It is vital for landmen to know many aspects of real property law, including the Duhig rule. The Duhig rule was created to properly determine the distribution of mineral rights in cases where there could be ambiguity or disputes between interested parties.
A new landowner of minerals rights could be cheated out of their rightful ownership of mineral rights because of old contracts that the buyer may not even be aware of. If you are curious to know where the Duhig rule has come from and why it is relevant today, below, Adam Ferrari explains the Duhig rule’s importance.
Historical Examples of the Duhig Rule in Action
The Duhig rule first came from a Texas court case in 1940, in which W. J. Duhig was granted specific property through an estate reservation by the grantor of an undivided one-half interest in any mineral rights or minerals in and on the land. The heirs of Duhig supposedly claimed that the title that was passed to Miller-Link only concerned the surface estate and that the heirs still should have access to the one-half interest in the mineral rights reserved by the Duhig party.
The court decided that the undivided one-half interest will be bestowed on behalf of the Duhig party. Miller-Link properly acquired the title to the property, including the remaining one-half interest in mineral rights.
Another critical modern case study of the Duhig rule is Shedden v. Anadarko E&P (Pa. 2016), in which the Shedden’s claimed that Anadarko’s original payment for half-interest under the lease was an amendment to an 1894 lease that gave Ezra and Emma Baxter one-half of the oil and gas rights of all gas found on the property. This meant that Anadarko could not seize the other half of the interest, and Shedden was able to lease the one-half interest as he chose.
Why the Duhig Rule Matters
This is one of the more modern examples of the Duhig rule in use, and it is a clarifying example that shows the power of the rule held in court.
If a landman is going into a new deal on a piece of property, it is essential to know all the legal ramifications from the deed transfers that have brought the property to the ownership it possesses today. Look at recent history, and anyone can see precedence will surely bring favor to those who have their share of mineral rights protected by the Duhig rule.
As the oil and gas industry gets more competitive emerging from the pandemic it is imperative that landmen take caution in cases where the Duhig rule could lead to ownership disputes and add costs to the overall development.
Take the Duhig rule into consideration on any property lease that may have share stipulations built into the agreement.
About Adam Ferrari
Adam Ferrari is the founder of the mineral acquisitions company Ferrari Energy. He is a chemical engineer by degree and is an accomplished petroleum engineer by profession. He also has experience in the financial sector through his work at an investment banking firm. Under his leadership, his company has supported numerous charitable organizations, including St. Jude Children’s Hospital, Freedom Service Dogs, Denver Rescue Mission, Coats for Colorado, and Next Steps of Chicago.