Oil and Gas—Effect of Entirety Clauses on Grantees Taking under Deeds Subject to Lease

Often the owner of land places it under an oil lease and later conveys fee interests or mineral or royalty interests in segregated tracts from the leased area. When oil is subsequently produced on some, but not all of the leased area, problems may arise as to the royalty rights of the lessor and the grantees. Specifically, is the right of each grantee to royalties modified by the fact that his tract is part of a larger leased area? The problem will be considered in the absence and in the presence of the contractual device known as the entirety clause.

Various types of conveyances may give rise to this problem: conveyance of an interest in the fee; conveyance of an interest in the minerals under the land; or conveyance of an interest in royalties. Unless otherwise indicated, “conveyance” henceforth in this note will refer to conveyance of interest in the minerals.