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Charles Sartain

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Co-author Rusty Tucker

In Mayo Found. For Med. Educ. & Research v. BP Am. Prod. Co. a United States District Court considered the circumstances under which a lessor can withold its consent to assign an oil and gas lease.

The provision 

A lease from Barbara Lips* to Alpar Resources included Section 157 and other lands.  Paragraph 7 reserved to Lips an absolute veto right over any assignment of Alpar’s interest in the Lease.

An amendment to the lease replaced the original Paragraph 7 with this less-restrictive clause:

“The rights and obligations of the Lessee hereunder are not assignable or transferable in any respect by it, except upon the written approval of [Mayo], which approval shall not be unreasonably withheld.”
Continue Reading Texas Court Evaluates Consent to Assign an Oil and Gas Lease

Co-author Rusty Tucker

The threat: You, the operator, are operating unprofitable wells where monthly costs exceed or barely equal revenues, making money on the fixed COPAS overhead charges. Your non-operators are going into the economic hole and they don’t like it.

Yesterday we presented options for the non–operator to stop the financial bleeding. Today we anticipate responses available to the operator.

Yesterday’s caveats still apply.
Continue Reading My Operator is Making Money … Part 2, The Operator’s Response

Co-author Rusty Tucker

With the plunge in commodity prices many formerly profitable wells are now in the red, and we don’t know for how long. This is causing non-operators to question the bona fides of the operations … and of the operator, and to search for a way out of their obligations.

The challenge: The operator is operating unprofitable wells where monthly costs exceed or barely equal revenues, making money on fixed COPAS overhead charges, and non-operators are going into the economic hole.  What can the non–operator do to stop the financial bleeding?
Continue Reading My Operator is Making Money on the Well and I’m Not. What Can I Do? Part 1.

Co-author Rusty Tucker

Jatex Oil & Gas, L.P. v. Nadel & Gussman Permian, L.L.C. presents several teachable moments:

  • The Texas Property Owner Rule does not allow a non-expert to testify on matters requiring expert testimony.
  • The operator may pay proceeds from a well to the lender to whom the working interest owner made a collateral assignment of net revenues from the well.
  • A claim for failure to act as a reasonbly prudent operator for failing to comply with an operating agreement is a contract claim, not a tort claim.

Continue Reading Lessons from an Operating Agreement Dispute

Gas flaring, especially in the Permian and the Eagle Ford, is coming in hot these days at the Texas Railroad Commission. Presented here are viewpoints from several stakeholders in the discussion. My comments are summaries. For a fuller understanding please read the reports for yourself.

The players are in general agreement on several points:

  • There needs to be an end to routine gas flaring.
  • Texas flares a lot of gas: About as much annually as all of its residential users combined, or maybe as much as the seven largest cities, or maybe Houston. It depends on who’s talking. Values vary but in the Permian it ranges from $450 Million to $750 Million.
  • Progress is being made, plenty for some, not enough for others.

The Texas Methane and Flaring Coalition

These seven trade associations and 40 operators are members of the Railroad Commission’s Blue Ribbon Task Force for Oil Economic Recovery. Their positon, among others:

  • More detailed data submissions from operators will result in more effective operational and regulatory decisions that will reduce flaring.
  • A proposed flaring matrix (see the report) identifies situations where flaring is necessary and makes recommendations for the application of Rule 32 that will result in overall flaring reductions because of the shortened time frame for administrative approvals.
  • Methane emissions from oil and gas systems are down 23 percent since 1990.
  • Texas flaring intensity is well below that of comparable countries according to the World Bank.

Continue Reading How Will the Texas Railroad Commission Address Gas Flaring?

Co-author Rusty Tucker

San Miguel Electric Coop is a Texas nonprofit electric cooperative that owns and operates a power plant that supplies electricity to 38 Texas counties. After a four-week absence, they return to these pages, this time in DCP Sand Hills Pipeline, LLC v. San Miguel Elec. Coop., Inc. Read on to learn about the “paramount importance doctrine”.Continue Reading Lignite Lease Prevails Over Pipeline Easement

A fellow walks into a bar in New Orleans. “What’ll it be?” “A Corona and two Hurricanes,” says he. “Here you go. That’ll be $20.20.”

Co-author Rusty Tucker

Now, on to operations in hurricane-free New Mexico. Lessons from BEPCO, L.P. v. RMTDC Operations, LLC d/b/a Total Energy Services:

  • Hire a good company man and trust him
  • Get a good expert for trial
  • Prep your witnesses well for deposition and trial

Continue Reading Company Man Wins MSA Dispute