Legal Memorandum: Meaning of "Out of Production" in LA

Issue: As used in La. Rev. Stat. 31:177, what is the meaning of the phrase ‘out of production’?

Area of Law: Environmental Law
Keywords: "Out of production"; Minerals lease; Consent of co-owners
Jurisdiction: Louisiana
Cited Cases: 509 So. 2d 1023; 202 La. 97; 165 So.2d 905
Cited Statutes: La. Rev. Stat. 31:177; La. Rev. Stat. § 31:164; La. Rev. Stat. § 31:175; La. Rev. Stat. 31:176; La. Rev. Stat. §§ 9:4882-9:4883; La. Rev. Stat. §§ 9:4871-9:4872; La. Rev. Stat. 9:4871
Date: 12/01/2013

Although used and in several articles within the Louisiana Mineral Code and frequently referenced in Louisiana court decisions, the phrase “out of production” is not well defined.  From the context of its usage in both, however, it appears that the phrase “out of production” relates to the source of a co-lessee’s contribution to the expenses of running a profitable well rather than establishing the method by which that contribution may be recovered.  That method is generally established elsewhere in the Mineral Code and Code of Civil Procedure.

As mentioned, the phrase “out of production,” or language of similar nature, is used in several articles of the Mineral Code, including, with emphasis:

La. Rev. Stat. § 31:164 (“A co-owner of land may create a mineral servitude out of his undivided interest in the land, and prescription commences from the date of its creation.  One who acquires a mineral servitude from a co-owner of land may not exercise his right without the consent of co-owners owning at least an undivided eighty percent interest in the land, provided that he has made every effort to contact such co-owners and, if contacted, has offered to contract with them on substantially the same basis that he has contracted with another co-owner.  A co-owner of the land who does not consent to the exercise of such rights has no liability for the costs of development and operations, except out of his share of production.”);

La. Rev. Stat. § 31:175 (“A co-owner of a mineral […]

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