Face Challenges Confidently

033 Hydrocarbon Horizons, Inc. v. Pecos Development Corp.

Tuesday, September 1st, 2015

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of some significance to you.
In Hydrocarbons Horizons. Inc. v. Pecos Development Corp., 797 S.W.2d 265 (Tex. App.– Corpus Christi 1990), writ denied per curiam, 803 S.W.2d 266 (Tex. 1991 a consultant was suing to enforce a purported letter agreement under which the consultant was to receive an overriding royalty, if the company leased the consultant’s prospects. The description of the land used in the letter agreement referred to the land only as the Clayton Field Prospect in Live Oak County and the Cochran Prospect in Colorado County. The company contended that the description of the land was not sufficient under the Statute of Frauds. The Statute of Frauds requires that certain contracts to convey real property must be in writing, and the writing itself must contain all of the essential elements of the agreement.
The Court of Appeals held that the conveyance of an overriding royalty interest in future production from unleased land was not subject to the Statute of Frauds. The Texas Supreme Court reversed.
Most of the commonly created interests in minerals are construed as real property under Texas law. Any party expecting to receive such an interest as compensation must be able to point to a writing completely describing the interest to be acquired.