Garza v. Prolithic Energy Co., L.P.

Vicente Saenz and Inocencia de Saenz conveyed to J.B. Claypool one-half of the minerals on the Saenzes’ land. The conveyance was subject to an existing oil and gas lease that reserved a one-eighth royalty for the Saenzes, and stated that Claypool was entitled to one-half of the royalty. The conveyance also stated that Claypool would be entitled to a one-sixteenth part of all minerals under any future leases, as well as “the same out of the royalty provided for in such lease or leases.” The Saenzes also issued a mineral deed conveying a fifteen-thirty-seconds mineral interest to Homer Lee. This conveyance was also subject to the existing oil and gas lease. The Lee deed stated that Lee was entitled to fifteen-thirty-seconds of the royalty and rentals under the lease. Similar to the Claypool conveyance, the Lee deed also stated that Lee would be entitled to fifteen-thirty-seconds of one-eighth of all minerals under any future leases, as well as “the same out of the royalty provided for in such lease or leases.” The existing oil and gas lease terminated, and the Saenzes executed a new oil and gas lease that reserved a one-fifth royalty. Claypool and Lee claimed that they were entitled to one-half and fifteen-thirty-seconds, respectively, of the one-fifth royalty. The Saenzes claimed that the future-lease clauses reduced the interests of Claypool and Lee and that Claypool and Lee were entitled to only a fixed one-sixteenth and fifteen-thirty-seconds of one-eighth, respectively, of the one-fifth royalty. The trial court granted summary judgment to Claypool and Lee. The Saenzes appealed.