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~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% reservationapplies, since these are not original Grant Lands. After 2/20/41, any 100% reservations made on foreclosedlands were declared unconstitutional by decision 1/31/52 (Convis -vs- State of North Dakota)

Even if the particular conveyance from the State does not address minerals, the statute applies.

If in question 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 ofthe 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: DIG

Act of March 3,1909 (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 towithdraw from settlement, location, sale, or entry of certain public lands whereoil 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 (39 Stat. 864) 43 U.S.C.A. Sec. 299; Reserves ALL COAL and OTHER MINERALS.

Act of June 14.1926 (RESERVES ALL MINERALS)

ONE SHOULD ALWAYS reference the Statute in the Patent when shown in the Title Memorandum as follows:i.e.Reservations: D/CorReservations: D/C; Coal (1909 Stat.)... ete ...

To stress the importance of including the full (PRECISE) language in reservationsand/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 ...

1.

At the time of this conveyance Oliver F. Stone was the owner of the surface and 60/BOths of the minerals

WARRANTY DEEDOliver 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 PMSection 14: W'hSW%

Reservations: "Reserving to the grantors an undivided 6/8ths interest in and to allof the Oil, gas, and other minerals. It being the intention of the grantor's toreserve sixty mineral acres."

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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 andViola Olson. Correction deed should be done ...

3. Under the DUHIG rule, since Stone had conveyed 20 MA prior to this deed, hehad 60 MA left, under the DUHIG rule he would pass 20 MA to grantee and retain40MA himself. If he intended to reserve the full 60 MA, then he should have saideither of the following: .

A) Reserving all oil, gas and mineralsorB) 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 mustbe included in the portion reserved.

i.e. the reservation of 60 mineral acres must include the prior conveyances of20 MA, therefore Olson would receive 80 less 60 (being 20 MA), leaving Stonewith 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 BettyJean 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 appearsto create a 3rd party reservation in said Betty Jean Stone. Subsequently, Oliver F. Stoneappears to have married a certain Ethel Stone, with no further mention of said Betty JeanStone. A quit claim deed should be obtained from said Betty Jean Stone, if the intent was notto vest an interest in said Betty Jean Stone. The alternative is to obtain an oil and gas leasefrom 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 "ErlingOlsons". For purposes of this report, have assumed the intent was to convey unto Erling Olsonand Viola Olson. A correction deed should be obtained clarifying the grantee.

i.e. A typical note should:1. Set out the problem2. Show assumptions made for purposes of the title report.3. Set out the solution or recommendations to remedy the problem.

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

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Example 2: 3rd party reservation ?

Question of 3rd 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-to-Fred Ferguson

WARRANTY DEED

Dated:etc ...

Does hereby grant to the grantee, all of the following lands, to-wit:

TOWNSHIP 154 NORTH, RANGE 96 WEST, 5TH PMSection 9: W%NE:i4

Reservations: all oil, gas and other minerals in and under said land.

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THIS IMPLIES a 3rd party reservation to Melgard Larson.

The problem in the above deed is that the reservation was not reported properlyby the title examiner.

The Reservation actually reads:

Excepting and Reserving unto Marion Larson all of her right, title and interest inand to all oil, gas and other minerals in and under and that may be produced fromsaid 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 3rd partyto this deed, may very well have claimed a mineral interest.

i.e. it is important to be specific in reporting the reservation language.

Example 3: INTENT CLAUSE, needs to be complete

At the time of the following Mineral Deed, Marion Anderson owned 50% of the minerals

3. Marion Anderson-to-Fred Johnson

MINERAL DEED

Dated:etc ...

Conveys an undivided half interest in the oil, gas, ... and other minerals in andunder and that may be produced from the following described lands, to-wit:

TOWNSHIP 154 NORTH, RANGE 96 WEST. 5TH PMSection 9: NE:i4... containing 160 acres, more or less.

*Intent to convey an undivided 1/2 of all oil, gas and other minerals ...

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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 showthe intent clause in its entirety. (it is not complete)

INTENT CLAUSE actually reads:

Intent to convey an undivided 1/2 of all oil, gas and other minerals in andunder 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.

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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 containonly 30 acres each. i.e. the TRUE GROSS acreage of the tract is only 140* acres.

4. Marion Anderson-to-Fred Johnson

MINERAL DEED

Dated:etc ...

Conveys an undivided 1/2 interest in and to all of the oil, gas, ... and otherminerals in and under and that may be produced from the following describedlands, to-wit:

TOWNSHIP 144 NORTH, RANGE 96 WEST, 5TH PMSection 1: NE%

... containing 160* acres, more or less

Intent to convey an undivided 80 mineral acres.

xxxxxxxxxxxxxxxxThe 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 deedwould 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 1Government Survey, in order toobtain the true gross of the tract conveyed, and shown on cover sheet as follows:

TOWNSHIP 144 NORTH, RANGE 96 WEST. 5TH PMSection 1: NE% aka Lots 1(30.00), 2(30.00), S%NE%

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

5. Ole Olson-to-Pete Peterson


TOWNSHIP 144 NORTH. RANGE 96 WEST, 5TH PMSection 10: SE%Section 11: NW%

... containing 320 acres, more or less


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Note: Must always consider the TRUE GROSS, in this case Ole only owned atotal of 300 gross acres. Since he can not sell under lands he does not own, andwith intent of 160 net acres conveyed, must take a proportionate share from landsunder which he does own.

Thus, rather than the granting clause, which implies 1/2 interest, must use theINTENT 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 conveyedIn SE-1O he owned 155 gross so: 0.5333334 * 155 = 82.6667 was conveyedIn NW-11 he owned 140 gross so: 0.5333334 * 145 = 77.3334 was conveyed

The alternative would have been to assume that since the intent was toconvey 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 intentclause is used, as well as knowing how much is owned in all of the landsconveyed.

MINERAL DEED

Dated:etc ...

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

6. Ole Olson-to-Pete Peterson

MINERAL DEED

Dated:etc ...


TOWNSHIP 144 NORTH, RANGE 96 WEST. 5TH PMSection 12: NE%Section 13: SW%

... containing 320 acres, more or less


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Note: The conveyance of 100/320 = 0.3125 or 31.25%. Since Ole only owned25% in said SW% Sec 13, he did not have sufficient interest to satisfy the intentclause on a proportionate basis. Therefore to satisfy the intent clause, one musttake 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 ofthe 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 intentclause is used, as well as knowing how much is owned in all of the landsconveyed.

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 hedid 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 PMSection 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 theproperty. Since the usual "Landowners Royalty" is based upon 12Y2%, anything beyond that amount starts to cut intothe 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, sometimesreferred to as 6%% of 8/8ths.

ROYALTY ACRES are also sometimes used to denote royalty interest. Royalty acres are also usually with respect tothe usual 12Y2% landowners royalty. A typical % section containing 160 acres would contain 160 royalty acres.

For example, SOroyalty acres would be equivalent to 6v..% of S/Sths or 50% of the landowners royalty.

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UNIFORM PROBATE CODE; N.DAKOTAEnacted in July 1975 Thru 1-1-1996LAWS OF INTESTACY

Example 1:John dies with spouse and living issue (kids)Wife gets 1/2Kids split other 1/2If 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 kidsIf parent or parents are living then goes to themIf parents both dead then goes to his siblings in equal sharesIf 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 ofthe decedent's death will determine which statutory distribution scheme governs. The intestate laws of distribution canbriefly 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 remainingestate. 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 survivingspouse.

4. If there are surviving children who are not descendants of both the decedent and the surviving spouse, then theIntestate rules become more complicated and the manner of distribution of the estate depends upon if there are childrenwho are descendants of both, children who are only descendants of the surviving spouse, and children who are onlydescendants of the decedent.

5. If the deceased does not leave a surviving spouse - 100% of the estate to the surviving descendants, byrepresentation.

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 remainingestate. 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 thesurviving spouse, plus 50% of the remaining estate. Remaining 50% of the estate to the surviving children, byrepresentation.

4. There are surviving children of the decedent, one or more who are not descendants of the surviving spouse - 50% tothe 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 examinermust determine the date of death and then consult the appropriate statutory scheme in effect as of the decedent's death.

MONTANA LAWS OF INTESTACY

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Montana is not a community property state. The rules of Intestate distribution vary, dependent upon the date ofdecedent's death. A modified version of the Uniform Probate Code was first enacted effective July 1, 1975. They arethe 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 mustdetermine the date of death and then consult the appropriate statutory scheme in effect at that time.

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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 Poolingincluded 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 andlands 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 nolonger effective when the unit was formed. According to Chapter 402 of ND Century Code 38-08-09.8, lands outside of aunit 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.


Trigonometry; Tangent, Cosine, Sin Functions

Tan X = Opposite/AdjacentCos X = AdjacentIHypotenuseSin X = OppositeiHypotenuse


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: www.discovernd.com

Terra Server:http://www.esg.montana.edu/glltrs-data.html

Corporate names and name change information:http://www .wy .blm .gov/corplist!

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