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Energy & the Law

When Joint Bidding Is Not Bid Rigging

Posted in Legislation, Regulations

joint biddingCo-author Dominic Salinas

Last week we discussed the pitfalls of joint bidding for oil and gas properties. We didn’t say you can’t do it. It’s like domestic life: There are ways you can tell your beloved that dress makes her look  …, well, never mind. You can do it, … in the right way and for the right reasons.

Joint bidding arrangements and AMI agreements are common in the upstream sector, so how do you go about it?

Joint bidding done successfully

In Gunnison and SG  (from last week), the government didn’t dispute the companies’ joint bidding activity after their agreement was set forth in an AMI and an Option and Participation Agreement. The DOJ determined that the AMI was an integral part of a broad pro-competitive collaboration between the two companies to jointly develop leasehold interests and create a new pipeline system in the area. The agreement allowed the companies to combine their resources and allocate risk. The DOJ concluded that the agreement was “reasonably necessary to achieve the potential benefits of their broad collaboration.” As the Gunnison/SG case suggests, today’s antitrust regulators regard lawful joint bidding arrangements as legitimate means for producers to achieve efficient production.

Even the government likes it

The Antitrust Guidelines for Collaborations Among Competitors, published in 2000 by the Department of Justice and the Federal Trade Commission, recognized that joint bidding and joint ventures often enhance competition by allowing new players to enter the market and achieve objectives that would be unattainable if they were required to act alone.

For joint ventures not deemed as per se unlawful, applying the Standard Oil rule of reason, pro-competitive benefits of the collaborative arrangement are weighed against the restraints that the agreement may place on free competition. The major factors outlined in last week’s case against Gunnison and SG can be used to determine whether a joint bidding agreement would be considered an unreasonable restraint on trade in violation of the Sherman Act or a pro-competitive and beneficial arrangement.

There are plenty of benefits to a legal joint-bidding arrangement. Smaller producers can become players in increasingly expensive upstream and midstream activity while allocating the potential risk appropriately. That is an increasingly important option in today’s price environment.

The takeaway

Engage in joint bidding in the right way and for the right reasons.

So, find partner and win a pep talk from Mavis Staples. You’ll be in the big times that will never end; let’s party like it’s 2013!

The Peril in Joint Bidding for Properties

Posted in Legislation, Regulations

Teddy-RooseveltCo-author Dominic Salinas

Wondering what was behind the Department of Justice indictment of the late Aubrey McClendon? The charge was conspiring to rig bids for oil and gas properties in Oklahoma. Read the McClendon indictment and engage in the parlor game of guessing who the co-conspirators were.

Where does this come from?

The Sherman Antitrust Act:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished …

In 1906, the Roosevelt Administration (Teddy, the speak-softly-and-carry-a-big-stick trust-buster) sued Standard Oil under the Sherman Act for conspiracy to restrain trade.  In upholding the decision by the district court to dissolve the empire, Chief Justice Edward White introduced the “rule of reason” as the basis for judicial evaluation of collaborative efforts among competitors.

Recent history

  • In 2012, Gunnison Energy Corp. and SG Interests paid a $550,000 settlement to the DOJ in the first challenge to anticompetitive joint bidding arrangements for the acquisition of mineral leases.
  • That same year Chesapeake and Encana were charged with dividing up counties to bid on a state auction. The scheme allegedly drove bid prices down from $1,510 per acre to $40. The state settled with Encana for $5 million and Chesapeake for $25 million.
  • And there was the recent McClendon indictment. Noticeably vague on details, count one depicted a bid-rigging arrangement among McClendon, Chesapeake and “Company B” in which McClendon and his co-conspirator agreed not to bid against one another for leaseholds and producing properties in return for a share in the leases ultimately purchased.

The test

Bid-rigging arrangements purposefully designed to restrict competition are considered per se unlawful, and the federal government has the discretion to instigate either a civil or criminal case against the alleged perpetrators.

In Gunnison and SG, an agreement under a written Memorandum of Understanding to not bid against one another for oil and gas leases in an auction was deemed by the DOJ to be a violation of the Act. The DOJ concluded that the agreement was a “naked restraint of trade”:

  • Gunnison and SG appeared to be the only significant bidders acquiring leases in the Ragged Mountain area of Colorado.
  • The companies had a history of bidding against one another for leases; conflicting efforts even led to litigation between them in 2004.
  • Gunnison and SG were not pooling their resources in order to acquire the oil and gas interests; each had the financial capability to complete the purchase independently.
  • Discussions between the two companies regarding a broad collaborative effort in the joint acquisition of assets, improvement of existing pipeline, and development of a new pipeline system had broken down.
  • The MOU was drafted just two days before the lease auction and was never disclosed to other parties in the bidding process.

In the Chesapeake-Encana matter, McClendon asked in an email, “Should we throw in 50/50” on Michigan “rather than bash each other’s brains out on lease buying.” Later he said the companies could save “billions of dollars in lease competition.”

With Merle Haggard’s passing, today is a three-musical-interlude occasion. RIP.

His favorite song

A kind-of country song with George Jones 

A country song

Next week: How to joint bid legally.

Washing Out a Lessee By Email

Posted in Land Titles, Lease Disputes, Title Issues

mr. cleanBehold Mr. Clean. Even he can’t remove a pesky stain as skillfully as the landman who framed the conversation in a way that washed out a lessee. See Anadarko Petroleum Corporation v. TRO-X, LP

Did the lessee retain any interest in the mineral estate after its sublessee and the lessors filed a release of the leases and, unbeknownst to the lessee, executed new leases  In the end, the new leases weren’t governed by anti-washout provisions. The lessee was washed out.

First, the background

Five leases in Ward County, Texas, were executed in 2007. An offset well obligation was triggered by the completion of a producing off-lease well. If the lessee failed to timely commence operations after demand, the lessee would surrender a portion of the lease.

Lessee TRO-X executed a sublease and a Participation Agreement with Anadarko, reserving a back-in that would extend to renewals, extensions or top leases taken within one year of termination of the underlying leases.

In 2008 a neighboring well was completed (by Anadarko, of all people) that arguably triggered the offset provision. Anadarko the sublessee failed to drill an offset well. Two years later the lessors asserted their right to terminate the lease and demanded a release. Anadarko concluded that the demand automatically vested the mineral interests back to the lessors.

In 2011, Anadarko and the lessors signed new leases. The release of the old leases was recorded 13 days after recordation of the 2011 leases. The trial court found that the 2011 leases were top leases and TRO-X was entitled to its back-in.

The court of appeals thought otherwise. Because of the 13-day delay between recordation of the new leases and the release, TRO-X needed to demonstrate that the lessors intended for the new leases to function temporarily as top leases until the transaction was fully consummated (by the release). The court believed that the separate release was an ancillary formality to the new leases.

What was so special about the emails?

The lessors representative assumed the new lease would be an extension of the 2007 leases. The Anadarko landman made it clear that they were not requesting an extension of the 2007 leases, but that they considered the 2011 leases as new leases. In the ensuing emails the lessor never disagreed. He probably didn’t care. He was focused on the bonus, term and a continuous drilling obligation.

My kingdom for a scintilla

There was no evidence suggesting the lessors’ actual intent. TRO-X had the burden of raising more than a scintilla of evidence to support its claim.  A jury may not reasonably infer an ultimate fact on “circumstantial evidence which could give rise to any number of inferences, none more probable than another.” You would assume the lessors’ representative was deposed and the result was not helpful to TRO-X.

The result hinged on what the lessors intended when they signed the 2011 leases. The mere execution and recording of a release after execution of the new leases, without more, was not legally sufficient evidence that the lessors intended for the leases to function as top leases until the release was executed and recorded.

 Our musical interlude considers TRO-X’s likely take on what happened to its back-in.

State Well Permit Prevails Over Local Zoning – Again

Posted in Legislation, Local Ordinances

st. tammanyCo-author Brooke Sizer

The state laws of Louisiana regulating oil and gas exploration and production will trump local regulations. See St. Tammany Parish Government v. State of Louisiana, Office of Conservation. (Forgive us for that word that should be avoided in a civil society.) 

The conflict

St. Tammany is a home-rule charter parish that adopted a Unified Development Code. The Louisiana Commissioner of Conservation later issued an order adopting a drilling and production unit and issued a permit to Helis Oil & Gas Company for a well that would be located in an area zoned as residential.

St. Tammany Parish sued to declare the drilling permit illegal because their zoning designation trumped prevailed over the right of the Commission to issue the permit.

The State prevails

The trial court and court of appeal ruled for the State. The appellate court first looked at “the extensive body of law that addresses every phase of the oil and gas exploration process … .”  The court focused on La. R.S. 30:28F:

The issuance of the permit by the [C]ommissioner … shall be sufficient authorization … to enter upon the property … and to drill in search of minerals thereon. No other agency or political subdivision of the [S]tate shall have the authority, and they are hereby expressly forbidden, to prohibit or in any way interfere with the drilling of a well or test well in search of minerals by the holder of such a permit. [Our emphasis.]

The court acknowledged that local power to regulate land use and zoning within its boundaries is not preempted unless it is the clear and manifest purpose of the legislature to do so.  However, St. Tammany’s zoning ordinances must yield to state law based on La. R.S. 30:28F.  “… [H]ereby expressly forbidden…” clearly and manifestly evinces the legislative intent to preempt that area of the law.

The pervasiveness of the legislation, which addresses every aspect of oil and gas exploration as well as the need for uniformity and the danger of conflicts between the enforcement of local laws, demonstrates the legislative intent to impliedly preempt that area of the law.  Therefore, local zoning ordinances are preempted by state law insofar as they affect the State’s regulation of oil and gas activity.

The court cited Art VI, §9(B) of the Constitution, “Notwithstanding any provision of this Article, the police power of the [S]tate shall never be abridged.”  The Commissioner’s power is an exercise of the State’s police powers.  The grant of zoning powers to local governments was not as important.

The court rejected the contention that the Constitution gives concurrent power to the State and the local governments to protect health, safety, and welfare, citing Article IX § 1 of the Constitution.

Finally, the court applied the ordinary meaning of “consider” and held that the Commissioner did “consider the master plan” as required by statute.

Musical interlude, presidential edition

Today we honor every voter who promises to emigrate if (insert name of candidate) is elected president.  The first tune is Reggae-inflected, Caribbean-by-white-guys; the second is real Reggae.

What Happens to a Bundled Production Payment When a Lease Terminates?

Posted in Land Titles, Royalty Disputes, Title Issues

production paymentMust a production payment out of four oil and gas leases be proportionately reduced if two of the leases expire because production ceased? In Apache Deepwater, LLC v. McDaniel Partners, Ltd., the Texas Supreme Court says yes. Absent express language in the assignment to the contrary, this general rule applies:  When an assigned lease terminates, a production payment (like an override) created in that lease is extinguished.

The instrument

A 1953 assignment of a production payment to McDaniel’s predecessor covering four leases in Upton County was a 1/16th of 35/64ths of 7/8ths in all four leases. Apache Deepwater acquired the four leases (after a wrong turn at Sabine Pass?). By the time of the acquisition two leases were of a 35/64ths mineral interest and two others were 3/64ths.

Tracts on two leases had expired for lack of production. Apache reduced the payment proportionately.

McDaniel’s losing proposition

The equation, 1/16th of 35/64ths of 7/8ths, states the production payment as a percentage of the cumulative working interests. This indicates the parties’ intent to burden the individual leases jointly with a production payment based upon the original cumulative working interest conveyed. The production payment was reserved from the conveyance as a whole, binding all of the leases jointly.

The result, and why

The production payment must be reduced when a lease expires. Neither the inclusion of four leases in a single instrument nor the instrument’s statement of the cumulative interest as a single fraction demonstrates that the parties intended the production payment to be carved from other than each lease. To the contrary, the phrase following the fraction ties the reservation to the assigning party’s interest in the “respective” leases. The court referred to Webster’s for the meaning of “respective’ and concluded it means “particular” or “separate”. This indicates that the interest pertains to each lease separately. The assignment neither states, implies, nor suggests the production payment would be unaffected by the termination of the leaseholds from which it was carved.  The assignment fixed the dollars in volume of oil to be delivered but that does not necessarily inform the rate at which it was to be delivered.

Takeaways

  • If the remaining leases hold up McDaniel will get his money, just not as quickly;
  • The parties could have written the assignment differently to achieve a different result;
  • Title examiners: Study the language carefully but keep the general rule in mind;
  • Everybody else: Hand off an instrument like this one to your title examiner.

Musical interlude

Many great song covers vary so much from the original as to be almost unrecognizable. For example, here is the original. Here is the cover. NOT SO FAST!  Having squandered so much of your precious allotment of waking hours reading this far, take a moment to waste a little more.  Go to the second cover; obscure enough of the screen so you can’t see the title (use that notepad where you’re recording your post-rebound getting-rich fantasies); hit “play”; see how long it takes to recognize the tune.

Or just forget it and get back to work.

Can the E&P Debtor Reject Gas Gathering Agreements in Bankruptcy?

Posted in Contract Disputes

gas processingWhat’s a sure way to destroy untold millions of dollars of energy infrastructure value built in reliance on the promise of reimbursement for huge capital investments necessary to move a producer’s product to market for the next 20 years or more?

Here’s another one: What’s a helpful way to effect the goal of bankruptcy reorganization, to give a bankrupt energy producer and its shareholders a fresh start by shedding burdensome contracts?

The answer to both questions: Allow a bankrupt energy producer to reject, as in walk away from with no remorse, gas gathering, processing and transportation agreements.

This is the hot issue

Can the E&P debtor reject, under Section 365 of the Bankruptcy Code, what is in today’s environment an above-market agreement?

The typical contract dedicates the producer’s oil and gas interests and associated acreage to its midstream counterparty.  These dedications assure that the producer and everyone who follows will be bound by the original bargain. Midstream companies invest billions of dollars to develop the infrastructure necessary to gather, process, and transport oil and gas for their E&P counterparty-producer.

A significant right of a debtor is to reject burdensome executory contracts. Upon rejection, the debtor no longer can be compelled to perform, leaving the counterparty with a breach of contract claim, which generally an unsecured claim worth very little. Bankruptcy courts apply a business judgment standard to the debtor’s decision, and generally do not consider the effect on the counterparty.

The legal question

From the midstream company‘s point of view: Dedications of producers’ underlying mineral interests are covenants running with the land that are real property interests and therefore, cannot be rejected in bankruptcy.

From the debtor’s point of view: The gathering and processing agreements are executory commercial services agreements and only affect personal property interests – oil and gas that has already been severed from the land.

How it will be resolved

Reconciling the issue requires examination of state law. At least in Texas, courts have not been asked to determine whether a producer’s dedication of reserves is a real property interest or a commercial agreement. Bankruptcy courts are left to speculate how a state court would rule on this issue.

What does it mean for the future?

The resolution could have a far-reaching effect on the structural and financial underpinnings of both midstream and E&P companies. If these agreements can be shed, the sanctity of thousands of bargained-for contracts is in jeopardy, investor confidence in midstream companies will be shaken, and the cost of capital and thus the price producers would have to pay for gathering and processing services, will increase.

On the other hand, saddling a bankrupt producer with an above-market contract would limit its ability to restructure.

Bragging on Gray Reed

In the Quicksilver bankruptcy, see the objection by Crestwood Midstream Partners to the debtor’s motion to reject a gathering, processing and transportation agreement. Kudos to Gray Reed lawyers Philip Jordan, Lydia Webb, Jonathan Hyman and James Ormiston.

Our musical interlude: A message from litigants to judges everywhere.

Post-Production Deductions Revisited

Posted in Lease Disputes, Royalty Disputes

ceasarApparently unsatisfied with its analysis in Chesapeake Exploration v. Hyder, the Texas Supreme Court revisited its original opinion on an overriding royalty clause. The Hyders remain the winners. In effect, the court replaced its reliance on earlier decisions interpreting royalty clauses with its own analysis (which looks a lot like the original).

The Basics

Let’s start with the rules:

  • An override is free of production costs but bears its share of post-production costs.
  • The parties to a contract are free to agree otherwise.
  • A royalty paid on the market value of oil at the well bears post-production costs.  That value is the commercial value less processing and transportation expenses that must be paid before the gas reaches the commercial market.
  • A royalty based on the price a lessee actually receives for gas (a “proceeds lease”) does not bear post-production costs.  The price-received basis is sufficient in itself to excuse charges to lessors of post-production costs.

The analysis

The override at issue is: “cost-free (except only its portion of production taxes) … of five percent … of gross production obtained …”.

The exception for production taxes (which are post-production expenses) cuts against Chesapeake.  It would make no sense to say that the royalty is free of production costs except for post-production taxes (no dogs, except for cats, opined Justice Hecht).

The court doesn’t agree with Hyder that cost-free cannot refer to production costs.  Drafters frequently specify that an override does not bear production costs even though it is already free of costs because it is a royalty interest. I call it the “belt and suspenders” school of document drafting.

Chesapeake argued that because the override is paid “on gross production” the reference is to production at the wellhead, making the royalty based on the market value of production at the wellhead, which bears post-production costs.  The court concluded that gross production is a reference to volume only. Specifying that the volume is determined at the wellhead says nothing about result:  “Cost-free” includes post-production costs.

The dissent

Four justices dissented, essentially seeing the same language as did the majority and disagreeing on just about every point. A highlight is their analysis of so-called production taxes. They are really post-production costs, according to the majority.

 The dissent thinks not everyone understands that distinction, and parties can allocate taxes differently than other post-production costs.

The dissent believes a statute does not turn a production cost into a post-production cost.  It simply creates a statutory exception to the common law default rule that an override is free of production costs. Second, the pro rata nature of production taxes bolsters the reading that cost-free does not refer to post-production costs.  The dissent believes that “cost free” is indicated to emphasize the default rule, clarifying that Hyder was still obligated to pay its share of production taxes.

Takeaways

  • Some operators, Chesapeake chief among them, have been condemned for gangsterism in their treatment of lessors. Think Imperator Ceaser ravishing the Roman hinterlands. Will Chesapeake go the way of most of the Ceasers? Maybe, but losing five-to-four twice suggests a legitimate legal position this time.
  • Don’t look for a policy you an count on in this case or in Heritage, other than the court will read the lease and interpret the text.

Our musical interlude – dedicated to the dissenters.

Railroad Commission Plugs the Wrong Well – Another Issue

Posted in Contract Disputes, Legislation

“Back in the day, when the Yankees always won the World Series and you could name a park after a Confederate general, we didn’t need no written contract; a man’s word was his bond, … yadda, yadda, yadda”.

Three things about that saying strike me. First, it was always a man; second, “the day” was always a time before the listener came on the scene; third, those fellows used some really bad grammar. R E LeeThe timeless truth is, a written agreement is always better, which returns us to Railroad Commission v Gulf Energy, discussed last week. Another question arose in that dispute: When did the Commission and Gulf Energy form a contract?  The trial court, in effect, decided as a matter of law that the parties had a binding contract.

What the trial court missed: Contract formation

The trial court deprived the jury of the ability to determine when the contract was formed:  At a May 19 meeting between the Commission and Gulf, or shortly after via conversations and emails, either of which was before the well was plugged – or on June 9 when a formal agreement was signed, which was after the unfortunate incident.  You can’t have a breach of contract claim without a contract, so the question was essential.

At trial there was disagreement aplenty among the witnesses about whether a meeting of the minds between the parties was achieved before or after the well was plugged. The Supreme Court decided that when a meeting of the minds occurred was a question of fact to be answered by the jury.

Practice tip

In lieu of our usual, customary, and frequently unconscionable fees for matters such as this, here is some free advice: If you want to avoid the “When was the contract formed?” dilemma, or worse, “Do we even have a contract?”, make it clear in your negotiations (emails, draft agreements, phone calls) something to the effect that that your understandings are subject to a final, binding agreement satisfactory to all parties. Or, if an enforceable agreement is your goal, say something like: The parties agree to cooperate in drafting and execution of future documents. The fact that such additional documents are contemplated does not affect the binding nature of this agreement.

Caveat

I call it “advice”, but what I say in this blog is not fact- or case-specific; I don’t know your situation, so don’t rely on what I say here without consulting a lawyer of your own choosing.

Musical interlude

At a loss for a song celebrating contract formation, think about this: New Orleans isn’t alone in the Africa-inspired musical universe, right? How about the Godfather of Soul and Africa itself?

Railroad Commission Not Off the Hook for Plugging the Wrong Well

Posted in Regulations

beasts of southern wild“You are my friend, kind of.” Hush Puppy, as she stares down the Aurochs in Beasts of the Southern Wild. Is our “friend” the Texas Railroad Commission?

Gulf Energy bought a package of offshore wells out of bankruptcy. Eight needed to be plugged and the Commission undertook that task, given the operator’s insolvency. Oops! The Commission’s contractor plugged one it shouldn’t have. Can Gulf Energy recover damages? The jury, trial court, and appellate court said yes. The Texas Supreme Court said maybe not. The question: Was the Commission entitled to have a jury determine whether it was in good faith when it mistakenly plugged the well?

The Commission awarded Superior Energy Services a contract to plug the wells. A Commission employee made a clerical error by transposing well numbers and Superior plugged well 708S-5 instead of well 707S-5.

Gulf sued the Commission and Superior for breach of contract and negligence. Superior settled.

Lawyers: See the discussion about preserving error when the court rejects your objection to a jury charge.  The result was the jury was not asked to determine whether the Commission was in good faith when it plugged the well.

The Statutory Defense

Under Commission rules, if the owners of a well can’t be found or don’t have sufficient assets, the Commission may plug an abandoned well. Under Chapter 89 of the Natural Resources Code the Commission and its employees “… are not liable for any damages that may occur as a result of acts done or omitted to be done by them … in a good—faith effort to carry out this chapter.”

How many ways can you say “good faith”

Gulf Energy alleged that the defense applies only to acts that involve discretion and do not extend to ministerial acts like plugging a well.  The Supreme Court rejected the argument based on the plain reading of the statute.

The Court had to determine what “good faith” means. After considering definitions from Webster’s Third New International Dictionary, Black’s Law Dictionary, the Uniform Commercial Code, and earlier Supreme Court rulings, it decided that good faith:

“refers to conduct which is honest in fact, free of improper motive or willful ignorance of the facts at hand.  It does not require proof of “reasonable” investigation … stating the proposition conversely …, “bad faith” means more than merely negligent or unreasonable conduct; it requires proof of an improper motive or willful ignorance of the facts.”

Good faith – judge or jury?

Was the good faith defense to be determined by the jury as a fact question or by the judge as a matter of law?  There were enough contradictory facts to raise a question about whether the Commission acted in good faith. For example, there was evidence that the employee presented correct information to Superior several days before the 708S-5 plugged, but they failed to pass it on to the crew boat conducting the operation. Energy urged that there was willful ignorance, which would nullify the good faith defense.

Result

Back to the trial court from whence it came for a new trial.

Things you only learn here 

Beasts of the Southern Wild is, to my knowledge, the only movie ever that employed a nutria consultant.

And a musical interlude worthy of Hush Puppy.

What is an Adequate Description For a Mineral Lien ?

Posted in Land Titles, Title Issues

wild goose chaseCo-author Alexandra Crawley

Thanks to In re Reichmann Petroleum Corp., we know one that works in Texas: A lien affidavit attaching either a plat or a plat and a Texas Railroad Commission Form W-1 provides an adequate property description for a mineral lien against an entire lease under the Texas Property Code.

Current practice – chase the wild goose

To have a valid mineral lien the claimant must file an affidavit in the Official Public Records of the county where the lease lies containing a “description of the property”.

Contractors often only identify a well name and county on their invoices.  When they run to their lawyers at the last minute for a lien, the wild goose chase ensues:  The lawyers navigate the user-unfriendly Railroad Commission web site and online county records (where available) seeking a “sufficient” description of the property for the affidavit. (Clients: Why do you wait so long? You’ve known for weeks the operator is a deadbeat.)

A better way

Reichmann provides much needed clarity, especially when the claimant can’t obtain the best description – from the lease – because of the pressure of time. Now, a plat or a plat and a Form W-1 will get you a lien on the entire lease, not just the portion depicted on the plat.

The court looks at what the statutory says 

Reichmann was an operator of oil and gas properties and sought bankruptcy protection. Creditors claimed mineral liens on  leases. Reichmann objected to several liens on the grounds that the property descriptions were inadequate, arguing that “a description of the land, leasehold interest, pipeline, or pipeline right-of-way involved” should be construed to be equivalent to the statute of frauds standard, which requires “exactness”.

In finding that Chapter 56 does not require a description as stringent as the statute of frauds, the court looked to the statutory mechanic’s lien standard, which requires a “legally sufficient” description.  That is lesser than the statute of frauds standard, and the mineral lien statute requires even less, by omitting “legally “sufficient”.

Said the  court: An affidavit with an RRC plat was adequate because it would “enable a party familiar with the locality to identify with reasonable certainty the premises intended.”

The objectors argued that the lien did not attach to the entire lease, but only to that part reflected in the attached plat.  The court disagreed, citing Mercantile National Bank at Dallas v. McCollough Tool Co., where in 1953 the “Texas Supreme Court gave a materialman a lien on an entire lease for work done on just one well under what is now Sections 56.001 and 56.003”, and Dunigan Tool  & Supply v. Burris (1968) “where a Texas Court of Appeals interpreted what is currently Chapter 56 to hold that the statutory language allows a lien to exist upon an entire leasehold interest upon which materials were delivered to or used.”

The liens applied to the entire lease “because the information provided helped to identify the nucleus of information that would identify relevant leases even without a complete lease attached.”

Musical interlude

The common element of today’s offerings is feathers: This kind and then there is this kind.