intestate distribution in North Dakota vary, and the date of the decedent's death will determine which statutory distribution scheme governs. The intestate laws of distribution can briefly be described as follows:

Intestacy laws after January 1.1996: 1. No surviving children or parent of deceased - 100% to the surviving spouse. 2. No surviving children but a parent of the deceased survives - spouse received first $200,000, plus 75% of remaining estate. Surviving parent receives remaining 25% of estate. 3. There are surviving children, but all of the children are descendants of the surviving spouse - 100% to the surviving spouse. 4. If there are surviving children who are not descendants of both the decedent and the surviving spouse, then the Intestate rules become more complicated and the manner of distribution of the estate depends upon if there are children who are descendants of both, children who are only descendants of the surviving spouse, and children who are only descendants of the decedent. 5. If the deceased does not leave a surviving spouse - 100% of the estate to the surviving descendants, by representation.

Intestacy laws from July 1. 1975 to December 31,1995: 1. No surviving children or parent of deceased - 100% to the surviving spouse. 2. No surviving children but a parent of the deceased survives - Spouse received first $50,000, plus 50% of remaining estate. Surviving parent received remaining 50% of estate. 3. There are surviving children, but all of the children are descendants of the surviving spouse - First $50,000 to the surviving spouse, plus 50% of the remaining estate. Remaining 50% of the estate to the surviving children, by representation. 4. There are surviving children of the decedent, one or more who are not descendants of the surviving spouse - 50% to the surviving spouse and 50% to the descendants of the deceased, by representation.

Intestacy laws prior to July 1, 1975: North Dakota's intestacy laws were amended several times for periods prior to 1975. The landman or title examiner must determine the date of death and then consult the appropriate statutory scheme in effect as of the decedent's death.

MONTANA LAWS OF INTESTACY

Montana is not a community property state. The rules of Intestate distribution vary, dependent upon the date of decedent's death. A modified version of the Uniform Probate Code was first enacted effective July 1, 1975. They are the same as North Dakota effective as of July 1, 1993. Prior to July 1, 1993, Montana's intestacy laws were amended several times. The landman or title examiner must determine the date of death and then consult the appropriate statutory scheme in effect at that time.

Last Doc on Film in Wms is #533372 filed 8-24-90; then to computer

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Example of a spacing unit being broken due to a Unit formed.

There is a well in the SESW of Section 6-158-95 that is active and was spaced 320 at the time, Declaration of Pooling included the S:h of Section 6. The McGinnity 24-6 well in Section 6: SESW was completed on 2-12-82 and was spaced Section 6: S:h. On December 1,1997, the Temple South Winnipegosis Unit as created. The unit covered Section 6: SW, SWSE and lands in other sections. The McGinnity 24-6 well is currently producing from the Winnipegosis formation. As per Mark Bohrer of the NDBOG, the S:h spacing for the Winnipegosis formation of the McGinnity 24-6 well was no longer effective when the unit was formed. According to Chapter 402 of ND Century Code 38-08-09.8, lands outside of a unit created after 1983 can only be held for two years after the unit is formed. The base leases covered Section 6: SE% or Section 6: W:hSE%. The lands outside the unit, being Section 6: NW%SE%, E:hSE% are therefore no longer HBP.

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Trigonometry; Tangent, Cosine, Sin Functions Tan X = Opposite/Adjacent Cos X = AdjacentIHypotenuse Sin X = OppositeiHypotenuse

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For website information of producing or non-producing wells in North Dakota go to web site:
To find active wells: http://www.oilgas.nd.gov/findwells.asp To find state ownership: http://www.land.state.nd.us/ go to Mineral Management, and legal description. These and other ND Web sites can be accessed thru: Terra Server: http://www.esg.montana.edu/glltrs-data.html Corporate names and name change information: http://www .wy .blm .gov/corplist! www.discovernd.com

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