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Recently, Ohio House Bill No. 100 was introduced which would amend the language of Ohio’s Dormant Mineral Act (DMA).  The bill makes several changes to the DMA, at least one of which would have far-reaching impacts on Ohio landowners and oil and gas producers.

  1. The bill eliminates the “deemed abandoned” language of the DMA which caused so much uncertainty before finally being decided in Corban v. Chesapeake and replaced it was with clear language of extinguishment.
  2. The bill specifically defines “public record” so as to clarify the due diligence which is necessary when conducting a search of heirship to determine which parties must be given notice of an affidavit of abandonment.
  3. Finally, and most significantly, the bill states that a claim to preserve is only effective as to the rights of the person filing it. For example, consider a situation where a landowner owns a parcel, but discovers there's an ancient mineral severance. Presently, if a surface owner files an affidavit of abandonment and sends or publishes notice, if even one of 1,000 heirs files a claim to preserve, 100 percent of that severance is preserved to all 1,000 heirs. Then the exploration & production company (E&P) is left having to try to track down and lease with as many of those heirs as they can find, at great expense to identify who those persons are. If the introduced language were enacted, and only one heir files a claim to preserve, then only his proportional interest is preserved, not that of the other 999 heirs. The rest of the severed interest would be extinguished and vested in the surface owner. Thus, the E&P would know the identity of the only person with a separate mineral interest, and can fully lease the property with just two leases: the person who filed the claim and the surface owner. This bill would help ensure that Ohioans own the minerals beneath their land and reap the benefits of bonus payments and royalties, would represent an enormous savings to E&Ps on their costly heirship searches, would helping E&Ps reach their unitization requirements for leasing, and allow them to maximize their profits by leasing higher proportions of mineral owners.

It is difficult to imagine the downside of this amendment for anyone other than unknown, distant relatives of ancient mineral severances that have long since been abandoned.  On the other hand, it would reap tremendous benefits for current Ohio landowners and E&Ps operating in the state.

 

 

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