Helpful Terms & Definitions to Know When Dealing in Oil & Gas

Steve Smith Blog June 14, 2014 | 0

HELPFUL TERMS

Listed below are descriptions of different oil and gas deeds as well as definitions of estate and probate terminology commonly seen when transferring oil and gas royalties from estates:

OIL & GAS DEED TERMINOLOGY

JOINT TENANT DEED

Transfers undivided co-ownership to two or more people whereby, upon the death of the first owner, his share automatically transfers in equal shares to the remaining owner(s).

RETAINED LIFE ESTATE DEED

Grantor transfers to the grantee the ownership of the interests, but grantor retains the right to receive revenues generated from oil and gas production and lease bonuses as long as the grantor is alive. Once the grantor dies, the right to receive revenues reverts to the grantee. Commonly used when an owner wants to transfer his oil assets out of his estate but wants to continue to receive the revenues generated from the oil royalties during his lifetime.

MINERAL DEED

Transfers ownership of the royalty interest including the right to execute leases and receive bonus payments.

ROYALTY DEED

Transfers ownership of the royalty interest only and not the right to execute leases and receive bonus payments.

QUIT CLAIM DEED

Also called quitclaim deed, quickclaim deed and quick claim deed. Transfers any mineral, royalty or overriding royalty owned with no warranty of title.

ESTATE & PROBATE TERMINOLOGY

ADMINISTRATOR

The person named in decedent’s will to administer the estate who accepts the appointment by qualifying before the clerk. Also called executor, executrix or personal representative.

AFFIDAVIT OF HEIRSHIP

A statement of facts relating to the death and heirship of the decedent which is sworn to before a notary public. Usually executed by someone who knew the decedent but is not an heir to the estate.

ANCILLARY PROBATE

The additional probate required to legally transfer title when the oil royalties are not located in the same state as the decedent. For example, the decedent’s estate was probated in New York (the decedent’s state of residence) but the oil royalties are located in Oklahoma.

ATTORNEY IN FACT

A document authorizing one person (“agent”) to act on behalf of another person (“principal”). Also called “Power of Attorney.”

BENEFICIARY

Person receiving assets of an estate under the terms of the will.

CERTIFIED COPY

A copy of a document that is signed and certified as a true copy by the officer to whose custody the original is entrusted.

DECEDENT

Deceased person.

ESTATE

The decedent’s property at the time of his death.

EXECUTOR

The person named in decedent’s will to administer the estate who accepts the appointment by qualifying before the clerk. Also called executrix, administrator or personal representative.

EXECUTRIX

A female executor. Also called administrator or personal representative.

FIDUCIARY

A person in a position of trust with respect to another’s property. A term used to refer to the executor or administrator.

FINAL DECREE

A court ruling detailing the distribution of assets of an estate.

FOREIGN WILL

When the decedent owned an asset in one state but the decedent’s will was probated in another state (i.e. the decedent owned oil royalties in Texas but his will was probated in Florida).

HEIR

Person receiving assets of an estate under the terms of the will.

HEIRS AT LAW

Persons who would inherit the decedent’s estate if the decedent died intestate, or without a will.

INTESTATE ESTATE

An estate to be administered without a will.

INVENTORY

Detailed list of real and personal property in an estate.

LETTERS TESTAMENTARY

A written decree of the court whereby the executor is named.

PERSONAL REPRESENTATIVE

The person named in decedent’s will to administer the estate who accepts the appointment by qualifying before the clerk. Also called administrator or executor.

POWER OF ATTORNEY

A document authorizing one person (“agent”) to act on behalf of another person (“principal”). Also called “Attorney-in-Fact.”

PROBATE

The legal process in which a court oversees the distribution of property left in a will. The procedure whereby a will is admitted of record in the clerk’s office, including the process of qualifying a person as an executor of an estate and the process of administering an estate.

TESTATOR

One who dies leaving a will.

TESTATE ESTATE

An estate to be administered pursuant to a will.

WILL

An individual’s written declaration of property disposal after death.

COMMON ACRONYMS

Helpful Terms & Definitions to Know When Dealing in Oil & Gas