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Charles Sartain

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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

Co-author Brittany Blakey

In Headington Royalty, Inc. v. Finley Resources, Inc., this release was included in an acreage swap agreement:

Headington waives, releases, acquits and discharges Petro Canyon and its affiliates and their respective… predecessors and representatives for any liabilities… related in any way to the Loving County Tract…”

The swap agreement did not explicitly mention Finley Resources, and Finley did not execute the agreement.

The question

Was “predecessors” limited to prior corporate forms of the released party and its affiliates, or did it include predecessors-in-title?  The court held that Finley was not a corporate predecessor of Petro Canyon or its affiliates and therefore was not a released party.

The circumstances
Continue Reading “Predecessors” Does Not Include Predecessors-in-Title, Says Court

Co-author Rusty Tucker

This is another chapter in the dispute between Eagle Oil & Gas Co. and. TRO-X, L.P.  The litigation arises out of an agreement to acquire and sell oil and gas leases. Here, TRO-X alleges that Eagle failed to remit a share of revenues from production that commenced after the first suit between the parties ended.

Background

In 2005 TRO-X and Eagle entered into an acreage acquisition agreement for leases in Pecos and Reeves counties. The interests would be acquired in Eagle’s name for both parties. Each party could choose to retain a percentage of un-promoted working interests in the prospects, and the remaining interests would be sold to third parties. Profitable sales would yield either “cash proceeds” or “non-cash proceeds.” The agreement included an AMI.
Continue Reading A Long-Running Dispute Over an Acquisition Agreement is Returned to the Trial Court