Oil is thicker than blood and water
Some of the most difficult title work in Pennsylvania involves intestate succession. When a person dies without a will, their property is distributed through statutory succession. Pennsylvania’s intestate succession statute has been amended several times over the years, with the most recent amendment coming in 2003. A person’s year of death and whether they died leaving a surviving spouse, children, and/or parents, are two important facts that will greatly affect who takes what and in what percentage.
Determining ownership of long ago severed oil, gas and mineral interests are often very challenging. Unlike its neighbor to the west (Ohio), Pennsylvania does not have a dormant mineral statute to facilitate the reuniting of severed mineral interests with the surface owner. In other words, if Farmer Brown conveyed 100 acres of farmland away in 1890 but reserved all of the oil, gas and other minerals underlying the farm (under Pennsylvania law it is a rebuttable presumption that a reservation of “minerals” does not include oil and gas), Farmer Brown’s great-great-grandchildren might own the oil and gas under the farm through generations of intestate succession.
Most likely, Farmer Brown did not die testate (with a will) when he died in the early 1900s. His homestead was likely transferred out of his estate to his heirs-at-law through a recorded deed or affidavit, but a conveyance that specifically described the severed oil and gas from the Estate of Farmer Brown to his heirs-at-law was probably not recorded in the Office of the Recorder of Deeds in the county where the 100-acre farm is located. Farmer Brown’s own children might not have even been aware that he owned the rights to the oil and gas under the 100 acres of farmland when he died. Fast forward several generations and it is even more unlikely that Farmer Brown’s great-great-grandchildren even have an inkling that they own a portion of the oil and gas reserved by Farmer Brown in 1890.
If the 100-acre farm is located in a the middle of a proposed unit, the E&P looking to lease the land might run into the time consuming (and expensive) task of tracking the intestate succession of the oil and gas rights reserved by Farmer Brown. While Pennsylvania does have the Oil and Gas Act to help facilitate the development of oil and gas reserves when not all interest holders can be located, “diligent efforts” to ascertain ownership must first be exercised. It is imperative that a seasoned title examiner know the relevant intestate succession statutes for each time period and be able to follow complex family chains to arrive at the true ownership. The title examiner will have to comb through family trees and page through dusty probate records in court houses (yes, plural!) to determine if Farmer Brown’s heirs died testate or intestate while paying close attention to the dates they died.Often, the real fun begins after the title examiner concludes who the owners of the severed oil and gas interest are and the E&Ps approach these owners to lease. These individuals might be located in different states and unaware they are related (or that they even had a great-great-grandfather Farmer Brown)! These distant relatives may be totally unaware that they own a potentially valuable interest in the oil and gas underlying the 100-acre farm. Some owners may refuse to sign the lease while others may attempt to purchase out other family members’ interests. Some families might be able to work through differences and come to an agreement as to their rights, but when large bonus payments and royalty checks come into the picture, “blood may be thicker than water, but oil is thicker than both of ‘em.”