It is not uncommon to encounter a situation where a mineral owner owns all the mineral estate in a tract of land, but the royalty interest in that tract has been divided and conveyed to a number of parties; i.e., the royalty ownership is not common in the entire tract. If a lease is granted by the mineral owner on the entire tract, and the lessee intends to develop the entire tract as a producing unit, the royalty owners may desire to enter into an agreement providing for all royalty owners in the tract to participate in production royalty, regardless of where the well is actually located on the tract. This form of agreement accomplishes this objective.
California Commingling and Entirety Agreement by Royalty Owners refers to a legal document that governs the rights and responsibilities of multiple royalty owners, where the ownership of royalties is not common or equal. In situations where a California oil or gas well produces oil or gas from distinct formations or layers owned by different royalty owners, commingling and entirety agreements ensure fair distribution and proper accounting of royalties. This agreement is crucial when different owners have separate and distinct rights to oil or gas production from a single well, where the formations within the well are layered and owned separately. By entering into a commingling and entirety agreement, royalty owners can effectively manage and optimize the extraction process, avoiding conflicts and disputes over the distribution of royalties. Under this agreement, royalty owners can lay out detailed guidelines and rules regarding the allocation, calculation, and distribution of royalties. The agreement clearly defines the respective ownership interests in the well and establishes a mechanism for commingling and distributing the produced oil or gas according to each owner's share. Different types of California Commingling and Entirety Agreement by Royalty Owners Where the Royalty Ownership Is Not Common can include: 1. Layered Formation Commingle Agreement: This type of agreement is applicable when separate royalty owners own distinct formations within the well, and they agree to commingle the production from these formations for efficient extraction and equitable sharing of royalties. 2. Split Estate Commingle Agreement: In cases where the surface landowner and the mineral rights' owner are different entities, this agreement allows both parties to agree on commingling the produced oil or gas from their respective ownership interests to ensure efficient production and royalty distribution. 3. Stacked Lateral Commingle Agreement: This agreement is relevant when multiple horizontal wells run parallel to each other, with different royalty owners having ownership rights in each well. It allows for the commingling and distribution of oil or gas production from these stacked wells. 4. Commingle Agreement with Production Sharing: In some cases, royalty owners may enter into an agreement where they not only commingle the production but also agree to share the costs and expenses associated with the extraction process. Overall, California Commingling and Entirety Agreement by Royalty Owners Where the Royalty Ownership Is Not Common plays a vital role in enabling efficient extraction, fair distribution, and smooth operation of oil and gas wells where multiple royalty owners have ownership interests in separate formations or layers.
