Wenske v Ealy

Wenske v Ealy, 13th Court of Appeals, Corpus Christi-Edinburg, January 28, 2016 Tex. App. LEXIS 836

A non-participation royalty interest is an interest in gross production and must be borne by the entire mineral estate.

A 1/4 non-participating royalty interest (NPRI) was reserved in a 1988 deed to Wenske. Wenske conveyed the property in 2003 and reserved 3/8ths of the minerals, thus conveying 5/8ths to the Ealys. Wenske claimed that the Ealys were to bear the entire burden of the NPRI. The 2003 deed made the conveyance subject “to several Reservations and Exceptions to Conveyance and Warranty for all purposes.” One Exception to the 2003 deed was the NPRI.

The court stated that an NPRI is an interest in the gross production of oil, gas and other minerals carved out of the mineral fee estate as a free royalty, which does not carry with it the right to participate in the execution of, the bonus payable for or delay rentals to accrue under an oil and gas lease executed by the owner of the minerals. Since the NPRI is carved out of the entire mineral estate, each of the mineral owners bears its proportionate share of this burden.