Co-author Brittany BlakeyThe Texas Supreme Court in Concho Resources, Inc. v. Ellison enforced a boundary stipulation involving an unambiguous deed about which there had been no dispute. You can refer to our earlier post to understand the facts, the boundary, and the Court of Appeals decison.
More facts
The Boundary Stipulation of Ownership
The fourth installment on the climate change debate by Gray Reed energy partner Paul Yale looks at criticisms of Bjorn Lomborg’s False Alarm: How Climate Panic Costs Us Billions, Hurts the Poor, and Fails to Fix the Planet. These short summaries can’t do justice to Paul’s articles, or the books themselves for that matter.
Co-author Brittany BlakeyThe central issue in the Texas case of Cook v. Cimarex Energy Co.: Did Cook grant Cimarex a right of way across Cook’s land to the location of two Cimarex wells. No he didn’t. Reversing the trial court, the court of appeals concluded that two Contracts of Release were ambiguous. Neither
Co-author Rusty TuckerBell v. Midway Petroleum Grp., L.P., was a trespass to try title action, suit to quiet title for possession of a land, and a counterclaim for title by adverse possession. There are several …
… Takeaways
Continue Reading Mother Hubbard Clause Saves a Property Deed
Co-author Brittany BlakeyTexas lien law in some cases does not require the filing of a financing statement for priority perfection. However, as you might have learned in In re First River Energy, the Delaware Uniform Commercial Code did not recognize the priority of Texas producers’ unfiled, unperfected security interests in proceeds under Texas Business and Commerce Code Section 9.343. In contrast, Oklahoma Producers prevailed because the Oklahoma Lien Act in 2010 cured a defect still present in the Texas statute. Texas producers with a lien are subject to UCC choice-of-law, priority, and perfection of security interests rules.
Rep. Charlie Green introduced House Bill No. 3794 which, if passed, would replace Section 9.343 with the “Texas First Purchaser Lien Act.”
Continue Reading Texas Legislature to Consider Oil and Gas Lien Law Amendment
Co-author Rusty TuckerAs Humpty Dumpty would have said to Alice if he were Justice Dumpty of the Texas Supreme Court, the term means whatever the parties to an oil and gas lease say it means, neither more nor less. In Sundown Energy LP, et al. v. HJSA No. 3, Ltd. P’ship the term “drilling operations” meant that activities other than spudding-in new wells were sufficient to satisfy a continuous operations clause.
The lease
In a lease in Ward County, 19,570 acres from the surface to the base of the Pennsylvanian formation were “Producing Areas”. The remainder covered all depths as to 10,880 acres plus depths in the Producing Areas below the Pennsylvanian. During the primary term, production in paying quantities from anywhere on the leased premises would maintain the entire lease. At the end of the primary term lessee Sundown was required to reassign its rights in each tract not then held by production unless Sundown was engaged in a “continuous drilling program.” The continuous drilling clause in Paragraph 7(b) read:
The obligation . . . to reassign tracts not held by production shall be delayed for so long as Lessee is engaged in a continuous drilling program on that part of the Leased Premises outside of the Producing Areas. The first such continuous development well shall be spudded-in on or before the sixth anniversary of the Effective Date, with no more than 120 days to elapse between completion or abandonment of operations on one well and commencement of drilling operations on the next ensuing well.
Sundown spudded-in three development wells prior to the end of the primary term and then spent over $40 million drilling 14 more wells from 2006 to 2015.
Continue Reading What are “Drilling Operations”?
Co-author Rusty TuckerWhat is the standard of care imposed by the Model Form JOA on the well operator? Crimson Exploration Op., Inc. v. BPX Op. Co. gives us the answer, and it is no surprise.
Background
Under a Model Form JOA, BPX as operator and Crimson and other non-operators drilled the McCarn A1H well. After a problem that prevented further drilling the parties agreed to plug and abandon the well.
BPX billed Crimson for its proportionate share of drilling expenses; Crimson refused to pay. In BPX’s suit to recover Crimson’s share of costs, Crimson asserted the affirmative defense of prior material breach by BPX’s failure to act as a prudent operator in drilling the well. Crimson argued the standard of care was a “reasonably prudent operator” while BPX relied on the exculpatory clause in Art. V.A of the JOA that excused liability unless BPX acted with gross negligence or willful misconduct.
Continue Reading Well Operator Protected by the Model Form JOA
In his third installment on the climate change debate, Gray Reed energy partner Paul Yale discusses the assertions of Bjorn Lomborg in his book False Alarm:
Co-author Rusty TuckerThe Supreme Court of Texas has ruled that oil and gas leases under consideration in BlueStone Natural Resources II, LLC v. Walker Murray Randle, et al. did not permit deduction of postproduction costs from sales proceeds before royalties were computed, and a “free use” clause did not authorize the lessee to consume leasehold gas in off-lease operations without compensating the lessors.
The takeaway …
… at least that’s what they ruled in this cicumstance. The Court reiterated that regardless of a recitation here or an observation over yonder, it will not adjudicate the supremacy of one contract clause over another or one arbitrary rule of construction over another. Rather, it will construe each contract according to its terms.
The royalty clause
Continue Reading Texas Supreme Court Weighs in on Post-Production Costs
Co-author Rusty TuckerYesterday we discussed aspects of PPC Acquisition Co., LLC, et al. v. Delaware Basin Res., LLC, et al. Today we consider whether the retained-acreage clauses created a special limitation or a covenant and the relationship between the clauses and Field Rules in place at several different times. Did Field Rules establishing 640-acre units expand acreage each lessee could retain? (The clauses are highlighted in the opinion and facts are in yesterday’s post.)
What’s the difference?
Continue Reading Texas Court Parses Three Retained-Acreage Clauses – Part 2