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Simple English definitions for legal terms
ownership-in-place theory
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A quick definition of ownership-in-place theory:
The ownership-in-place theory is a way of describing the rights of someone who owns land with oil and gas reserves in many states. It means that the owner has the right to use the land to search for and produce oil and gas, and also has the right to possess the oil and gas that is still in the ground. However, if the oil and gas flows out from under the owner's land, their ownership of it ends. This theory is used in states like Texas, New Mexico, Kansas, and Mississippi. In other states, like California, Wyoming, Louisiana, and Oklahoma, a different theory is used called the nonownership theory, which means that the owner of the land only has the right to search for and produce oil and gas, but not to possess it until it is removed from the ground.
A more thorough explanation:
Definition: Ownership-in-place theory is a concept used in the oil and gas industry that states the owner of a property has the right to possess the oil and gas in place, as well as the right to use the land surface to search, develop, and produce from the property. However, the owner's interest in the minerals ends if the oil and gas flows out from under the owner's land. This theory is used in several major producing states, including Texas, New Mexico, Kansas, and Mississippi.
Let's say John owns a piece of land in Texas that has oil and gas reserves underneath it. According to the ownership-in-place theory, John has the right to possess the oil and gas in place and use the land surface to extract it. However, if the oil and gas flows out from under John's land and into a neighboring property, John no longer has any claim to it.
Definition: Nonownership theory is a concept used in the oil and gas industry that states the owner of a severed mineral interest does not have a present right to possess the oil and gas in place, but only to search for, develop, and produce it. This theory is used in several states, including California, Wyoming, Louisiana, and Oklahoma.
Let's say Jane owns a severed mineral interest in a piece of land in California that has oil and gas reserves underneath it. According to the nonownership theory, Jane does not have the right to possess the oil and gas in place, but only to search for, develop, and produce it. This means that Jane's interest in the oil and gas is similar to a profit a prendre, which is a right to use the land and remove items of value from it.