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Charles Sartain

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In Mary et al. QEP Energy Company  the question was, given an encroachment of a pipeline onto the property of another, what is the test for determining the good faith, or not, of the party in possession?

Ms. Mary and QED were parties to a Pipeline Servitude Agreement and what appears to be an oil and gas lease (the court could have just called it that). Ms. Mary  et al claimed that QED’s gas pipelines unlawfully extended onto their property by 31 feet and 15 feet and sought disgorgement of the profits derived from the pipelines. The issue was to determine the source of the liability of QED, the encroacher, which would determine damages.   
Continue Reading What is the Test For Good Faith in the Louisiana Civil Code?

Quick answer: It depends on what the lease says.  Last week featured a tug-of-war between a producer and the community in which it operates; this week in HJSA No. 3 LP v. Sundown Energy LP  it’s the producer and the lessor.

HJSA owns the mineral estate under 30,540 acres in Ward County, Texas. Sundown is the lessee. After six years the lease could be maintained only as to individual tracts from which there was production in paying quantities and as to other tracts only if Sundown was engaged in a “continuous drilling program”.

Dueling lease provisions (emphasis mine)

Paragraph 7B says:

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 the commencement of drilling operations on the next ensuing well.

Paragraph 18 is a 90-day temporary cessation clause that defines drilling operations as:

“ … actual operations … (spud-in with equipment capable of drilling to Lessee’s objective depth); reworking operations, including fracturing and acidizing; and reconditioning, … “.
Continue Reading Spudding? Reworking? What are “Operations” Under an Oil and Gas Lease?

In Town of Flower Mound v. Eagle Ridge Operating LLC, an operator’s injunction against enforcement of a local ordinance was dissolved. EagleRidge operates gas wells in the Flower Mound. A Town ordinance prohibits work on gas wells (other than drilling) at times other than between 7 a.m. and 7 a.m. Monday through Friday and certain times on Saturday.

EagleRidge tried to avoid enforcement of the ordinance by:
Continue Reading Gas Well Operator’s Injunction Against Texas Town is Dissolved

Can an email be directed to a particular state? No, said a Texas court in Enerquest Oil & Gas, LLC v. Antero Resources Corporation. The court questioned “the very premise of the contention that an email can be sent to a particular state”. Emails are not sent to a designated computer or electronic device located at a particular place. Email accounts have no physical address. They are sent into cyberspace, saved onto a server or servers, and opened by the recipient wherever that person might happen to be whether, as the court said, “in Texas, Tennessee or Tibet.”
Continue Reading Cyberspace Saves an Out-of-State Oil Company

Let’s start with a quiz:

Which of these predictions is most likely to come true:

  1. Senator Sanders’ “bold” climate action plan will gain traction and become the law of the land.
  2. Vegan options will be available at the next landman’s dinner meeting.
  3. As 2020 approaches President Trump will learn his lesson. No more tweets.
  4. After all these years, your cat will finally respect you.
  5. LSU will beat Texas on the gridiron.

Continue Reading Another Bid is in on the Green New Deal

Co-author Paul Yale

What’s good for the goose is not always good for the gander, at least in some places. It appears that the North Dakota Supreme Court has adopted the minority “ Marketable Product Rule” in connection with a 1979 North Dakota state oil and gas lease. We say “it appears” because not so long ago, in its 2009 decision in Bice v. Petro-Hunt, LLC, the Court held that North Dakota was an “at the well” state, like Texas and the majority of other oil producing states. This latest decision is Newfield Exploration Company, et al v. State of North Dakota et al.

The difference between the “Marketable Product Rule” and the “at the well” rule has to do with the deductibility of post-production costs of transporting, compressing, treating and processing from royalty payments. In an “at the well” state such costs are charged proportionately against the royalty owner. In a “Marketable Product” state they are not.
Continue Reading North Dakota: A Different Rule for Post-Production Costs In a State Lease.

Co-author Lydia Webb

Nabors Offshore Corp. v. Whistler Energy II LLC  is the rare bankruptcy case where the outcome was consistent with the realities of operating in the oil patch rather than the artificial constraints of the Bankruptcy Code. The Fifth Circuit balanced the debtor’s interest in minimizing the costs of administering its estate with a counterparty’s economic interest in its property sitting idle in the debtor’s possession. The counterparty was not made to eat the costs for the time its equipment sat unused after rejection of their contract. 
Continue Reading Bankruptcy Ruling Sides With Oil Field Realities

It’s still true, “Whiskey’s for drinkin’, water’s for fightin’.” Gray Reed lawyers Brock Niezgoda and Stephen Cooney spoke to TIPRO’s summer conference on the use, control and ownership of water in oil and gas operations. Here is their PowerPoint.

The takeaways:

Groundwater
Continue Reading Water: The Hot Commodity in the Permian and Elsewhere

Co-author Chance Decker

How long – if ever – has it been since you pondered the difference between a “tenancy in common” and a “joint tenancy”? Same for us, until the wheels came off a family relationship and a lawsuit was filed in Wagenschein v. Ehlinger. This brings to us – and you – the opportunity to review a little Texas property law. Landmen and title examiners, perk up.

Tenancy in common v. joint tenancy
Continue Reading Tenancy in Common and Joint Tenancy Explained