The short answer is no, according to the American Petroleum Institute. The API compared oil and gas to other industries in terms of profit margin and effective tax rate. The oil and gas industry-wide profit margin is 7.3%, which is lower than manufacturing (8.6%), computers and peripherals (9.7%), pharmaceuticals (16.0%) and beverage and tobacco products (19.3%)…. Continue Reading
Charles Sartain
Is the Oil and Gas Industry Undertaxed?
Posted in Energy PolicyLessor is Not Entitled to Royalty on Hedging Profits
Posted in Lease DisputesA Louisiana lessee does not owe its lessor royalties based on hedging profits, said a federal district court in Cimarex Energy Co. v. Chastant. Cimarex, the lessee, hedged its gas contracts and didn’t pay its lessor, Chastant, earnings from the hedge. As the court described it, hedging involves buying and selling financial positions as a strategy… Continue Reading
How Much Water Does Fracking Shale Gas Consume, and Where?
Posted in Environmental Policy, Hydraulic FracturingJesse Jenkins of the Energy Collective ponders the question. He reports as follows: According to the US Energy Information Administration 27,000 new gas wells were completed in the U.S. in 2011, many of which were horizontal wells implementing hydraulic fracturing. Each well consumes 5 million gallons of water per well for fracking and completion. He… Continue Reading
A Look at Two Approaches to Oil and Gas Regulation
Posted in Energy Policy, Environmental Policy, Hydraulic FracturingThis is a tale of two regulatory schemes. First, there is the federal way, and I’m not making this up: In my last post we learned that if the BLM, when preparing its PRMP/FEIS (which in some incomprehensible way is different from a PRMP/EIS, but which nevertheless includes an RFD) which is issued by an EA and adopted… Continue Reading
Fracking Stymied on Federal Lands in California
Posted in Environmental Policy, Hydraulic FracturingIn an opinion with as many acronyms as the Dallas Cowboys have draft-pick detractors, a California federal court in Center For Biological Diversity v. Bureau of Land Management, held that the BLM violated the National Environmental Policy Act in its assessment of oil and gas leases on federal lands in California. A “FONSI” – a Finding of No Significant Impact… Continue Reading
Pennsylvania Supreme Court Confirms The Dunham Rule
Posted in Land TitlesIf it ain’t broke, don’t fix it. Or, as said by the Pennsylvania Supreme Court, “A rule of property long acquiesced in should not be overthrown except for compelling reasons of public policy or the imperative demands of justice.” There were no such imperatives in Butler vs. Charles Powers Estate, in which the Court upheld the ”Dunham Rule” in Pennsylvania oil… Continue Reading
Changes Ahead for the Texas Railroad Commission?
Posted in RegulationsThe Texas Railroad Commission is going through the Sunset review required every 10 years for all state agencies. If approved, the pending legislation (House Bill 2166) would: A New Name • Change the name of the agency to the Texas Energy Resources Commission. Campaign Finance Reform • Limit the ability of commissioners and candidates to accept… Continue Reading
HOW MUCH CONSENSUS IS THERE ON GLOBAL WARMING?
Posted in Energy Policy, Environmental PolicyThis post is not from a global warming denier. But I do appreciate even-handed assessments of the situation. Here are two reports that fit the bill. In the London Telegraph, Geoffrey Lean says that recent research suggests climate change might not be as catastrophic as the gloomiest forecasts. But he warns that it will be decades, if not centuries,… Continue Reading
The 1956 Model Form JOA Does Not Apply to Future Leases
Posted in Contract DisputesCo-author Jonathan Nowlin I learned to drive on an old, black, stick-shift, straight-six, no-radio, no-A/C automobile manufactured the year after the AAPL’s first Form 610 - Model Form Operating Agreement was created. The ’57 Chevy is now considered a classic. Not so with the 1956 Model Form, which is generally considered a relic. Clovelly Oil Co., LLC v. Midstates Petroleum Co. shows that while… Continue Reading
What is an Enforceable Property Description?
Posted in Land Titles, Title IssuesCo-author: Travis Booher Valid Description? We don’t need no valid stinking description! Actually, in May v. Buck, a Texas Court of Appeals says you do. The need for a sufficient property description in a oil and gas transaction seems like an easy-enough and fundamental concept to grasp, but its application has escaped many a contracting… Continue Reading
Should I Agree to Arbitrate My Contract Dispute?
Posted in LitigationYou are negotiating a master service agreement, exploration agreement, farmout, or other oil-field contract, and the other side proposes that all disputes be resolved by arbitration. Should you agree? The answer? It depends. I try lawsuits, advocate in arbitrations, and preside as an arbitrator, so I’m often asked this question. The answer isn’t the same in every case…. Continue Reading
Compulsory Unitization Undermines Texas Values (Rhetorically Speaking)
Posted in Pooling and UnitizationWith Travis Booher Texas’s proposed Oil and Gas Majority Rights Protection Act(House Bill 100) has many detractors whose reasons are intense and varied. Here are some of them: It’s About Liberty It’s my property that I’ve worked for years to develop (or not, but that’s my concern and not yours). I should be able to do… Continue Reading
Large Condemnation Award Upheld for Eagle Ford Pipeline
Posted in Eminent DomainBy Travis Booher “Money isn’t everything, Jett.” Leslie Benedict. “Not when you’ve got it.” Jett Rink The ageless struggle between the oil man and the rancher continues. The Texas Supreme Court declined to review LaSalle Pipeline, LP v. Donnell Lands, L.P., (the link is the court of appeals opinion) a pipeline condemnation suit involving land in McMullen… Continue Reading
Deed Restrictions – Good for Barking Dogs, Not Good for Mineral Reservations
Posted in Land Titles, Title IssuesBy Travis Booher In Texas title law, “it is well settled that a purchaser is bound by every recital, reference and reservation contained in or fairly disclosed by any instrument which forms an essential link in the chain of title under which he claims.” But does this rule apply to mineral reservations in deed restrictions?… Continue Reading
Who’s Against Fracking and What are They Saying?
Posted in Energy Policy, Hydraulic Fracturing“Science is my most favorite subject, especially the Old Testament.” Kenneth, 30 Rock Keeping in mind the importance of science, technology, and transparency in evaluating the safety and reliability of fracking, let’s take a look at some of the leaders in the anti-fracking movement. The results are worthy of your attention. Displaying an understanding of science… Continue Reading
Compulsory Unitization is a Grand Idea (Rhetorically Speaking)
Posted in Pooling and UnitizationCo-author Travis Booher There are plenty of reasons why compulsory unitization is good for Texas, say the proponents of Texas House Bill 100, the Oil and Gas Majority Rights Protection Act. More production = more money The foremost benefit of fieldwide unitization is enhanced production. Oil and or gas that would otherwise be left behind would be produced. For… Continue Reading
Louisiana Surface Owner Can Sue Servitude Owner for Pollution
Posted in Environmental Policy, PollutionIt’s Mardi Gras. If you see my college-student daughter chasing beads, dubloons and coconuts, tell her to get back to the library where she said she was going. In Walton vs. Burns, another legacy pollution case, a Louisiana court of appeal ruled, among other things, that a surface owner has the right to assert a claim… Continue Reading
Judicial Ascertainment Clause Trumps Automatic Termination of a Louisiana Lease
Posted in Lease DisputesOther than say, $8.00 crude, the recent national election, or a top-five recruiting class by your most-reviled gridiron enemies, few events are as likely to work an operator into a worst-case-scenario frenzy as a lease termination claim. Lessors love ‘em, of course! The question of the day: In a head-to-head contest between a Louisiana statute and language… Continue Reading
What‘s in a Name? Is Texas House Bill 100 Really Forced “Pooling”?
Posted in Pooling and UnitizationCo-author Travis Booher “What’s in a name? That which we call a rose by any other name would smell as sweet”. (This situation is more like the star-crossed lovers of this famous passage than you might think; let’s hope this session’s Act III doesn’t end the same way.) We’ve been called to task because of last week’s reference to HB… Continue Reading
Is Texas Ready for Forced Pooling?
Posted in PoolingCo-author Travis Booher Efforts to introduce forced pooling into Texas law continue. House Bill 100, the Oil and Gas Majority Rights Protection Act, has been introduced by Rep. Van Taylor in the Texas legislature. Today’s post summarizes the bill. Upcoming entries will ponder whether it is a victory over the tyranny of the myopic minority or a fascist… Continue Reading
No Agreement on Essential Terms Means No Contract
Posted in Contract DisputesIf your written agreement terminates and you engage in extensive discussions to reestablish the agreement but essential terms are not agreed on, you don’t have a binding contract. So said a Texas court in 2001 Trinity Fund, L.L.C. v. Carrizo Oil & Gas, Inc. Trading a bunch of emails without agreeing on the essential terms… Continue Reading
When an Easement Isn’t What it Appears To Be
Posted in Land TitlesHere is Something We Know A Texas mineral estate owner has an implied easement for reasonable use of the surface estate in developing and extracting the minerals below. And a Question Can the mineral estate owner and his lessee use the easement to produce from a mineral estate that is pooled with the surface estate?… Continue Reading
In Texas Contract Dispute, Risk Allocation Trumps Due Diligence Duties
Posted in Construction, Contract DisputesThere are certain cases that litigants and their lawyers find difficult to resolve: Lots of money on the line, two reasonable interpretations of a complicated agreement and, I suspect, parties who seek vindication for their actions. El Paso Field Services, L.P. v. MasTec North America, Inc. is one of those cases. The Question: In a pipeline… Continue Reading
What Can the Energy Industry Expect from Obama’s Second Term?
Posted in Energy Policy, Environmental Policy“It is better to stop a bad law than pass a good one.” Calvin Coolidge. Is anybody in Washington listening to Silent Cal? What can the energy industry (oil and gas in particular) expect from the Administration in its second term? Let’s gaze into the crystal ball: Carbon Tax The National Center for Policy Analysis predicts… Continue Reading