Does the Texas Form Title Opinion Work in Oklahoma? - The Good, the Bad and the Ugly

I would observe that our counterparts in Oklahoma and the Rockies were more easily able to accommodate their existing title opinion formats to the shale revolution because unlike Texas, they practice in states where the forced pooling regime is better equipped to handle multiple tract development. — Paul Yale, Houston oil and gas attorney

Texas Title Opinions, Oklahoma Soil: When One Size Doesn’t Fit All:

Imagine a document, born in the vast landscapes of Texas, shaping the very bedrock of oil & gas law across state lines. This document is the Texas form title opinion, a blueprint that has influenced title practices far beyond its borders, including right here in Oklahoma. A decade ago, I read an insightful piece by Houston lawyer Paul Yale, which dissected the specifics of how these title opinions are structured.[1] While the Texas model offers undeniable benefits, it is clear it does not fit perfectly within Oklahoma’s unique legal and operational landscape.

Over the years, I have observed a curious trend: the widespread use of this Texas-style in places like Colorado, North Dakota, and crucially, Oklahoma. This adaptation is largely driven by the significant influence of Texas-based or affiliated law firms branching out into other states. However, this one-size-fits-all approach raises questions: How does it align with Oklahoma’s specific needs, particularly in the structuring of ownership tables?

In this article, we will explore the challenges of adapting a Texas-style title opinion to Oklahoma’s oil and gas industry. We will contrast the Texan approach with Oklahoma’s practices, highlighting how state laws like forced pooling, gas marketing and the difficulties of managing numerous tracts affect title opinion formatting. From the depth of detail in ownership tables to handling historical fractions and lease burdens, we will dissect why a ‘Texas fit’ might not be the ‘Oklahoma fit’ and what makes Oklahoma’s approach uniquely tailored to its regulatory environment and operational differences.

?The Good:?

The Paul Yale article stands out for its genuine effort to tackle the inconsistency in the format and structure of oil and gas title opinions. The piece pushes for a collaborative spirit among legal professionals to potentially establish a model form title opinion, acknowledging that while tradition or competitive concerns might resist such changes, the gains in efficiency and clarity for clients could be substantial.

The Texas Form Title Opinion, as highlighted in his article, seeks to bring about uniformity, consistency, clarity, efficiency, and an enhanced client experience. It aims to minimize errors, facilitate easier review processes, and improve overall client service in an industry that is only growing in complexity. The approach of the Texas-style largely meets these objectives, offering a blueprint for how title opinions can be managed with greater effectiveness.

However, for Oklahoma, there is a clear need to adapt this model. While the Texas model provides a solid foundation, Oklahoma’s unique legal landscape, particularly with aspects like robust forced pooling and multi-tract drilling and spacing units, requires modifications to the ownership tables to align with state laws and practices. This customization is required to ensure that the model fits the needs of Oklahoma’s oil and gas industry.

The Bad:? Net acres Underappreciated as a Universal “constant” in Multi-tract Unit Development [2]

When comparing Texas and Oklahoma style title opinions one of the most notable differences is how net acres are treated in ownership tables. The inclusion of net acres in Oklahoma title opinions is not just a formality but a necessity driven by the state’s unique oil and gas development practices.

To illustrate, if you own a 10% mineral interest, or leasehold interest, in a 40-acre tract, you have 4 net acres. This figure of net acres remains constant; it does not change whether your tract is part of a 40-acre unit, an 80-acre lay-down spacing unit, a 640-acre gas unit, or even a 1,280-acre horizontal well unit. Your ownership percentage might fluctuate with the size of the tract or unit, but your net acres stay the same, simplifying calculations and ownership tracking.?

Oklahoma title opinions typically highlight net acres prominently in the ownership tables, often extending to six decimal places (e.g., 3.333333 net acres), which facilitates more precise ownership percentage or decimal revenue interest calculations (e.g., 3.33/160 = 2.081250% vs. 3.333333/160 = 2.083333%). This constancy is particularly crucial in Oklahoma due to the use of net acres to pay lease and pooling bonuses, royalty payments, and unit share calculation.

In contrast, I have noticed that Texas title opinions have historically placed less emphasis on net acres (or not included at all) perhaps due to a focus on larger, single-tract developments or smaller units, coupled with less reliance on the stringent pooling and spacing rules prevalent in Oklahoma.[3] However, the industry’s evolution towards horizontal drilling across multiple tracts has begun to blur these lines. With units now often sprawling over several sections and involving numerous owners, the operational landscape for title examiners, landmen, and division order analysts has significantly expanded. In this regard, Paul Yale’s statement on the “net acres” issue is illuminating:

I would further observe that to a certain extent the “net acres” debate is a Texas-centric discussion. Oklahoma title opinions and Rocky Mountain title opinions are much more apt to include net acres. For that matter, and at some risk of criticism from my Texas peers, I would observe that our counterparts in Oklahoma and the Rockies were more easily able to accommodate their existing title opinion formats to the shale revolution because unlike Texas, they practice in states where the forced pooling regime is better equipped to handle multiple tract development.[4]

?The Ugly:

?1. The Use of Historical Fractions, String Formulas and the “Two column” Method

You want to know what is really ugly? The use of historical fractions and long string formulas in ownership tables. For example, Table 1 below, shows a string formula placed under the owner’s name:

Let us talk frankly about something interesting but a bit tricky: historical fractions in title opinions. Now, when I say, “historical fractions,” I am talking about how we trace back the ownership of a tract of land or an oil & gas lease through time. Some title opinions contain lengthy string formulas (positioned under the owner’s name) that tell the story as to how title evolved—with each element representing a different title transaction. For example, Little Red Oil, LLC owns all the leasehold and working interest in a 160-acre tract of land: its interest can be shown by string formula as (10%*1/2) + 1/4 + 1/3 + 11/30; or it could also be represented as just “100%”— which would negate the history.

?The benefit of historical formulas is they provide a clear, traceable path from some base point in ownership down to current interests. This transparency allows clients to verify the examiner’s calculations, ensuring trust and accuracy in ownership determination. By showing each step in the ownership chain, the formula acts as a roadmap, making it possible to check back against records or run sheets if needed.

But here is the thing - this traditional way of showing fractions works great for simple, single-tract units where the history is straightforward. However, when we are dealing with large, multi-tract units, these historical formulas start to look like a tangled web of spaghetti-math. You see, in these complex setups, ownership is not just split once or twice; it is split multiple times, across numerous tracts, with various events like deeds, probates, assignments of oil & gas leases and assignments of overriding royalty interests, affecting the title over time.

The “Two Column” Method: In addition to the string formula, Table 1 also uses two columns: a Working Interest column and a decimal revenue interest column, defined as Net Revenue Interest.? An argument I hear from Texas practitioners is: “the string formula under the owner’s name is absolutely necessary because we have to show our work; the division order analyst has to be able verify the examiner’s calculations.” Yes! Of course, and the reason for having to include the string formula to begin with is precisely because Table 1 is missing a very critical “constant”/element in the equation: the actual lease net revenue interest; without which, it is impossible to verify the calculation in the “Net Revenue Interest” column of Table 1.? Fortunately for the division order analyst, the string formula under the owner’s name includes this most important mathematical constant. A very simple solution, however, is to add a third column to Table 1—providing for the actual lease net revenue interest—and thereby completing the equation for a simple calculation and verification of the decimal revenue interest (i.e., WI x lease NRI = the decimal revenue interest).????????

We will discuss the “third column” method in a moment; but first let use conclude this section of the article by observing that using the old-school string-formula “two column” method can:

?·??????? Confuse rather than clarify: With each tract potentially having its own chain of title transfers, the formula can become unreadable and ineffective for showing ownership clearly.

?·??????? Be inefficient: When historical fractions and string formulas are included, they often need to be formatted from an Excel spreadsheet or similar into a text-based format that is more “readable” in a title opinion. This process of recasting the formula from “2/3*3/4*(7/8-5%)*60/80+1/4*5/6*60/80” to something more like “2/3 of 3/4 of (7/8 less 5%) of 60/80 plus 1/4 of (5/6) of 60/80” requires additional time and effort (and creates additional “failure points” for the examining attorney.) This can significantly extend the time spent on each opinion, which directly translates to higher costs for the client.

?·??????? Miss the forest for the trees: Sometimes, what clients need is a simplified view of ownership rather than a detailed history, especially when they are managing multiple tract units.

So, while the historical fraction method has its place in showing how ownership has evolved, in large, multi-tract units, it is often better to adapt. We might use a “root” fraction approach, where we start from a more recent, stable point of ownership, or we might simplify the fractions to make them more digestible. This does not mean we ignore issues of transparency, traceability and verification; it just means we present it in a way that is more practical for today’s complex title scenarios. One such method, employed by many Oklahoma practitioners, is to break up complex ownership into more manageable “bite-sized” interests based on grouping interests according to oil and gas lease burdens (i.e., common royalty and overriding royalty burdens).? By way of example, the ownership Table 1, shown above, could also be presented as follows:

In summary, while historical fractions can provide transparency and a detailed account of title evolution, the practicalities of time, cost, and client utility often argue against their inclusion in large multi-tract units unless they directly serve the client’s specific needs or requests. The focus should be on delivering actionable, clear information that aligns with the client’s objectives, rather than an exhaustive historical lesson unless it adds significant value.

?2. The NRI/Decimal Interest Distinction and the “Three column” Method

Remember how we talked about net acres being a universal constant in multi-tract unit development? Well, another equally important universal constant is the lease net revenue interest.? The use of nomenclature in title opinions can be confusing, however. Typically, in my experience, Oklahoma division order title opinions use Working Interest (WI), Net Revenue Interest (NRI) and Decimal interest (Decimal)[5] in the ownership tables.

The NRI is the non-proportionately reduced lease revenue interest attached to the WI (e.g. an 81.25% NRI lease would typically have a corresponding 3/16 royalty).? While the Decimal interest is just the NRI, proportionately reduced down to the tract or unit size. However, NRI and Decimal interest are sometimes used interchangeably in title opinions.

For example, the Table 1 column for NRI is in fact the proportionally reduced NRI (under the above definition), which is in turn represented as the Decimal column in Table 2.? Consequently, in our “three column” scenario the “string-formula” is baked into ownership Table 2 (i.e., the WI x the NRI = the Decimal). This set-up, more or less, corresponds to the string formula used in Table 1 under the owner’s name. As such, the inclusion of string formulas in Table 2 is considered a redundancy by many practitioners—and would be omitted entirely.?

Furthermore, the “two column” method in Table 1 of using only the WI column and the decimal interest (but is called NRI) column without giving a true lease (or lease group) NRI can be problematic for some clients. Increasingly, division order title opinions are used for more than just disbursing revenue. In fact, the use of the term “Drilling & Division Order Title Opinion” is reflective of the emerging dual use title opinion. For example, the WI (frequently not included in older Texas division order title opinions), is used by clients for accounting and joint interest billing purposes. Also, the use of a true lease NRI column can be a very convenient way for a land department or owner to quickly verify ownership percentages.?

If you recall our discussion about net acres, we used the example of an owner with 4 net acres being a “constant” number.? Likewise, an owner of 4 net acres with an 80% lease NRI is also a constant number; and that too remains unchanged regardless of whether you are dealing with a 40-acre unit or a sprawling 1,280-acre horizontal well unit.

The variables, however, in this scenario are your Working Interest (WI) or ownership percentage in the tract or unit, and the Decimal interest which can be calculated from these constants. Your WI and Decimal interest can vary; they might be higher or lower based on how the tract or unit is configured or expanded. This aspect of ownership is fluid, adjusting with the scale or the pooling of the land, but the foundational elements - your net acres and lease NRI - provide a stable base for all calculations and ownership considerations in the industry.[6]

?3. Marketable Title and Payment of Interest on Suspended Proceeds

Earlier in the article, we discussed simplifying complex ownership into more digestible “bite-sized” interests by categorizing them according to oil and gas lease burdens like common royalty and overriding royalty. This approach is not merely a workaround to steer clear of complex string formulas. There are crucially important reasons for structuring ownership this way, primarily driven by Oklahoma’s legal framework, specifically the PRSA (52 O.S. § 570.1 et. seq.), known as the Production Revenue Standards Act, and the NGMSA (52 O.S. § 581.1 et. seq.), or Natural Gas Market Sharing Act. These Oklahoma statutes significantly influence how title opinions are formatted to ensure compliance and clarity in the distribution of production revenues and natural gas market shares.

In Oklahoma, operators are legally obligated to pay interest on suspended production proceeds, with rates set at 12% for marketable title and 6% for unmarketable title.[7] Following the SUNOCO[8] decision, this payment of interest is mandatory, not discretionary. Moreover, in cases where part of an ownership interest is marketable while another part is unmarketable, Oklahoma law demands that operators pay interest on the marketable portion.[9] Operators cannot suspend payments on the entire interest merely because some part faces a title issue.[10] Therefore, to exercise caution and adhere to the operator’s duty to pay interest, title opinions in Oklahoma should—where practical—segment ownership according to specific title requirements. This approach distinctly separates marketable from unmarketable portions within the ownership schedules as shown in Table 2.

In contrast, the Texas division order law does not necessitate such detailed separation because Texas requires all owners to sign indemnifying division orders.[11] This requirement reduces the operator’s liability regarding interest payments on suspended royalties, as reflected in the Table 1 form which does not differentiate between marketable and unmarketable segmented interests. This distinction highlights a significant difference in how title opinions are structured and managed between Oklahoma and Texas and reinforces the need for tailored approaches to comply with state requirements and protect both the operator and the interest owners.

?4. The Proportionate Production Interest (PPI)

Senate Bill 168, enacted in 1992, significantly re-shaped the title opinion landscape by introducing the Production Revenue Standards Act (PRSA) and the Natural Gas Market Sharing Act (NGMSA). The NGMSA allows for split-stream gas sales, ensuring that operators make the gas market accessible to all partners, by allowing them to market their share independently based upon their calculated Proportionate Production Interest (PPI).[12] This aids in achieving fair market value for gas royalties and reduces the monopoly power an operator might have over gas sales.?

On the other hand, the PRSA mandates that royalty payments be disbursed within six months of the sale of production, with interest accruing on late payments, ensuring prompt and fair compensation for royalty owners. It also clarifies that each owner can produce their share according to their PPI, with certain balancing restrictions to ensure equitable access to production.[13] This act aims to provide clarity and efficiency in royalty distribution amidst complex ownership structures.

Segmenting ownership in title opinions according to oil and gas lease burdens like common royalty and overriding royalty is crucial for accurately calculating the PPI in Oklahoma. The PPI is determined by adding the net revenue interest of a working interest owner to any additional subsequently created interests (such as overriding royalties) burdening that working interest, then dividing this sum by one minus the royalty share. This approach adjusts for the complexities introduced by different royalty and overriding royalty burdens, ensuring that each owner receives their rightful share of production.

The calculation method underlines the necessity to clearly delineate these interests because the presence of overriding royalties or other burdens can significantly alter how revenue is distributed among stakeholders. In practical terms, this segmentation ensures that the royalty owner’s share, as stipulated by their lease agreement, is not diminished by subsequent interests carved out from the working interest. Table 2 is formatted for this purpose, by among other things, linking the overriding royalty interests to the leases they burden as indicated in the "ORRI" column.

5. Sharing of Force-Pooled Acreage

Under Oklahoma law, as stated in Woolley v. Corporation Commission of Oklahoma, 2011 OK CIV APP 90, 261 P.3d 1181, operators are obligated to share pooled acreage with non-operators, even when those non-operators were inadvertently excluded from earlier pooling orders due to title recognition errors. The Woolley case underscores the necessity for clear identification of force-pooled acreage in title opinions, emphasizing that operators have a legal duty to offer each non-operator their proportionate share of such acreage.

?Oklahoma’s Title Terrain: Where Texas Templates Meet Local Law:

In conclusion, while the Texas Form Title Opinion offers a robust framework for standardizing oil and gas title practices, its direct application in Oklahoma presents significant challenges due to the state’s unique legal and operational landscape. The Texas model, with its emphasis on uniformity and simplicity, has undeniably positive attributes that have made it a popular choice across various jurisdictions. However, as Paul Yale insightfully notes:

In any event multi-tract opinions are becoming more and more the norm, even in Texas. The entire production sharing/allocation well debate in Texas is arguably driven because of weak forced pooling laws. I predict that over time Texas opinions will be looking more and more like Oklahoma and Rocky Mountain opinions as horizontal units get larger and allocation well drilling becomes more common.[14]

This observation underscores a trend where even Texas is moving towards practices that resemble those in Oklahoma, acknowledging the challenges of multi-tract units and the necessity for detailed ownership segmentation.

Oklahoma’s legal framework, with its strong emphasis on forced pooling, multi-tract development, and royalty owner protection, demands a tailored approach to title opinions. The state’s laws, like the Production Revenue Standards Act and the Natural Gas Market Sharing Act, along with the obligation to pay interest on suspended proceeds, require title opinions to be more detailed and segmented than the Texas model might allow for in its current form.

Thus, while Texas-style title opinions can serve as an excellent starting point, they must be significantly adapted to meet Oklahoma’s specific needs. This adaptation involves not just tweaking the format but fundamentally rethinking how ownership interests are formatted and presented to align with industry customs and practices as shaped by state laws. As the oil and gas sector evolves with larger, more intricate units, the interplay between Texas and Oklahoma’s methods may foster further integration. However, currently, Oklahoma exemplifies the need for localized strategies in title opinion formatting—demonstrating that a one-size-fits-all approach is not practical or effective in this context.

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Lance Walker, Copyright ? 2025

Bio: Lance Walker is an Oklahoma City-based oil and gas attorney with 25 years of experience, focused primarily on rendering title opinions. His practice spans both Texas and Oklahoma, where he has developed an understanding of the challenges of oil and gas law across state lines. Lance co-founded Walker Law, PLLC, with his wife Tina, focusing on oil & gas title examination and transactional work. He began his legal career in oil and gas title law while working with Cotton, Bledsoe, Tighe, and Dawson, P.C. in Midland, Texas, learning the art of crafting title opinions in the Permian Basin of west Texas and southeast New Mexico. Lance holds a Bachelor’s Degree with high honors in Political Science from the University of Florida and a Law Degree from the University of Oklahoma. He is admitted to practice law (at one time or another) in Oklahoma, Texas, New Mexico, North Dakota, and Arkansas. His article, “Does the Texas Form Title Opinion Work in Oklahoma? - The Good, the Bad and the Ugly,” reflects his commitment to clarifying legal practices across state lines for professionals in the oil and gas sector. Lance may be reached at: [email protected]

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[1] Oil and Gas Title Opinions: Structuring and Format, State Bar of Texas, OIL, GAS & MINERAL TITLE EXAMINATION COURSE, June 25-26, 2015, Houston, Chapter 17, presented by Paul Yale of Gray Reed & McGraw, P.C., Houston, Texas. ?

?[2] For purposes of this article, a mathematical constant is a specific number whose value does not change; it remains the same regardless of the context or the problem at hand. See, e.g., https://www.geeksforgeeks.org/constant-in-maths/

?[3] In the interest of full disclosure, as a young lawyer I worked at a well-respected Midland, Texas oil and gas law firm examining titles and rendering title opinions covering lands in west Texas and southeast New Mexico.

?[4] Yale, at p. 11.

?[5] Obviously not all Oklahoma practitioners use the term “Decimal.”? However, I chose to use the term for four (4) reasons:

????? 1.? The term “Decimal” distinguishes the interest from the lease “NRI;”

???? 2.? The WI and lease NRI are expressed as six-digit percentages, whereas the proportionally reduced net revenue interests are expressed as eight-digit decimals. This is also consistent with the view of Paul Yale, where is notes: “Working interests are traditionally expressed as percentages, whereas net revenue interests are almost invariably expressed as decimals.” Yale, at p. 19;

??? 3 The National Association of Division Order Analysis Model Form Division Order uses the phrase “decimal interest’’ in reference to production or proceeds (see, Division Order Model Blank Form 2017 v2; and,

??? 4.? The Oklahoma Production Revenue Standards Act requires that the “Owner’s interest, expressed as a decimal, in production from the property” be included on the payment check stub. 52 O.S. § 570.12 (7) (emphasis added).

?[6] Unlike the string formula method shown in Table 1, the “three column” approach in Table 2 does away with explicit math symbols like +, -, ×, and ÷, largely because of the limited space available on a sheet of paper. However, this does not mean the math is absent; rather, it is assumed that readers are savvy enough to understand that these mathematical operations are implied. Indeed, I have never had a client question how to calculate or verify the decimal interest from the data provided in the ownership tables—they implicitly understand the process.

?[7] See, 52 O.S. § 570.1 et. seq.

?[8] Cline v. Sunoco, Inc., 479 F. Supp. 3d 1148 (E.D. Okla. 2020) (holding that the industry-wide practice of withholding interest on late royalty payments until such interest is specifically requested by an owner is contrary to Oklahoma law requiring automatic interest for late payment of proceeds—resulting in a judgement against a first purchaser of $150 Million in actual and punitive damages.)

?[9] The Oklahoma Supreme Court in Hull v. Sun Ref. & Mktg. Co., 1989 OK 168, held that the only condition justifying the suspension of royalty payments is the existence of unmarketable title, not the execution of a division order. Therefore, lessors with marketable title are entitled to royalty payments without the necessity of signing a division order, and any custom or usage requiring such execution was deemed contrary to the public policy established by Oklahoma law.

?[10] Id.

?[11] Under Texas Division Order Law, specifically Tex. Nat. Res. Code § 91.402 (2023), the requirement for all owners to sign indemnifying division orders pertains to the following:

?Indemnity Provision: The division order must include an indemnity clause where the payee (owner) agrees to indemnify and hold the payor harmless from all liabilities resulting from payments made in accordance with the division of interest specified in the division order. This includes liabilities from legal actions like attorney fees or judgments related to the owner's interest.

?Operator's Liability: Regarding the operator's liability for interest payments on suspended royalties:

?The law allows the payor (operator) to withhold payments without interest if there is a dispute concerning title, doubt about the payee’s authority to sell the production, or if there’s a requirement in a title opinion that places in question the title, identity, or whereabouts of the payee;

?The payor is protected from common law breach of contract claims for withholding payments under these conditions unless specified otherwise in the contract; and

?If an owner refuses to sign a division order that contains only the provisions specified in the law (including the indemnity clause), the payor is authorized to withhold payment without interest until such a division order is signed.

?[12] See, 52 O.S. § 581.1 et. seq.

?[13] See, 52 O.S. § 570.1 et. seq.

?[14] Yale, at p. 11.