Header graphic for print
Energy & the Law

Category Archives: Contract Disputes

Subscribe to Contract Disputes RSS Feed

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

Operator Can’t Recover Drilling Costs For Affiliate’s Expensive Rig

Posted in Contract Disputes, Operating Agreements

Co-author Alexandra Crawley In Elm Ridge Exploration Co., LLC v. Engle we are reminded of a little-used provision in the 1989 Model Form Operating Agreement. Article VI.D.1 allows the operator to use its own equipment, but his charges may not exceed prevailing rates in the area, and the rates must be agreed to in writing before… Continue Reading

More Seismic Rumbling in Louisiana

Posted in Contract Disputes

Co-author Brooke Sizer In Olympia Minerals et al v. HS Resources, et al, the Louisiana Supreme Court addressed a decision we discussed in a February entry by affirming in part, reversing in part, amending in part and remanding (because why do one thing when you can do four). The case involved the “North Starks Project Agreement” covering 42,000… Continue Reading

Subcontractors Score a Victory in Federal Court

Posted in Contract Disputes, Title Issues

By: Martin P. Averill On August 27, in In re Heritage Consolidated, L.L.C., the Fifth Circuit Court of Appeals granted subcontractor’s lien rights to two oil and gas drilling contractors. The Court reversed a district court ruling which upheld a summary judgment issued by a bankruptcy court denying liens to the two drilling contractors. The case was briefed and argued by Gray… Continue Reading

Treachery of the Untrustworthy Trustee

Posted in Contract Disputes, Title Issues

Co-author Brooke Sizer J-W Operating Co. v. Olsen is another Louisiana concursus (“It’s not my money, Your Honor; let them fight over it”). The Trust In 2006, Fred Houston created the Fred L. Houston Trust and placed into it the Tenneco lease, which had been producing since 1974. Ms. Williams was the trustee. The trust instrument declared… Continue Reading

Operator Wins JOA Fight

Posted in Contract Disputes, Operating Agreements

MDU Barnett Ltd. P’ship v. Chesapeake Exploration Ltd. P’ship is at least three things: The culmination of an unhappy relationship between an operator and non-operators. What happens when joint owners’ interests are not aligned. Predictable, given Texas law and the relationship of parties under the model form JOA. In 2005 Chesapeake and Conglomerate Gas entered into an Exploration and Development Agreement involving Barnett Shale properties…. Continue Reading

Condition Precedent Sinks Chesapeake

Posted in Contract Disputes

A condition precedent was the issue in Preston Exploration Company, et al v. Chesapeake Energy Corporation. This opinion was the result of the parties’ second visit to the federal Fifth Circuit Court of Appeals. In the first trip, the issue was whether the Purchase and Sale Agreement between the parties in a $110 million transaction satisfied the statute of… Continue Reading

Reaping What You Sow – City of Dallas Sued by Trinity East Energy

Posted in Contract Disputes, Eminent Domain, Local Ordinances

Suppose I own a large tract of land in the region of the Barnett Shale, the exclusive right to allow (or prevent) drilling on the aforesaid land, and a desparate need for funds. You have $19 million and the desire to exploit the minerals. I take your $19 million, and when you ask for permission to drill I… Continue Reading

Texas Court Declines Indemnity for One’s Own Bad Acts.

Posted in Contract Disputes

We begin with a philosophical question: Should a person be rewarded for bad behavior? Despite twerkee Miley Cyrus (and her daddy), the Kardashians and, at least for a while Richard Nixon, the answer should be, no. Texas law agrees. The express negligence doctrine in indemnification agreements “… mandates that the party use express language within the four corners of the contract specifically… Continue Reading

Broker Loses His Override

Posted in Contract Disputes

Co-author Tara Trout Flume You won’t get what you don’t ask for. That’s a given. But so is, You can’t always get what you want. That’s the end of most lawsuits for one side or the other.  Take Wade Oil & Gas, Inc. v. Telesis Operating Company, Inc., et al, for example. Wade, an oil and… Continue Reading

The Prospect Generator’s Case, a Second Look

Posted in Contract Disputes, Litigation

There is more to learn from Southwestern Energy Production Co. v. Berry-Helfand and Muncey, discussed in a recent post. Damages – With Room to Run, the Expert Scores. Courts are entitled to be “flexible and imaginative” when determining damages for misappropriation. The methods could include value of the plaintiff’s lost profits, the defendant’s actual profits from the use of… Continue Reading

Hold on to Your Insurance … Federal Court Certifies Deepwater Horizon Questions to Texas Supreme Court

Posted in Contract Disputes, Litigation

By David Leonard and Julie Palmer BP’s woes from the Deepwater Horizon disaster in the Gulf continue. The federal Fifth Circuit in In re: Deepwater Horizon, withdrew an opinion of a three-judge panel and certified questions for consideration by the Supreme Court of Texas. Resolution of this dispute could significantly impact insurance law in Texas, which… Continue Reading

Prospect Generator is Vindicated

Posted in Contract Disputes, Litigation

The prospect generator’s worst nightmare is presented in Southwestern Energy Production Co. v. Berry-Helfand and Muncey. I will over-simplify the facts: Hefland and Muncey toil for years generating James Lime prospects in a five-county area in East Texas. They show it. Dry holes are drilled. More data is generated. They show it many times again.  Parties who are shown… Continue Reading

The 1956 Model Form JOA Does Not Apply to Future Leases

Posted in Contract Disputes

Co-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

In Texas Contract Dispute, Risk Allocation Trumps Due Diligence Duties

Posted in Construction, Contract Disputes

There 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

The Corporate Shield is Not Invincible

Posted in Contract Disputes

This non-oil and gas case should be of interest to startups and those of you who run “lean and mean” operation.  Thanks to Jerry Murray at Goldin Peiser & Peiser, LLP for bringing it to my attention. You file the paperwork to set up a corporation so that your personal assets are shielded from assault by unprincipled plaintiff’s… Continue Reading