How many times must an operator suffer for a mistake in a unit declaration? Samson Exploration LLC v. T. S. Reed Properties Inc. makes it twice. (See Hooks v. Samson Lone Star for the first round). The Texas Supreme Court ruled that a lessee could not avoid a contractual obligation to pay royalties from a zone shared by two pooled units. Continue Reading Unit Operator Pays For a Problem of its Own Making
Conoco Phillips Company v. Ramirez et al is a helpful reminder when preparing a document transferring title:
- “Family vernacular” is a great way to communicate in wedding toasts and funeral eulogies, not so much in land conveyances.
- Absent an express reservation, a conveyance of land includes both the surface and the underlying minerals.
- When there is a claim of ambiguity, extrinsic evidence may not be used to create doubt as to the plain meaning of the words.
Co-author Chance Decker
You’ve seen the headlines. The portrait is complete; the verdict is in; the clock has run down to zero. The devastation of Harvey is “unprecedented” and it’s all because of climate change. That’s not necessarily so, thanks to Powerline and Dr. Roy Spencer. Read it and reach your own conclusion.
And now, on to the the law
Apache Deepwater, LLC v. Double Eagle Development, LLC asked whether a retained acreage clause provided for “rolling terminations” after the primary term or “snapshot termination”. As you might expect, the result depended on the language of the lease. Continue Reading Harvey and Climate Change, and Consideration of a Retained Acreage Clause
In light of the adverse effects the storm, floods and tornadoes will have on oil and gas production, transportation and processing operations, we offer several bits of advice:
Winds and floods are among the very reasons for the seldom-invoked force majeure provisions of your oil and gas leases, operating agreements, transportation agreements and other contracts. If your operations are affected by the storm, study your contracts and be mindful of what you will need to do and when in order to invoke the protections force majeure clauses offer. Continue Reading Hurricane Harvey and Oil and Gas Operations – What To Do
Lenders to Louisiana operators are likely to be reconsidering their business practices in light of Gloria’s Ranch v. Tauren et al.
A rather ordinary lease termination suit resulted in the lender Wells Fargo being solidarily liable with the lessees for $22.8 million in lost leasing opportunities, $242,000 in unpaid royalties, $484,000 in statutory damages, and almost $1 million in attorneys’ fees.
Noble Energy Inc. v. ConocoPhillips Company, a 6-to-3 Texas Supreme Court decision, is a reminder of two things:
- How parties to a property transaction describe what’s being acquired and what’s being left behind can have grave consequences. The purchaser can acquire specific obligations associated with purchased assets, excluding all others not mentioned. Or, he can acquire all obligations, disclaiming none, including those not even mentioned and those he doesn’t even know about. Here, the difference cost Noble $63 million.
- When given a choice, the Texas Supreme Court is likely to resolve a dispute by relying on the words in a contract rather than notions of equity.
“The only sensible way to live in this world is without rules”. The Joker to Batman, The Dark Knight
Subject-to, reservations-from, and exceptions-to problems have been lurking in the shadows of Texas jurisprudence for a while now, and the courts have been all over the map in recent holdings (Title nerd and proud of it? Compare this example with this one.)
In Wenske v. Ealy, the Supreme Court channeled our superhero’s painted friend, essentially jettisoning the old rules and confirming the new rule in deed construction cases: There are no “rules”. Continue Reading Does Texas Have a New “Rule” in Conveyancing?
Benjamin Franklin would be relieved. Just when it seems that the taxman always wins, he doesn’t. In CGG Americas, Inc. v. Commissioner the U. S. Tax Court concluded that a taxpayer need not own underlying hydrocarbons in order to take a deduction for geological and geophysical expenses. Counterintuitive, you say? Read on.
Rozel Operating v. Crown Point Holdings, LLC, et al., reminds one of the need to understand and apply the meaning of terms used in a statute one is attempting to enforce. And imaginative theories don’t work without evidence to support them. Continue Reading How Not to Secure an Oil Well Lien in Louisiana
Co-author Chance Decker
We recently discussed Freeman v. Harleton. The opinion shows the transaction as a bunco job. Here’s more:
- Bufkin and Wayne Freeman have done business together since the 1980s. They had a co-development agreement with Harleton.
- Long-standing agreements among the three of them made it clear that Harleton owned 50 percent of the Geisler Unit.
- Chesapeake never talked to the Freeman defendants, who were not parties to the letter agreement for the sale.
- Chesapeake didn’t contract non-ops because Chesapeake believed the letter agreement prevented them from doing so.
- Bufkin would bring non-ops to each closing, and they would receive offers to sell on the same terms as Buffco.
- Wayne Freeman, who attended his closing, knew Harleton’s ownership interest in the unit but did not raise the issue because, ”It did not occur to him to do so.” He said “[I]t was Chesapeake’s obligation to figure out who owned what” in the unit.
- As a non-op and non-signatory Freeman never made representations or warranties.
- To Chesapeake it became obvious that Bufkin had known when he closed that the ownership in the Geisler Unit was different than what he said it was.
- The due-diligence landman’s work was entirely from Buffco/Twin files. He didn’t check the county records because he was told by Bufkin and team that his title determination was correct.
- The landman came to believe that Buffco removed materials from files that would have revealed Harleton’s interest in the deep rights.
- See the opinion for federal Judge Gilstrap’s view of the defendants’ activities. it was adopted by the state court trial judge.