Co-author Lydia Webb

Nabors Offshore Corp. v. Whistler Energy II LLC  is the rare bankruptcy case where the outcome was consistent with the realities of operating in the oil patch rather than the artificial constraints of the Bankruptcy Code. The Fifth Circuit balanced the debtor’s interest in minimizing the costs of administering its estate with a counterparty’s economic interest in its property sitting idle in the debtor’s possession. The counterparty was not made to eat the costs for the time its equipment sat unused after rejection of their contract. 

The Facts

Whistler owned a production platform in the Gulf of Mexico and contracted with Nabors for a drilling rig and related equipment and services.  After a worker was killed in an accident, federal regulators shut down the project.  Whistler filed bankruptcy, abandoned the well, and rejected the contract.  It took four months after rejection for regulators to approve a demobilization plan and another two months for Nabors to remove the rig from the platform.  Nabors filed a $7 million administrative expense claim for costs incurred during the six months post-rejection when  its equipment sat idle on the platform.  Whistler objected on the basis that it neither requested nor used Nabors’ services post-rejection, and thus, Nabors provided no benefit to the estate. Continue Reading Bankruptcy Ruling Sides With Oil Field Realities

It’s still true, “Whiskey’s for drinkin’, water’s for fightin’.” Gray Reed lawyers Brock Niezgoda and Stephen Cooney spoke to TIPRO’s summer conference on the use, control and ownership of water in oil and gas operations. Here is their PowerPoint.

The takeaways:

Groundwater Continue Reading Water: The Hot Commodity in the Permian and Elsewhere

Co-author Chance Decker

How long – if ever – has it been since you pondered the difference between a “tenancy in common” and a “joint tenancy”? Same for us, until the wheels came off a family relationship and a lawsuit was filed in Wagenschein v. Ehlinger. This brings to us – and you – the opportunity to review a little Texas property law. Landmen and title examiners, perk up.

Tenancy in common v. joint tenancy Continue Reading Tenancy in Common and Joint Tenancy Explained

In January I commented on the partnership that wasn’t and the lawyer whose actions give the rest of us a bad name. That was Stephens et al. v. Three Finger Black Shale Partnership et al. The court of appeal has substituted its original 66-pages with a 67 page opus. Save yourself the trouble of reading the whole thing and go to pages 41 to 44.

The court concluded that as a result of the recent Supreme Court decision in Agar Corp. v. Electro Circuits Int’l, LLC, several Thunderbird entities and their owner, sleazy lawyer Stephens, were jointly and severally liable to L W Hunt Resources and Raughton for actual and exemplary damages. There were three different conspiracy scenarios for the jury to consider: conspiracy to commit a breach of fiduciary duties related to the attorney-client relationship, breach of fiduciary duties arising from related to the “Alpine Group”, and conspiracy to commit fraud. The jury found a conspiracy on each ground.

The court originally found that because there was no separate jury finding as to the amount of damages related specifically to the conspiracy, the conspiracy findings would not be upheld. Since then the Supreme Court held that a plaintiff’s injury is the damage from the underlying wrong, not the conspiracy. Civil conspiracy is not independent tort. Thus, the Stephens jury didn’t need to answer a conspiracy damage issue separate from a damage issue relative to the underlying tort.

Why does this matter?

Now, a bad player can be liable for conspiring with his own limited liability companies because they are entities separate from their sole member. If your scammer scammed through his LLC you can recover a judgment against the company as well as the scammer. That bodes well for post-judgment collection efforts.

Trigger warnings!

If you agree with the New York Times that all oil exploration everywhere should cease immediately, stop reading now and retire to your safe space. If not, consider this article from Watts Up With That! and a correction casting doubt on the economic sustainability of wind energy.

Not saying you need to accept the premises of the article, but know there are contrarian opinions that don’t attract much attention from the MSM.

We’re running out of Neville Brothers

At Neville, RIP.

Reacting to Hurricane Barry, get it?
Co-author Chance Decker

In Barrow-Shaver Resources Company v. Carrizo Oil & Gas, Inc the Supreme Court of Texas has held again, here in a consent-to-assign dispute, that a contract means what the words say, even if in negotiations a landman said something he didn’t mean, … or changed his mind later, and even if “industry custom” is to the contrary. Continue Reading Industry Custom Does Not Supersede Contract Language

Today is a two-fer. The questions: When does the “merger doctrine” not work in Texas, and how do courts treat technological developments created after a contract becomes effective?

In Murphy Land Group LLC v. Atmos Energy Corporation, Atmos constructed and operated pipelines under three easements from the ‘50’s and ‘60’s and the parties had a 2012 Roadway Lease granting Atmos a 40 foot roadway lease, which expired under his own terms in 2015.

The merger doctrine Continue Reading Smart Pig Technology … and the Texas Merger Doctrine

Co-author Niloufar Hafizi

As mentioned last week, the 86th Legislature amended the Texas Citizens Participation Act, Texas’ Anti-SLAPP law and defendants’ go-to weapon of destruction in a diverse range of cases.

The TCPA was intended to prevent harassing lawsuits by plaintiffs seeking to quell constitutionally protected activity, in particular the exercise of free speech, the right to association, and the right to petition.but has been much-criticized for being overly broad and subject to abuse and misuse. The old TCPA was frequently applied in oil and gas litigation, which is why we are benefiting you with our observations.

Continue Reading The TCPA Revisions Are Good for (Not Only) the Oil Business

Co-author Nilofaur Hafizi

The answer depends on what part of “the oil business” you care about. The 86th Legislature produced a few, but not many, changes in laws affecting the business, (most going into effect on September 1). Here are some that passed and some that failed:

WINNERS Continue Reading Was the 86th Texas Legislature Good to the Oil Business?

Just because anthropogenic climate change is a legitimate concern doesn’t mean that the most radical pronouncements from the idealogues aren’t fair game for criticism.

Not an idealogue, Bjorn  Lomborg, thinks we should worry about it  … a little bit. That caution has earned him derision as a skeptic or worse, a denier merely because he believes the “threat” is overstated and the proposed cures are needless and far more expensive than the disease.

Now for the vote-trolling presidential aspirants.

How many trillions for the Green Nude Eel?

Uncle Joe Biden opens with an unmuscular $1.7 Trillion and, in honor of his past, is accused of stealing ideas from the GND.  He sweetens the pot by refusing to take money from fossil fuel interests. Continue Reading What’s the Bidding on the Green New Deal?