Current through Reg. 49, No. 38; September 20, 2024
For purposes of this rule only, the term "mineral interest"
means an interest in or under an oil, gas, or mining lease, fee, or title,
including real property from which the minerals have not been severed, or
contracts relating thereto. The offer and sale of a mineral interest, at an
auction, by the seller itself, or a registered dealer or agent acting on behalf
of the seller, is exempt from the securities registration requirements of the
Texas Securities Act, Section 7, if all of the following conditions are
met.
(1) Auctioneer. The auctioneer or
associate auctioneer through which the mineral interest is offered or sold must
be licensed as a dealer under the Texas Securities Act and licensed by the
Texas Department of Licensing and Regulation in accordance with Texas
Occupations Code, §
RSA
1802.001 et. seq.
(2) Seller.
(A) Intent. The seller did not acquire the
mineral interest with a view to resale, unless the seller was forced to acquire
the mineral interest in a package in order to obtain other properties in the
package.
(B) No fractionalization
of mineral interests.
(i) The seller has the
full right and authority to sell the mineral interest, and is selling 100% of
its mineral interest, except that retention by the seller of a royalty or
overriding royalty or the horizontal severance of the property is permissible
as indicated in clause (ii) of this subparagraph.
(ii) The seller must not be creating
undivided interests out of its mineral interest for the purpose of resale.
Where all the seller owns is a partial interest (such as a royalty, overriding
royalty, or undivided fractional working interest), this requirement is met if
the seller sells all of that interest. However, the seller shall not be
considered to be fractionalizing its interest in sales where the seller retains
only a royalty or overriding royalty, or where the seller horizontally severs
the property by retaining all of its existing rights in certain formations or
depths under the whole property.
(3) Not applicable to investment contracts.
The mineral interest offered or sold does not constitute an investment
contract.
(4) Purchaser.
(A) Knowledge and experience. The purchaser
or its representative is engaged in the business of exploring for or producing
oil or gas or other minerals as an ongoing business. By reason of this
knowledge and experience, the purchaser or its representative has evaluated the
merits and risks of the mineral interest to be purchased at auction and has
formed an opinion based solely upon his knowledge and experience and not upon
any statement, representation, or printed material provided or made by
auctioneer or seller. If a purchaser representative is used, such purchaser
representative:
(i) has no business
relationship with the seller;
(ii)
represents only the purchaser and not the seller; and
(iii) is compensated only by the
purchaser.
(B) Financial
ability. The purchaser has sufficient financial resources in order to bear the
risk of loss attendant to the purchase of the property.
(C) Suitability. In all sales to purchasers
in this state, the seller or any person acting on its behalf shall have
reasonable grounds to believe and after making reasonable inquiry shall believe
that the purchaser satisfies the requirements set forth in subparagraphs (A)
and (B) of this paragraph. This requirement could be met by obtaining a
document signed by the purchaser to the effect that the purchaser meets these
conditions.
(5) Auction.
For purposes of this rule only, auction shall mean the sale of the seller's
mineral interest by public outcry.
(6) Information not prohibited. The use of
statistical information in trade journals and data bases as well as auction
pamphlets concerning the mineral interests to be offered pursuant to this rule
is not prohibited.
