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Energy & the Law

Charles Sartain

Posts by Charles Sartain

You Own the Oil. Do You Own the Rock?

Posted in Land Titles, operations

Riddle: What’s the difference between a hydrocarbon molecule and the underground structure which the molecule inhabits? Answer: In Texas, you can own one and not the other, according to Lightning Oil Co. v. Anadarko E&P Onshore LLC. Dueling Estates This was a subsurface trespass case between lessees on two adjacent mineral estates. The Cutlass lease, owned by Lightning, is a severed… Continue Reading

Compressor Station Negligent Nuisance Verdict Reversed

Posted in Construction, Litigation

Therapist: “We’re here today in group to bring closure to the traumatic events of Crosstex North Texas Pipeline L.P. v. Gardiner. Each side claims mistreatment by his adversary and by one component or another of the civil justice system. Rancher/property owner Mr. Gardiner, you appear to be the more unhappy party, let’s start with you. Your glorious trial victory… Continue Reading

Who Needs A Master Service Agreement?

Posted in Contract Disputes, Hydraulic Fracturing

You do, whether you are a vendor or an operator. Matador Production Company vs. Weatherford Artificial Lift Systems, Inc. is a treatise on what can go wrong with a frac job: Failure of pumps, worker inexperience, failure of the “delayed release gel breaker”, failure to clean gel hoses, failure to pump enough gel and proppant, loss of materials, profuse apologies, invoices,… Continue Reading

Did the 2015 Texas Legislature Help Oil and Gas?

Posted in Energy Policy, Legislation

Your Texas legislators have done their work and the citizens are safe for the next two years.  The other good news is that industry supporters generally believe the 2015 Legislature was their friend. House Bill 2: Set aside $4,471,800 to the University of Texas at Austin Bureau for Economic Geology and appointed a technical advisory committee to study the… Continue Reading

Fracking, Trigger Warnings, and a Safe Room

Posted in Energy Policy, Hydraulic Fracturing

First, an apology. I have brought shame to my own self and this blog for failing to invoke trigger warnings about activities I will mention again, after the appropriate trigger warning. (I had no idea there were so many.) Trigger Warning This post will refer to activities in oil and gas production as they are commonly described in the industry…. Continue Reading

Another Lease Termination Case, a Different Ending

Posted in Lease Disputes

Co-author Matthew Wheatley We recently discussed failure to produce in paying quantities. Another decision involving the same lessee had a different result. Why? The question in both cases was whether the well was capable of producing in paying quantities and whether a reasonably prudent operator would continue to operate the well. In the new case ten wells were on… Continue Reading

Royalty Clauses For the Lessor – This Battle is Over

Posted in Lease Disputes, Royalty Disputes

What is your guiding principle when writing agreements? “The more the words the less the meaning, and how does that profit anyone?” Ecclesiastes 6:11. or “The beginning of wisdom is the definition of terms.” Socrates The Legal Issue A lease grants “a perpetual, cost-free (except only its portion of production taxes) overriding royalty of five percent …… Continue Reading

How an Expert Can Affect Your Oil and Gas Claim

Posted in Litigation

Co-author Matthew Wheatley Your well consultant just cemented 10,000 feet of tubing inside the casing of your eight million dollar well, … a neighboring operator frac’ed his Eagle Ford well into your Austin Chalk completion, thereby trespassing and contaminating your well. Righteousness and vengeance are yours. The jury will draw and quarter the offender. Not So Fast Texokan Operating,… Continue Reading

Is Your Well Producing in Paying Quantities? – The Jury Will Decide

Posted in Lease Disputes

One consequence of falling oil prices is leases that cease to produce in paying quantities. The producer’s question: How soon must the well return to profitability? The answer in BP American Production Company v. Laddex, Ltd. is, a “reasonable” period, to be determined by the jury and not the judge. The Magic Well The facts aren’t unique: The well on… Continue Reading

Defendants Saved by Louisiana Subsequent Purchaser Rule

Posted in Pollution

Co-author Brooke Sizer Another Louisiana court has ruled that the Subsequent Purchaser Rule applies to damages following a mineral lease. In Bundrick v. Anadarko Petroleum Corp. it is the 3rd Circuit. The Rule: An owner of property had no right or actual interest in recovering from a third party for damage which was inflicted on the property before his purchase, in… Continue Reading

Can the Tax Man Come After Your Stored Gas?

Posted in Taxation

Co-author Matthew Wheatley The owner of 33 BCF of gas cant’ just stuff it in his pocket and move it county-to-county to avoid taxes. So, the question: Is gas in storage subject to ad valorem tax on personal property?  The Harris County Appraisal District thought so. The taxman prevailed in ETC Marketing v. Harris County Appraisal District. The gas was stored in a depleted… Continue Reading

How to Manage Credit and Collect Unpaid Bills in Today’s Oil Patch

Posted in Contract Disputes, Litigation

Co-authors Preston Kamin and Joe Virene Everybody from the well site to the board room has an opinion about when oil prices will “rebound”. Rather than an opinion, we have a question:  How do I collect my money while we’re waiting? This post is a refresher for service companies and suppliers looking for money from operators, and for operators looking to non-operators.  There are many steps… Continue Reading

Lipsky Revisited – Details and Debate

Posted in Hydraulic Fracturing, Litigation, Pollution

I often wonder if anybody actually reads our modest, quasi-weekly offerings. They do! And they respond! To criticize!  I earn my keep being “critiqued” by impatient judges, aggressive opposing counsel and, occasionally, less-than-happy clients, so – challenge accepted. “Critique” One: Lipsky was not Range’s lessor, therefor I know nothing about the case. Surely, this person lives in my house, where I enjoy a… Continue Reading

How Are the Texas Anti-SLAPP Statute and Jade Helm 15 Alike?

Posted in Hydraulic Fracturing, Litigation, Pollution

May a court “draw rational inferences from circumstantial evidence” when determining if a plaintiff  has met its burden in a suit in which the defendant has invoked the Texas Citizens Participation Act . That was the question in In re Lipsky. What is The Anti-SLAPP Statute? The purpose of the TCPA (the “Anti-SLAPP” statute) is to protect citizens from… Continue Reading

Your Texas Legislature at Work, Part 2

Posted in Legislation

The Texas legislature is still busy on energy issues. Is that good or bad? It depends on your situation; oil patch thieves won’t like it. Wind Energy Senate Bill 931 would blow away the Renewable Portfolio Standard, established in 1999 to set renewable energy goals for Texas. The bill would also halt construction of transmission lines in Competitive Renewable… Continue Reading

The Danger of “Too Much Information”?

Posted in Land Titles, Title Issues

I know contract writers who like to state terms, such as property descriptions, several different ways. If you just have to over-describe, at least be careful, and at least be sure the descriptions are consistent. The McGregors and Millican were adjacent landowners fighting over a 34.28 acre wooded tract in Brazos County, Texas. The question:  Was the acreage in Millican’s chain of title. The answer: “No”. A 1945 deed… Continue Reading

Obama Approves Keystone Pipeline and Other News- Special Edition

Posted in Energy Policy

It was an abrupt and remarkable about-face. In a Rose Garden ceremony in the presence of the CEOs of America’s largest oil companies and special guest David Koch (brother Charles remained ball-gagged and handcuffed by the editorial board of The Nation), President Obama signed an executive order fast-tracking construction of the Keystone XL Pipeline and, to the… Continue Reading

A Lesson in Lease Administration

Posted in Lease Disputes, Royalty Disputes

Co-Author Brooke Sizer What must a Louisiana lessee do to avoid statutory penalties for non-payment of royalty, and what must a royalty owner do to put the lessee on notice that royalties are not being paid? The answers are, more than the lessee did in Samson Contour Energy E&P, LLC v. Smith and less than the lessee argued for. What the Lessee Did… Continue Reading

Must the Lessee Be Wary of the Executive Right Owner?

Posted in Lease Disputes, Royalty Disputes

You are negotiating to take a big oil and gas lease. The run sheets show you are dealing with an executive right owner on behalf of himself and his NPRI owner.  His proposed terms are odd: a lower-than-market royalty and a higher-than-market bonus. After reflecting, you get it: The terms aren’t odd; they are just better for him than the… Continue Reading