Is a Working Interest in a Gas Lease Considered Real Estate for Purposes of a Deed?

Full question:

I own a working interest in oil leases in Kansas operated by a small drilling and operating company headquartered in Denver, Colorado. For purposes of a beneficiary deed or TOD deed, is this legally considered real estate?

• Category: Oil Gas and Minerals
• Date: 04/07/2025
• State: Colorado

Answer:

Pursuant to K.S.A. 60-601, the term "real property" includes any interest or estate created by an oil, gas, or mineral lease, or an oil, gas, or mineral royalty.

Please see the following Kansas statute:

60-601. Actions concerning real property.

The term real property, as used in this section, includes any interest or
estate created by an oil, gas or mineral lease, or an oil, gas or mineral
royalty. Actions concerning real property must be brought in the county
designated in this section.

(a) Eminent domain actions. Eminent domain actions must be brought in the
county in which the real estate is situated, except if it be an entire
tract situated in two or more counties and there is common ownership, the
action may be brought in any county in which a part thereof is situated.

(b) Generally. The following actions must be brought in the county in
which the real estate is situated, except if it be an entire tract situated
in two or more counties, or if it consists of separate tracts situated in
two or more counties, the action may be brought in any county in which any
tract or parts thereof is situated:

(1) Actions in ejectment or for the recovery of real property or any
estate or interest therein, or to determine adverse claims.

(2) Actions for the partition of real estate or any estate or interest
therein.

(3) Actions for the sale of real property or any estate or interest
therein, under a mortgage, lien or other encumbrance or charge.

(4) Actions to compel the specific performance of a contract for the sale
of real property, or any estate or interest therein. Such action may also
be brought in any county where the defendant or any one of the defendants
may reside.

(c) Transcript to other counties. Immediately after final judgment the
clerk of the district court in which the action was brought shall transmit
a transcript of the proceedings to the clerk of the district court in any
other county wherein any real property may be affected by such proceedings
where the same shall be docketed and filed. The cost of such transcript and
filing shall be taxed as costs of the case.

History: L. 1963, ch. 303, 60-601; L. 1970, ch. 237, § 1; July 1.

Typically, a deed has to be recorded for the mineral rights in the county and state where the mineral rights are located. In many areas the sale of mineral rights are recorded in the government record in a separate deed book or database than the sale of surface property. Therefore, the deed to the surface property might not mention mineral rights that have been sold away.

Please see the following KS case law for further discussion:

NELSON ENERGY PRO. v. OIL & GAS TECH., 36 Kan. App. 2d 462 (2006)
143 P.3d 50
NELSON ENERGY PROGRAMS, INC., Appellant, v. OIL & GAS
TECHNOLOGY FUND, INC., et al., Appellees.
No. 94,191.
Court of Appeals of Kansas.
Opinion filed August 25, 2006.

SYLLABUS BY THE COURT

1. APPEAL AND ERROR — Venue — Appellate Review. Although venue decisions
are typically reviewed for abuse of discretion, appellate review is
unlimited where the district court's decision is based on a forum
selection clause or where the issue is the district court's
interpretation of the venue statute and its application.

2. CONTRACTS — Stipulations and Prior Agreements Merge into Final Formal
Contract or Deed. It is a general rule of law applicable to all
contracts that prior stipulations and agreements are merged into the
final formal contract or the deed, and when a deed is delivered and
accepted as performance of a contract to convey property, the contract
is presumed to be merged into the deed.

3. REAL PROPERTY — Partition — Right of Partition by Cotenants. The right
of partition enjoyed by cotenants in Kansas is considered an incident
of common ownership and based on the equitable doctrine that it is
better to have the control of property in one person than in several
who may entertain divergent views with respect to proper control and
management.

4. SAME — Partition — Venue Is Jurisdictional and May Not Be Waived by
Parties. Kansas has long required that actions affecting real
property, including partition actions, take place in the county where
the real property is located. Venue in such actions may not be changed
by agreement because the venue provisions are jurisdictional, and
jurisdiction of the subject matter may not be waived by the parties.

5. CIVIL PROCEDURE — "Real Property" Construed as Applied to Venue
Statute. Pursuant to K.S.A. 60-601, the term "real property" includes
any interest or estate created by an oil, gas, or mineral lease, or an
oil, gas, or mineral royalty. Actions concerning real property must be
brought in the county in which the real estate is situated, including
actions for the partition of real estate or any estate or interest
therein.

6. REAL PROPERTY — Partition — Bifurcation of Issues Not Practicable.
Partition of property under K.S.A. 60-1003(c) is a single judicial
action that both determines the parties' interest and orders
partition. These functions are so inextricably linked that bifurcation
with part of the issues determined by a foreign state court and the
actual partition ordered by a Kansas court would be impractical,
cumbersome, and unreasonable.
Page 463

7. OIL AND GAS — Lease Subject to Partition under Facts of Case. Under
the facts of this case and from the well-pleaded facts of the
plaintiffs petition, ownership in an estate or interest created by an
oil, gas, or mineral lease has been sufficiently shown and is entitled
to partition under K.S.A. 60-1003, although the defendant may contend
and prove otherwise on remand.

8. SAME — Lease Subject to Partition under Facts of Case — Action Must Be
Brought in County Where Property Is Located Despite Contract Clause
Requiring Application of Another State's Laws. Under the facts of this
case and for the reasons more fully set forth in the opinion, despite a
forum selection clause stating the parties' agreement shall be governed
by Nevada law with venue for any action thereon being in Washoe
County, Nevada, an action to partition oil and gas leases located in
Chautauqua County, Kansas, which is the subject of the parties'
agreement must be brought and litigated in Chautauqua County, Kansas.

Appeal from Chautauqua District Court; RUSSELL D. CANADAY, judge.
Opinion filed August 25, 2006. Reversed and remanded.

John R. Horst, of John R. Horst, P.A., of Caney, and Gordon B. Stull,
of Stull & Rein, L.L.C., of Pratt, for appellant.

Jeffrey A. Chubb, of Scovel, Emert, Heasty & Chubb, of Independence,
for appellees.

Before BUSER, P.J., LARSON, S.J. and WAHL, S.J.

BUSER, J.:

This appeal presents for our consideration the proper forum for a
partition action wherein the plaintiff claims to own oil and gas leasehold
interests in Kansas derived from an investment agreement with a forum
selection clause providing for venue in Nevada. The district court
dismissed the action, concluding the forum selection clause was
enforceable and the plaintiff had no partitionable interest. We reverse
and remand for further proceedings, concluding the Kansas venue statute
and long-standing case law requiring local venue for actions affecting
real property may not be superseded by agreement and the allegations of
plaintiff's amended petition support a partitionable interest under Kansas
law.

Factual and Procedural Background

Nelson Energy Programs, Inc. (Nelson) entered into agreements with Oil
& Gas Technology Fund, Inc. (OGTF) to invest in a coalbed methane
redevelopment project involving the exploration and
Page 464
development of 5,200 acres in Chautauqua County, Kansas, covered by oil
and gas leases purportedly held by OGTF. The principal agreements between
the parties were each entitled "Natural Gas Sublease Agreement" and
provided in material part:

"Each of the lots and well locations therein are
offered to Lessee for exploration purposes on the
basis of Lessee investing 100% of the Working
Interests costs associated in the drilling and or
completion of each well listed . . . in return for
[Nelson] earning 75% of the Working Interest revenues
in each well, before payout and 50% of each well
following payout subject to all overriding royalties.
. . .

. . . .

". . . OGTF has agreed to convey and hereby does
grant, sell and convey to [Nelson] his undivided
percentage share in and only to the well bore located
within subject Lots and limited to the depths drilled
by the locations as set forth . . . and including each
successive exploratory or development well drilled and
completed pursuant to the terms set forth herein this
agreement."

The Sublease Agreements also contained the following provision:

"Application of Nevada Law. This agreement, and its
application or interpretation, shall be governed by
the laws of the United States of America and the State
of Nevada. Venue for any action arising hereunder
shall lie in Washoe County, Nevada."

Pursuant to the Sublease Agreements, Nelson invested $697,247 to be
utilized by OGTF to pay for 100% of the costs of drilling and completing
eight wells. Not all of the wells were drilled and completed, and for
this and other reasons not pertinent to this appeal, Nelson came to
believe that it had been defrauded in the transaction.

Nelson initially filed suit against OGTF and related parties in
Chautauqua County District Court, alleging fraud and securities
violations and seeking rescission, injunctive relief, and partition of
the leasehold interests. Prior to responsive pleadings being filed,
Nelson voluntarily dismissed the bulk of its original action and filed an
amended petition seeking only partition and an accounting. The amended
petition included the following allegations:

"[Nelson] is the owner of a working interest in all
of the oil and gas leases more particularly described
on Exhibit `A'. . . . [Nelson's] interests in the Oil
& Gas Leases may not include each and every one of
the Oil & Gas Leases but the exact
Page 465
nature of Plaintiff's ownership will not be known
until completion of discovery herein.

. . . .

"The Court should determine the names and ownership
amounts of each owner of an interest in the Oil and
Gas leaseholds.

"The Court should make partition of the working
interest of the Oil and Gas Leases, and equipment
owned in connection therewith, in accordance with the
interests of all of the owners thereof as determined
by the Court."

OGTF moved to dismiss the amended petition on the sole basis that the
forum selection clause in the Sublease Agreements required the action to
be dismissed for lack of jurisdiction and venue. The district court
granted the motion to dismiss, concluding in material part:

"The Court perceives that [Nelson] seeks to avoid
removal of the whole case to Washoe County, Nevada,
under the agreements' forum selection clauses by in
essence, asking the Court to bifurcate from the rest
of the conflicted issues at least the partition action
so it can proceed in Chautauqua County, Kansas, where
the affected acreage lies.

"This the Court declines to do.

"Doubtless [OGTF] has not performed as [Nelson]
expected pursuant to the signed agreements. Indeed it
appears from the Court's limited understanding of the
facts pled herein, [Nelson] very well may have been
swindled.

"But it is not clear to this Court that [Nelson] has
a partitionable interest in Chautauqua County, Kansas,
property.

"The Court sees no reason why that question, as well
as all other legal and factual questions [Nelson]
wishes to litigate should not be dealt with in the
forum and law selected by the parties in the
agreement."

Shortly after the dismissal, OGTF filed of record in the office of the
Register of Deeds of Chautauqua County, assignments purporting to convey
interests in and to the well bore of the completed wells on five of its
leases to Nelson and others. Although Nelson brought this fact to the
district court's attention by filing a motion for reconsideration and
attaching copies of the recorded assignments, the district court adhered
to its order of dismissal. Nelson appeals.

Standard of Review

Although venue decisions are typically reviewed for abuse of
discretion, Schmidt v. Shearer, 26 Kan. App. 2d 760, 765,
Page 466
995 P.2d 381 (1999), appellate review is unlimited here because the
district court's decision was based on a forum selection clause. See
Aylward v. Dar Ran Furniture Industries, Inc., 32 Kan. App. 2d 697,
698, 87 P.3d 341 (2004) (applying standard of review for interpretation
of written instruments to review of forum selection clause); K & V
Scientific Co., Inc. v. Bayerische Motoren Werke, 314 F.3d 494, 497 (10th
Cir. 2002) (applying standard for interpretation of contractual
provisions to review of forum selection clause). Appellate review is also
unlimited to the extent the issue is "the district court's interpretation
of the venue statute and its application." 5B Wright & Miller, Federal
Practice and Procedure: Civil § 1352 (2004); see Cooper v. Werholtz,
277 Kan. 250, 252, 83 P.3d 1212 (2004) (appellate review of statutory
interpretation is unlimited).

Dismissal Based Upon the Forum Selection Clause

1. Do Nelson's claims to partition arise from the Sublease Agreements?

We first consider Nelson's argument that its partition claim is
"independent of any conflict or dispute arising out of the agreements
between Nelson and OGTF." Although Nelson's claims may not have been
"independent" of the Sublease Agreements prior to the execution and
filing of record of five assignments, we agree that the execution and
filing of these assignments may distance Nelson's partition claims from
the forum selection clause in the Sublease Agreements under the doctrine
of merger.

It is a general rule of law applicable to all contracts that prior
stipulations and agreements are merged into the final formal contract or
the deed, and when a deed is delivered and accepted as performance of a
contract to convey property, the contract is presumed to be merged into
the deed. See Palmer v. The Land & Power Co., 172 Kan. 231, Syl. ¶ 2,
239 P.2d 960 (1952). Here, the obligations of OGTF pursuant to the
Sublease Agreements were finally performed when formal assignments were
executed, delivered, and recorded. The assignments conveying well bore
interests carved out of Kansas oil and gas leasehold interests contained
no forum selection clause.
Page 467

Nelson's action to partition its oil and gas leasehold interests under
the assignments did not arise under the Sublease Agreements; rather, it
arises by virtue of common ownership of its property interests in
Kansas. The right of partition enjoyed by cotenants in Kansas is
considered an incident of common ownership and based on the equitable
doctrine that it is better to have the control of property in one person
than in several who may entertain divergent views with respect to proper
control and management. See Miller v. Miller, 222 Kan. 317, 320,
564 P.2d 524 (1977).

Once OGTF's obligations under the Sublease Agreements were performed
through the conveyance to Nelson of property interests by formal
assignment, the covenants of the Sublease Agreements merged into those
assignments and Nelson's partition rights derived from common ownership
— not from contractual rights burdened by the forum selection clause. For
this reason alone, the district court erred in denying Nelson's motion
for reconsideration.

2. Kansas law regarding the venue of actions affecting realty.

Kansas has long required that actions affecting real property,
including partition actions, take place in the county where the real
property is located. K.S.A. 60-601; see Terr. L. 1858, ch. 11, sec. 45.
This rule was codified after statehood, G.S. 1868, ch. 80, sec. 46, and
in 1912 the Kansas Supreme Court explained the requirement as follows:

"So strict is this requirement that if a party seeks
to recover the possession of land and it consists of
separate tracts in two or more counties separate
actions must be brought in the counties where they are
situated. . . .

. . . .

"A party seeking to recover land can not compel
another claiming interest in or title to it to
litigate the title in any county except where the land
is situated. Under the statute the subject of the
action must be within the jurisdiction of the court,
and no judgment which it can render in one county,
determining title or right of possession, can affect
land in a distant county any more than such a judgment
could affect land in another state. A judgment
affecting title to realty can only operate on the res
that is within the jurisdiction of the court rendering
it. A party may rely on what is shown by the records
of the court having jurisdiction and may safely
purchase an interest without looking to the records in
courts in other counties or states. . . .

. . . .
Page 468

"As the code specifically provides that actions for
the recovery, partition, determination of an interest
or sale of real property must be brought in the county
where the real property is situated, . . . there can
be no jurisdiction of the subject matter of such an
action in any other county." Martin v. Battey,
87 Kan. 582, 588-90, 125 Pac. 88 (1912).

Martin shows the near equivalence under Kansas law of venue and subject
matter jurisdiction when the subject of the litigation is land. While in
many instances "[v]enue is not a jurisdictional matter but a procedural
one," this appears to be the rule only "where real property is only
incidentally affected and the action is transitory in nature." Shutts,
Executor v. Phillips Petroleum Co., 222 Kan. 527, Syl. ¶ 6, 567 P.2d 1292
(1977). Where the action regards land, it "must be brought in the county
in which the land is located," and such venue cannot be changed by
agreement because "the venue provisions . . . are jurisdictional, and
jurisdiction of the subject matter cannot be waived by the parties."
Raynolds v. Row, 184 Kan. 791, 795, 339 P.2d 358 (1959). An action
regards land "if the subject of inquiry is a right or interest in land,
and if the judgment in the case will operate directly upon this right or
interest, or will determine in any form any such right or interest, or
bar any defendant therefrom." 184 Kan. at 793.

Venue for claims arising from oil and gas leases, however, was
historically a distinct case. See, e.g., Connell v. Kanwa Oil Inc.,
161 Kan. 649, 653, 170 P.2d 631 (1946) (venue distinguished in such
instances because "an oil and gas lease conveys no interest in the land
therein described . . . and is personal property."). In 1953, the
legislature then amended G.S. 1949, 60-501 and other venue statutes to
include oil and gas leases as real property. See L. 1953, ch. 276, sec.
1. Before the amendment, G.S. 1949, 60-501 stated in part that actions
"[f]or the partition of real property" must be brought in the county
where the real property was situated, but after amendment the subsection
applied to actions "for the partition of real property or any estate or
interest created by an oil, gas or mineral lease or an oil or gas
royalty." (Emphasis added.) G.S. 1949, 60-501 (1961 Supp.). See Suits v.
Mobil Crude Purchasing Co., 182 Kan. 310, 314, 321 P.2d 167 (1958)
(action for determination and recovery of an interest created by an oil,
gas, or mineral
Page 469
lease must be situated in the county of the real estate covered by such
lease "[d]ue to legislative fiat").

These venue provisions were unchanged in the 1963 revision of the Code
of Civil Procedure and are now codified in material part in K.S.A. 60-601.
See L. 1963, ch. 303, sec. 60-601. The relevant portions of K.S.A. 60-601
are as follows:

"The term real property, as used in this section,
includes any interest or estate created by an oil, gas
or mineral lease, or an oil, gas or mineral royalty.
Actions concerning real property must be brought in the
county designated in this section.

. . . .

"(b) . . . The following actions must be brought in
the county in which the real estate is situated . . .

. . . .

(2) Actions for the partition of real estate or any
estate or interest therein." K.S.A. 60-601(b)(2).

Since 1953, our venue statutes have considered oil and gas lease-hold
interests as realty. We conclude that long-standing Kansas law dictates
that actions concerning real property, including oil and gas leasehold
interests, should be litigated in the county where the property is
situated.

3. Bifurcating claims for determination of interests from claims for
partition.

We next consider the conflict between Kansas venue law and the forum
selection clause in this case. OGTF concedes that "parties may not
contract to establish jurisdiction of a local county action in a foreign
state." It argues, however, that "[i]t has not been determined what
interest [Nelson] has in the oil and gas lease in question." OGTF would
have this initial question answered by the Nevada court pursuant to the
forum selection clause, thus bifurcating this issue from the partition
action.

We agree that a Nevada (foreign) court may not directly partition land
located in Kansas. See Hoppe v. Hoppe, 181 Kan. 428, Syl. ¶ 4,
312 P.2d 215 (1957) ("While a court . . . acting upon the person of the
defendant may decree a conveyance of land in another jurisdiction . . .
neither the decree, nor any conveyance under it except by the party in
whom title is vested, is of any efficacy beyond the jurisdiction of the
court."). That being settled, we must decide
Page 470
whether, as OGTF argues, the partition action should be bifurcated. Under
this approach, OGTF would have the determination of interests under the
Sublease Agreements handled by the Nevada court, and any eventual
enforcement or partition would lie in Kansas with the Chautauqua County
District Court.

The leading Kansas case discussing forum selection clauses is Vanier
v. Ponsoldt, 251 Kan. 88, 833 P.2d 949 (1992). Relying on The Bremen v.
Zapata Off-Shore Co., 407 U.S. 1, 32 L. Ed. 2d 513, 92 S. Ct. 1907
(1972), our Supreme Court upheld forum selection clauses which are "fair
and reasonable." 251 Kan. at 101.

"Parties to a contract may choose the jurisdiction in
which all actions or proceedings arising from their
transaction shall be heard. The forum selected by the
parties must bear a reasonable relationship to the
transaction and the forum-selection clause in the
contract must not have been entered into under fraud.
. . ." 251 Kan. 88, Syl. ¶ 2.

We are not convinced the bifurcation suggested by OGTF would be fair
and reasonable under these circumstances. See Vanier, 251 Kan. at 101.
First, two of seven parties to the action may have a Nevada residence,
but Nevada hardly bears a reasonable relationship to a transaction
involving the solicitation of an investment by a Kansas investor in a
Kansas development program in exchange for conveyance of Kansas
property.

More importantly, however, is the close connection in a partition
action between the findings which must be made regarding each party's
interests and the resulting division of those interests. The Kansas
partition statute directs that "[t]he judge shall first determine and make
an order specifying the interest[s] of the respective parties and
directing partition." K.S.A. 60-1003(c)(1). We construe this statute as
envisioning a single judicial action that both determines the parties'
interests and orders partition. It is doubtful that an equivalent result
could be achieved in a fair, reasonable, and efficient manner through the
successive involvement of courts in different jurisdictions.

For example, if the partition were evidently unfair or unreasonable in
its execution because of circumstances not anticipated by counsel or the
courts, the parties would face further rounds of appearing first before
the Nevada court and then the Kansas court
Page 471
to resolve the questions. Moreover, our Supreme Court has characterized
the district court's "powers to make a just and equitable partition
between the parties and to secure their respective interests" as
"plenary." Stratmann v. Stratmann, 204 Kan. 658, 661, 465 P.2d 938
(1970). It would be difficult to exercise such plenary powers through
orders from the courts of two jurisdictions, one to determine each
party's interests and the other to secure those interests. These functions
are so inextricably linked that bifurcation would be impractical,
cumbersome, and unreasonable.

Our conclusion serves the interests of public notice as well. The
Kansas partition statute, once again, directs that the judge should
determine the parties' interests and make "an order specifying the
interest of the respective parties and directing partition." K.S.A.
60-1003(c)(1). One order, filed of record in the county where the
interests are located, would clearly provide far better notice than the
procedure suggested by OGTF. And, if further clarification or amendment of
the order were needed, public notice in Kansas would again be superior to
the uncertainties of returning to Nevada for such proceedings.

This holding is consistent with authorities from other jurisdictions.
For example, in RMP Rentals v. Metroplex, Inc., 356 Ark. 76, 84,
146 S.W.3d 861 (2004), the Arkansas Supreme Court rejected a suggestion
similar to that proposed by OGTF, specifically that the parties "could
litigate on their contract in Louisiana and then seek to enforce the
liens in Arkansas." 356 Ark. at 82. According to the Arkansas court, this
violated its holding that the local court "had sole jurisdiction over the
res." 356 Ark. at 82. The court also noted even if a Louisiana judgment
could be registered and then enforced in Arkansas, "it is highly probable
that, in the interim, the land could be transferred to a third party or
further encumbered." 356 Ark. at 82. Finally, the court held the
bifurcated approach "disregards our well-established policy that
piecemeal litigation is to be avoided." 356 Ark. at 82; see also McCloud
Constr., Inc. v. Home Depot USA, Inc., 149 F. Supp. 2d 695, 701
(E.D. Wis. 2001) (federal court sitting in diversity refused to give
effect to a Georgia forum selection clause based on a Wisconsin
statute); Omne Financial, Inc. v. Shacks, Inc., 460 Mich. 305, 311-12,
Page 472
596 N.W.2d 591 (1999) (Michigan court declined to read into the venue
statute a consent for venue elsewhere.).

For all these reasons, we conclude that bifurcation is not
appropriate. The essential nature of a partition action in Kansas dictates
the judicial function of determining relative interests should not be
separated from judicial protection and vindication of those interests in
partition.

Does Nelson Have a Partitionable Interest?

Nelson also challenges the district court's apparent conclusion that it
has no partitionable interest in the Chautauqua County property, arguing
that "[t]he nature and extent of Nelson's interests in the oil and gas
leases in issue . . . is not an appropriate subject for resolution by
summary dismissal, and is not a basis for judicial determination that the
Court lacks jurisdiction at this early stage of the proceedings." We
agree.

To the extent the district court dismissed Nelson's action based upon
the understanding that Nelson had no partitionable interest, the court's
dismissal must be characterized as a judgment on the pleadings that
Nelson failed to state a claim for relief. See K.S.A. 60-212(b)(6), (c).
The standards for the district court's review in this setting are well
established.

"`"When a motion to dismiss under K.S.A. 60-212(b)(6)
raises an issue concerning the legal sufficiency of a
claim, the question must be decided from the
well-pleaded facts of plaintiff's petition. . . ."

"`"Disputed issues of fact cannot be resolved or
determined on a motion to dismiss for failure of the
petition to state a claim upon which relief can be
granted. The question for determination is whether in
the light most favorable to plaintiff, and with every
doubt resolved in plaintiff's favor, the petition
states any valid claim for relief. Dismissal is
justified only when the allegations of the petition
clearly demonstrate plaintiff does not have a claim."

"`"In considering a motion to dismiss for failure of
the petition to state a claim for relief, a court must
accept the plaintiff's description of that which
occurred, along with any inferences reasonably to be
drawn therefrom."' [Citations omitted.]" Blevins
v. Board of Douglas County Comm'rs, 251 Kan. 374,
381, 834 P.2d 1344 (1992).

In addition to the allegations in Nelson's amended petition, wherein
Nelson claims to be "owner of a working interest in all oil
Page 473
and gas leases," the Sublease Agreements purport to convey to Nelson
"[its] undivided percentage share in and only to the well bore." Nelson
also attached to its motion for reconsideration copies of five recorded
assignments purporting to convey an interest in the well bore of
completed wells on some of the leases. OGTF responds on appeal that the
assignments do not demonstrate a "possessory interest," citing Mulsow v.
Gerber Energy Corp., 237 Kan. 58, 60, 697 P.2d 1269 (1985). We disagree.

In Mulsow our Supreme Court simply held that a working interest owner
of an oil and gas lease was not entitled to partition the overriding
royalty interest. 237 Kan. at 63. Nelson, however, alleges that it is the
owner of a working interest and seeks to partition the interests of all
other cotenants. Moreover, the assignments that were recorded appear to
create interests carved out of OGTF's oil and gas leasehold interests,
but they are restricted to specific well bores with revenue interests
dependent upon payout. We do not construe Nelson's interests as
overriding royalty interests, nor do we construe Nelson's amended
petition as seeking the partition of such overriding royalty interests.
OGTF's reliance on Mulsow is misplaced.

From the well-pleaded facts of Nelson's amended petition, together with
any reasonable construction of the Sublease Agreements amplified by the
recorded assignments, and resolving every doubt in Nelson's favor, Nelson
claims ownership of an estate or interest created by an oil, gas, or
mineral lease and is expressly entitled to partition under K.S.A. 60-1003.
Although OGTF may contend otherwise and may still prove such contention
in proceedings on remand, it was premature for the district court to
dismiss Nelson's amended petition as failing to state a claim on this
basis.

We recognize that Nelson's claims in the amended petition seek not only
partition but an accounting. Although a claim for an accounting standing
alone might be entitled to different treatment under the forum selection
clause, here the accounting issues are inextricably linked to the
partition issues. The doctrine of ancillary venue allows claims to be
tried together for reasons of judicial economy and efficiency, even
though venue is not technically
Page 474
proper for one or more of the claims. See 77 Am. Jur. 2d, Venue § 19, p.
647.

In summary, we conclude the district court erred in dismissing Nelson's
action based either on the forum selection clause or on a mistaken
understanding that Nelson failed to plead a partitionable interest. We
remand for further proceedings in Chautauqua County District Court
consistent with this opinion.

Reversed and remanded.