Before Sept. 1, the Texas Legislature had never imposed a duty on oil and gas operators to their overriding royalty interest owners when releasing their leases. In several decisions, Texas courts resisted placing a greater fiduciary duty on operators to their override owners. Thus, operators could “wash out” an override by releasing a lease and then leasing the same minerals without the overriding interest burden.

Override holders had to rely on contractual arrangements such as anti-washout clauses to keep from losing their interest. But in 2020, in Yowell v. Granite Operating Co., the Texas Supreme Court examined anti-washout language purporting to extend an override to any extension, renewal or new lease executed by the operator or its successors and warned such language could violate the rule against perpetuities.

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