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Hook ‘Em: University Lands

The State of Texas retained title to all vacant and unappropriated lands upon admission to the Union in 1845. Subsequently, the Texas Constitution of 1876 set aside 1 million acres of land for the benefit and glory of the University of Texas. The Texas Legislature enlarged this grant by an additional 1 million acres by Act in 1883. Such lands are dedicated to the Permanent University Fund (“University Lands”). In 1931 the Legislature reluctantly agreed to split all income from University Lands 2/3 to the University of Texas System and 1/3 to the Texas ATM System.

Section 66.41 of the Texas Education Code vests exclusive control and management of University Lands in the University of Texas System Board of Regents, including the right to sell, lease or otherwise manage and control the lands. The Board for Lease of University Lands, established by Texas Education Code Section 66.61, is the body that effectuates the power vested in the Board of Regents.

Rights to operate on University Lands are governed exclusively by the State’s oil and gas lease as well as other agreements with the State, including Development Unit Agreement(s). When conducting operations on University Lands you should be aware of and respect all terms and provisions of the following:

  1. Texas Education Code Section 66, et seq.
  1. The University of Texas System Board of Regents’ Rules and Regulations
  1. The Board for Lease of University Lands’ Rules and Regulations
  1. University Lands Oil & Gas Leases Required Operating, Reporting and Compliance Procedures
  1. University Lands Rate & Damage Schedule
  1. University Lands Field Manual of Required Operating Procedures for Oil and Gas Leases

The Board for Lease of University Lands meets irregularly “at times the Board finds necessary and appropriate,” but generally twice yearly in conjunction with lease sales. Board meeting agendas are published in the Texas Register on the Texas Secretary of State’s website. Note that the Board for Lease of University Lands is only required to give prior, written notice of a meeting to a Lessee if the Lessee’s interest is subject to forfeiture.[1] Thus, it is advisable to stay updated on the Board for Lease of University Lands’ meeting agendas as the Board may update or change rules that affect your operations on University Lands without prior, written notice.

The staff at University Lands can answer any questions you may have regarding operating on University Lands. I have found them to be wonderfully helpful and quite knowledgeable. I owe a special thanks to Buck Underwood, Landman at University Lands, for his recent help with surface access issues.

Word on the street is the rules and regulations governing University Lands are about to change substantially. Keep an eye on the Board for Lease of University Lands’ meeting agendas! Additionally, allocation wells are a hot topic right now as University Leases do not include pooling provisions and prior forms did not mention allocation wells. The custom on University Lands is for the Lessee to enter into Development Agreements that cover pooling/unitization. The current University Lands lease form expressly disallows allocation wells without prior, written consent.  The Legislature is sure to again take up allocation wells in the 2017 session, with University Lands likely seeking a carve out/exception. More to come!

University Lands can be found HERE.

Former Speaker Craddick’s HB 1552 re: allocation wells (left in Committee 2015 Legislative Session) can be found HERE.

[1] See Tex. Ed. Code Sec. 66.64(b)