Author Ethan WoodLouisiana’s compulsory pooling scheme seeks to balance the interests of individual landowners and oil and gas operators to promote responsible development of natural resources. Because of compulsory pooling, operators are not held hostage by individual landowners who refuse to lease, but landowners are afforded protections so as not to be taken for
[Updated] The North Dakota Supreme Court will hear oral arguments on Thursday to consider who owns the right to profit from the value of the porous spaces within subsurface rock formations. The issue is over Senate Bill 2344, passed by the Legislature in 2019 and, no
Co-author Stephanie Snyder-Zuasnabar*
A subcontractor’s mineral lien in Texas is invalid when, at the time the mineral owner receives notice of the lien affidavit, the mineral owner is not yet obligated to pay the contract price to its contractor. So says Pearl Resources Operating Co., LLC v. Transcon Capital, LLC,
The real takeaway that
Foote and Cypert v. Texcel Exploration and Decker determined that cattle loitering uninvited around a well and tank battery and causing destruction are trespassers, not licensees.
How it happened
Foote arranged with Yates to graze 650 head of cattle on Yates’ pasture and paid Cypert to take care of them. Texcel operated the Hertel oil
It was jurisprudential Groundhog Day as the Supreme Court of Texas handed down Nettye Engler Energy v. Bluestone Natural Resources, another in a series of postproduction cost disputes, only two days after Puxsutawney Phil peeked out of his cozy burrow to pronounce six more weeks of winter.
The takeaway
The Court clarified Burlington Resources
Consider the power of a single word over the fortunes of the parties to a property deed. Such was the effect of the court’s ruling in Barrow Shaver Resources, LLC, et al v. NETX Acquisitions, LLC, et al.
In 1963, by the Stone Deed, Dawson and Hill conveyed a 181-acre tract in Cass County, Texas, to the Stones (John and Treba, not the Rollings). The granting clause described the land by metes and bounds, and continued, “There is likewise conveyed … 1/8th of the Oil, Gas and Other Minerals … .” The conveyance was subject to an oil and gas lease then existing. At the time of the suit, Barrow Shaver had an oil and gas lease from Dawson/Hill and NETX had a lease from Merritt (successor to the Stones).
The question and spoiler alert
Did Dawson/Hill convey 1/8th of the minerals or did they convey 100% of the minerals and attempt to reserve 7/8ths in themselves? Dawson and Hill conveyed 1/8th of the minerals (and the surface, of course).
The Court’s journey to the answer
Continue Reading Texas Court Decides What “Likewise” Means in a Conveyance
If you dispose of produced water you are no-doubt aware of the intensive earthquakes being observed across the Midland and Delaware Basins. In West Texas Earthquake Observations, Implications for the Oil and Gas Industry, Scott Pinsonnault and John Shepherd of Ankura Consulting summarize the evolving situation and the Texas Railroad Commission’s response. They also
The baseball season might be in jeopardy, but litigants are swinging for the fences. In Mary v. QEP Energy, the parties entered into a Pipeline Servitude Agreement over Ms. Mary’s 160 acres. One of QEP’s pipelines extended beyond the servitude by 31 feet and another by 15 feet.
Ms. Mary sued claiming the pipeline was
Of course it is. (Apologies for the clickbait.) If further reading would damage you, I recommend a subscription to the Guardian. Otherwise, consider these points of view when conversing with those in need of enlightenment. Counter-arguments abound, but they are not the purpose of this post.
The industry is subject to ad hominem attacks
Federal Insurance Company et al v. Select Energy Services LLC and Exco et al. is a reminder for negotiators of indemnity and defense obligations in oilfield contracts that choice of law is important. Ignore it when drafting and it will be too late when litigating.
The events
Three workers were injured on an Exco drilling rig in DeSoto Parish. Two sued in Texas, one sued in Louisiana. In the Texas suit Exco demanded that Select indemnify and defend Exco under the parties’ service agreement; Select did, and paid $31MM to settle. In the Louisiana suit the roles were reversed. Exco (through Federal) agreed to defend Select. Exco then withdrew its defense and alleged that the indemnity provision was unenforceable because it contravened La. R.S. 9:2780 the Louisiana Oilfield Anti-Indemnity Act. Select filed a reconventional demand to recover the amount of the Texas settlement.
The choice of law provision called for Texas law to apply without regard to conflict of laws provisions. In case a court might choose to apply the Louisiana Act, there was a substitute indemnity provision: The indemnity and insurance obligations are separate and apart from each other. The insurance obligation would support, but not in any way limit, the defense and indemnity obligations set forth in the agreement.
The Louisiana and Texas Acts
The Louisiana Act was an attempt to avoid adhesionary contracts in which, due to unequal bargaining power, a contractor would have no choice but to agree to indemnify the oil company lest they risk losing the contract. The Act declares null and void any provision in any agreement which requires defense and/or indemnification where there is negligence or fault on the part of the indemnitee or an independent contractor who is directly responsible. If Louisiana law applied, the statute would invalidate Exco’s defense and indemnity obligations to Select.
On the other hand, the Texas Act generally invalidates oilfield indemnity agreements but allows enforcement of mutual indemnity obligations limited to the scope and amount of contractual indemnity insurance each party as indemnitor has agreed to provide to the other as indemnitee. Thus, a mutual obligation is enforceable but limited to the extent of coverage limits of contractual indemnity insurance.
The insurance provided by the parties in the contract brought the mutual indemnity agreement within the exception.
Continue Reading Louisiana Court Considers Texas and Louisiana Oilfield Anti-Indemnity Acts