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Charles Sartain

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In Plaquemines Parish et al. v. Chevron et al., the U. S. Fifth Circuit has ruled on whether 42 suits brought by six parishes and the Louisiana Attorney General against a number of oil companies belongs in federal court or state court. The allegations are that the companies’ operations over the years  essentially destroyed the Louisiana coastal marshes. Billions of dollars are at stake. The immediate issue was whether the defendants’ removal was timely. They were, the result of which is that the cases are likely to remain in federal court.

A short history
Continue Reading Louisiana Coastal Zone Litigation Likely to Remain in Federal Court

Co-author Brittany Blakey

Yowell v. Granite Op. Co. and Apache Corp. v. Peyton Royalties, L.P. is another Rule Against Perpetuities case. Keep reading. The anti-washout protection for your reserved overriding royalty could be at risk.

The court of appeals (on remand from the Supreme Court) determined that a reserved overriding royalty interest in an oil and gas lease may be reformed under section 5.043 of the Texas Property Code to comply with the Rule.
Continue Reading Texas Court Addresses Anti-Washout Clause and Rule Against Perpetuities

Regency Field Services LLC v. Swift Energy Operating LLC, draws one’s attention to the difficult analyses that should be made before bringing a subsurface trespass claim.

A mineral estate lessee (Swift) alleged that H2S (“brimstone” if you follow the Old Testament) injected into the Wilcox formation by an injection well (owned by Regency) migrated and injured its interests in the minerals underlying nearby properties. The issue for the court was when the lessee’s claims accrued. We will ignore parts of the decision discussing pleadings and summary judgment evidence (trial lawyers, pay attention!).
Continue Reading Texas Supreme Court Reverses Subsurface Trespass Judgment

Co-author Rees LeMay*

In Apollo Exploration, LLC v. Apache Corp., Texas’ 11th Court of Appeals analyzed several provisions of purchase and sale agreements in a complex oil and gas transaction and demonstrated a measured, text-centered approach to the interpretation of contract language.

Significant parts of the holding hinged on the Court’s reference to…

Co-author Rusty Tucker

Howard, et al. v. Matterhorn Energy, LLC, et al. [6th Dist.] May 4, 2021 considered the Texas Citizens Participation Act as amended, effective on September 1, 2019.

Background

The lessors leased their minerals in 1,100+ acres in Harrison County to Matterhorn. To induce the deal, Matterhorn several representations to the lessors and agreed to a continuous development program. The lease required lessors to give 60 days’ notice of a breach before filing suit. Before the primary term expired gas prices dropped and Matterhorn decided to sell the lease.

The lessors sued Matterhorn for damages and rescission based on several causes of action  and filed a notice of lis pendens. Matterhorn alleged it had contracted with EnergyNet to market its interest in the lease and that when lessors became aware they filed suit and a notice of lis pendens.

Testimony showed that the lessors made false misrepresentations about Matterhorn and Cherry to third parties (including prospective purchasers) prior to filing suit. Matterhorn claimed these discussions led to the termination of its sales agreement with EnergyNet. Matterhorn counterclaimed for tortious interference and business disparagement.

Lessors moved to dismiss Matterhorn’s claims under the TCPA because they were based on their petition and lis pendens and invoked their exercise of the right to petition the courts for relief. Lessors further argued they established an affirmative defense entitling them to judgment as matter of law because the counterclaims were barred by the judicial proceedings privilege.

Matterhorn responded that the communications forming the basis of their claims were among private parties, not the public, and occurred prior to the filing of the litigation. There was testimony about how lessors’ third party discussion and filing of the lawsuit and lis pendens caused Matterhorn to lose its ability to sell the lease. Plaintiff Howard admitted in a deposition that he filed the lawsuit before expiration of the primary term and before penalties under the lease were due to “put . . . a drain on” Matterhorn and affect its ability to “flip” the lease. The trial court denied lessors’ TCPA motion to dismiss.

The TCPA process

Resolving a TCPA claim occurs in three steps:
Continue Reading Texas Court Applies Amended Citizens Participation Act to a Lease Dispute

Co-author Rusty Tucker

Ridgefield Permian, LLC, et al. v. Diamondback E & P LLC, et al. addresses the scope of a property interest foreclosed upon by a tax suit in Reeves County, Texas. In this post we will shortcut the complicated facts and discuss the takeaways. The rules are what you need.

Royalty interests that were subject to an oil and gas lease were foreclosed upon and sold by the sheriff. The lease then terminated. Both the purchaser of the foreclosed interest (Magnolia, LLC) and the assignee (the Trust) of the former royalty owner whose interest was foreclosed upon (Albert) claimed to own the possibility of reverter * (the POR) and granted oil and gas leases.

The point

The Supreme Court of Texas has held that a POR is not taxable. The POR was not included in the property interest that was the subject of the tax foreclosure. The foreclosed interest was a royalty interest under the Meriwether lease. The POR, owned by Albert, was not derived from, part of, or attached to the foreclosed royalty interest. Therefore, the tax lien did not attach to the POR.
Continue Reading Tax Foreclosure on Royalty Did Not Include Possibility of Reverter

Co-author Rees LeMay*

“Ratification is not a game of ‘gotcha’”, said the Texas Supreme Court in BPX Operating Co. v. Strickhausen.  The Court, in a 5-4 opinion, addressed the standard for an oil and gas lessor’s implied ratification of an unauthorized pooling. Among other lessons, this decision warns royalty owners to be careful when cashing those royalty checks.
Continue Reading Supreme Court Introduces Totality of the Circumstances Test for Implied Ratification