Sec. 847. MINERAL LEASES AFTER PUBLIC NOTICE

(a) In this subpart:

(1) "Land" or "interest in land" includes minerals or any interest in any of the minerals in place.

(2) "Mineral development" includes exploration, by geophysical or by any other means, drilling, mining, developing, and operating, and producing and saving oil, other liquid hydrocarbons, gas (including all liquid hydrocarbons in the gaseous phase in the reservoir), gaseous elements, sulphur, metals, and all other minerals, solid or otherwise.

(3) "Property" includes land, minerals in place, whether solid, liquid, or gaseous, as well as an interest of any kind in the property, including royalty, owned by the estate.

(b) A guardian acting solely under an order of a court, may be authorized by the court in which the guardianship proceeding is pending to make, execute, and deliver leases, with or without unitization clauses or pooling provisions, that provide for the exploration for, and development and production of, oil, other liquid hydrocarbons, gas (including all liquid hydrocarbons in the gaseous phase), metals, and other solid minerals, and other minerals, or any of those minerals in place, belonging to the estate.

(c) All leases authorized by Subsection (b) of this section, with or without pooling provisions or unitization clauses, shall be made and entered into pursuant to and in conformity with Subsections (d)-(m) of this section.

(d) The guardian of the estate shall file a written application with the court seeking authority to lease property of the estate for mineral exploration and development, with or without pooling provisions or unitization clauses. The name of any proposed lessee or the terms, provisions, or form of any desired lease do not need to be set out or suggested in the application. The application shall:

(1) describe the property fully enough by reference to the amount of acreage, the survey name or number, abstract number, or other description that adequately identifies the property and its location in the county in which the property is located;

(2) specify the interest thought to be owned by the estate if less than the whole, but asking for authority to include all interest owned by the estate if that is the intention; and

(3) set out the reasons why the particular property of the estate should be leased.

(e) When an application to lease is filed, under this section, the county clerk shall immediately call the filing of the application to the attention of the court. The judge shall promptly make and enter a brief order designating the time and place for the hearing of the application. If the hearing does not take place at the time originally designated by the court or by timely order of continuance duly entered, the hearing shall be automatically continued without further notice to the same hour or time the following day, except Sundays and holidays on which the county courthouse is officially closed to business, and from day to day until the application is finally acted on and disposed of by order of the court. No notice of the automatic continuance shall be required.

(f) The guardian shall give written notice directed to all persons interested in the estate of the time designated by the judge for the hearing on the application to lease. The notice must be dated, state the date on which the application was filed, describe briefly the property sought to be leased, specify the fractional interest sought to be leased if less than the entire interest in the tract identified, and state the time and place designated by the judge for the hearing. Exclusive of the date of notice and of the date set for hearing, the guardian shall give at least 10 days' notice by publishing in one issue of a newspaper of general circulation in the county in which the proceeding is pending or by posting if there is no newspaper in the county. Posting under this section may be done at the guardian's instance. The date of notice when published shall be the date the newspaper bears.

(g) A court order authorizing any acts to be performed pursuant to the application is null and void in the absence of:

(1) a written order originally designating a time and place for hearing;

(2) a notice issued by the guardian of the estate in compliance with the order; and

(3) proof of publication or posting of the notice as required.

(h) At the time and place designated for the hearing, or at any time to which the hearing has been continued as provided by this section, the judge shall hear the application and require proof as to the necessity or advisability of leasing for mineral development the property described in the application and in the notice. If the judge is satisfied that the application is in due form, that notice has been duly given in the manner and for the time required by law, that the proof of necessity or advisability of leasing is sufficient, and that the application should be granted, the judge shall enter an order so finding and authorizing the making of one or more leases, with or without pooling provisions or unitization clauses (with or without cash consideration if deemed by the court to be in the best interest of the estate) that affects and covers the property or portions of the property described in the application. The order that authorizes the leasing must also set out the following mandatory contents:

(1) the name of the lessee;

(2) the actual cash consideration, if any, to be paid by the lessee;

(3) a finding that the guardian is exempt by law from giving bond if that is a fact, and if the guardian is required to give a bond, then a finding as to whether or not the guardian's general bond on file is sufficient to protect the personal property on hand, inclusive of any cash bonus to be paid; but if the court finds the general bond is insufficient to meet these requirements, the order shall show the amount of increased or additional bond required to cover the deficiency;

(4) a complete exhibit copy, either written or printed, of each lease authorized to be made, either set out in, attached to, incorporated by reference in, or made a part of the order.

(i) An exhibit copy must show the name of the lessee, the date of the lease, an adequate description of the property being leased, the delay rental, if any, to be paid to defer commencement of operations, and all other terms and provisions authorized. If no date of the lease appears in the exhibit copy or in the court's order, then the date of the court's order is considered for all purposes as the date of the authorized lease. If the name and address of a depository bank for receiving rental is not shown in the exhibit copy, the name or address of the depository bank may be inserted or caused to be inserted in the lease by the estate's guardian at the time of its execution or at any other time agreeable to the lessee, his successors, or assigns.

(j) On the hearing of an application for authority to lease, if the court grants the authority to lease, the guardian of the estate is fully authorized to make, not later than the 30th day after the date of the judge's order, unless an extension is granted by the court on a sworn application showing good cause, the lease as evidenced by the true exhibit copies in accordance with the order. Unless the guardian is not required to give a general bond, a lease for which a cash consideration is required, though ordered, executed, and delivered, is not valid unless the order authorizing the lease actually makes a finding with respect to the general bond. If the general bond has been found insufficient, the lease is not valid until the bond has been increased or an additional bond given with the sureties required by law as required by the court order, has been approved by the judge, and has been filed with the clerk of the court in which the proceeding is pending. If two or more leases on different lands are authorized by the same order, the general bond shall be increased or additional bonds given to cover all. It is not necessary for the judge to make any order confirming the leases.

(k) Every lease when executed and delivered in compliance with the rules set out in this section shall be valid and binding on the property or interest owned by the estate and covered by the lease for the full duration of the term as provided in the lease and is subject only to its terms and conditions even though the primary term extends beyond the date when the estate is closed in accordance with law. In order for a lease to be valid and binding on the property or interest owned by the estate under this section, the authorized primary term in the lease may not exceed five years, subject to terms and provisions of the lease extending it beyond the primary term by paying production, by bona fide drilling or reworking operations, whether in or on the same or additional well or wells with no cessation of operations of more than 60 consecutive days before production has been restored or obtained, or by the provisions of the lease relating to a shut-in gas well.

(l) As to any existing valid mineral lease executed and delivered in compliance with this chapter before September 1, 1993, a provision of the lease continuing the lease in force after its five-year primary term by a shut-in gas well is validated, unless the validity of the provision is an issue in a lawsuit pending in this state on September 1, 1993.

(m) Any oil, gas, and mineral lease executed by a guardian under this chapter may be amended by an instrument that provides that a shut-in gas well on the land covered by the lease or on land pooled with all or some part of the land covered by the lease shall continue the lease in force after its five-year primary term. The instrument shall be executed by the guardian, with court approval, and on the terms and conditions as may be prescribed in the instrument.

Added by Acts 1993, 73rd Leg., ch. 957, Sec. 1, eff. Sept. 1, 1993.