Confess … Confess!
When you prepare, review and/or sign settlement agreements you sometimes pay less attention than you should to the details of those “standard” releases! Acme Energy Services, d/b/a Big Dog Drilling v. Staley et al. says, Beware the “boilerplate”; before signing consider what you are actually trying to accomplish.
Continue Reading Broad Settlement Discharges Mineral Liens
Co-authors Niloufar Hafizi and Mauri Hinterlong
In resolving disputes among the mineral interest family, there is no bright-line rule delineating the duty of the executive right holder. In Texas Outfitters Limited v. Nicholson, the Texas Supreme Court explained why. The Court last addressed executive rights in 2015 in KCM Financial v. Bradshaw, where the executive allegedly colluded with a lessee for lease terms favoring itself at the expense of the non-executive. Texas Outfitters presented an oppportunity for the Court to apply the KCM guidelines to a different scenario: whether the executive breached the duty by refusing to lease.
(Spoiler alert: Yes.)
Continue Reading Executive Right Holder Liable for Refusing to Lease
Speedier than Jesse Owens in the ‘36 Olympics, Democrats railroaded the Colorado legislature passed, by party-line vote, Senate Bill 181, a new law that will have a profound effect on oil and gas operations in that state. It replaces Proposition 112, which was rejected by 57 percent of the voters just five months ago.
Among other effects, the new law mandates the Colorado Oil and Gas Conservation Commission to redirect its priorities from oil and gas production to protection of public health, safety and welfare, and gives local governments more control over drilling and production. Rather than hear it from me, here are reports from those who were closer to the action:
Continue Reading Colorado Rewrites the Rules of Oil and Gas Exploration
Co-author Ethan WoodIn Johnson et al vs. Chesapeake et al, unit operator Chesapeake deducted post-production costs (gathering, compression, treatment, processing, transportation and dehydration) from non-operating, unleased mineral owners’ share of production proceeds. The UMO’s (so-called by the court) sued. The federal district court concluded that La. R.S. 30:10(A)(3) governs the dispute, and post-production costs could not be recovered from the UMO’s share of production proceeds.
Continue Reading Louisiana Operator Can’t Deduct Post-Production Costs from Unleased Mineral Owners
Co-authors Ethan Wood and Chance Decker
Less than a year ago, we discussed the “Unanswered Questions” left in the wake of Devon Energy Prod. Co., LP v. Apache Corp. (which did answer the question, “Who is a ‘Payor’ Under the Texas Natural Resources Code?”). We asked:
“But if the non-participating working interest owner is not paying royalties—what is keeping the lease alive? Absent pooling of the leases or a JOA, the non-participating working interest owner cannot rely on the operator’s actions to perpetuate its leases. A sly operator can obtain top leases from the non-participating working interest lessors and run out the clock on those leases …”
In Cimarex Energy Co. v. Anadarko Petroleum Corp., the operator did just that …
Continue Reading Operator Runs Out the Clock on Co-Tenant
C
o-author Niloufar “Nikki” Hafizi
The latest Fifth Circuit opinion in Seeligson v. Devon Energy Production, L.P. is the latest round in a class action that has been developing since 2014. The plaintiffs are royalty owners who leased to defendant DEPCO. They were certified by the trial court as a class based on an alleged breach of DEPCO’s implied duty to market gas.
The issue on this appeal: Did the trial court abuse its discretion in certifying the lessors in 4,143 Barnett Shale leases as a class under Federal Rule 23?
The Fifth Circuit reversed and remanded to determine “commonality” and to analyze “predominance”, both of which are required for class certification.
This opinion supercedes an earlier opinion from the same panel. This reversal was for a different reason than the first.
The Devon arrangement
Continue Reading Royalty Owners Seeking Class Certification Sent Back to the Trial Court
Co-author Chance DeckerBurlington Resources Oil & Gas Company, LP. v. Texas Crude Energy, LLC et al is another chapter in the back-and-forth over deduction of post-production costs from royalty payments. In “clarifying” (royalty owners might say “retreating from”) Chesapeake Exploration & Production, LLC v. Hyder, the Texas Supreme Court held that a royalty delivered into the pipeline or tanks is akin to a royalty delivered “at the wellhead.” The lessee was entitled to deduct post-production costs from its royalty calculation, notwithstanding that the calculation was based on the “amount realized” from downstream sales.
Don’t read too much into it?
Continue Reading Texas Supreme Court Clarifies Hyder
Co-author Trevor LawhornA lot, if the claim before the court is for fraudulent inducement. Points to remember:
Continue Reading What Does a Car Dealer Case Have to do With Oil and Gas?
Marsha Ellison v. Three Rivers Acquisition, LLC, et al. reminds us what is required for an instrument to be a conveyance and what is required for a stipulation to be effective.
When J.D. Suggs died in 1925, his heirs agreed to swap land with the Noelkes, and executed the Suggs Deed conveying several tracts to the Noelkes. One tract was described as “all of … the lands located North and West of the public road which now runs across the corner of [the survey], containing 147 acres more or less.” There was a problem: There were actually 301 acres in the section northwest of the public road.
Continue Reading A Lesson in Property Stipulations
The Green New Deal (read it for yourself; its not long), floating around Congress on a cloud of cow farts, is quite a grand and far-reaching manifesto. Here are differing views from the media, think tanks, and other interested parties. They describe it better than I.
Even though the GND is “impossible”, reliably left Slate opines that‘s why some people like it. Impossible plans are good for thinking and thinking leads to dreaming, and dreaming is the only way that change occurs.
But the journey from dreams to reality is perilous. According to Big Think, the GND is a “catalyst to radically restructure the US economy and social structure”. Speaking of peril, among the goals the sponsors want to achieve through government action are:
Continue Reading The Green New Deal: It’s Not Just About Energy