Photo of Charles Sartain

Charles Sartain

Subscribe to Charles Sartain's Posts
Contact:Read more about Charles Sartain

Co-author Trenton Patterson*

We’re not saying you should do it, but there is a recipe for ridding oil and gas leases of pesky burdens: Enter into a new lease covering the same interest as the earlier lease and omit any reference to an intent that the later be subordinate to the earlier. You don’t even have to release the earlier lease. So says TRO-X, L.P. v. Anadarko Petroleum Corp.

You might remember a report on this case at the court of appeal, where we marveled at the skillful (or fortuitous, we’ll never know) way the Anadarko landman won the day via email.
Continue Reading Texas Supreme Court Affirms Washout of a Back–in Interest

Co-author Chance Decker

In Murphy Exploration & Production Co. — USA v. Adams the Texas Supreme Court held that an offset well clause in an oil and gas lease did not require the lessee to drill wells calculated to protect against drainage. Four dissenting justices believed the majority disregarded the well-established meaning of “offset well” used in the oilfield for decades.
Continue Reading Texas Supreme Court Redefines an Offset Well Clause

Co-author Brittany Blakey*

A few things you should know about the acreage retention clause:

  1. Foremost and always, read the instrument – not all clauses are created equal. But you know that.
  2. Consider the clause before perfunctorily filing P-15’s, plats, and other RRC forms.
  3. Absentmindedly relying on field rules to determine how much acreage you can retain? Do so at your peril.  And while your’re reading, read the rules pertaining to your acreage!

Two Texas Supreme Court decisions published on the same day confirm that retained acreage clauses that vary in language from one instrument to another will likely vary in effect. Depending on the language, the lessee might not be able to maintain all the acreage it planned on holding. 
Continue Reading Ask and You Shall (Not?) Receive: Retained Acreage Clauses and the Texas Supreme Court

Co-author Sonya Reddy

Defendants accused of stealing trade secrets often claim that publicly available information can’t constitute a trade secret. Sometimes yes, but mineral ownership that can be determined from the public record only after lengthy, expensive, and labor-intensive research in the county courthouse can have trade-secret protection, according to Eagle Oil & Gas Co. v. Shale Exploration, LLC.

 It began like a routine exploration venture …
Continue Reading Big Damages in a Texas Trade Secret Case

Co-author Chance Decker

You’ve secured the right leases.  You’ve drilled nice wells in the right locations.  Now, who will pay the royalty owners?  Follow Devon Energy Production Company, L.P. v. Apache Corporation, to be sure.

The takeaways

It is often a worthy strategy for the lessee to be aggressive with counterclaims against the lessor. Or how about we’re the Wehrmacht and the other guy is Poland.

Lessees should think twice about that strategy if it means complaining about the lessor’s public statements. In Lona Hills Ranch v. Creative Oil & Gas Operating LLC et al, that strategy ran afoul of the Texas Citizens Participation Act, Texas’s “anti-SLAPP” statute (“Strategic Lawsuits Against Public Participation”).

The TCPA authorizes dismissal of a legal action based on, relating to, or in response to a party’s exercise of the right of free speech, right to petition, or right of association.
Continue Reading Texas Anti-SLAPP Statute Stalls Lessee’s Counterclaim

Briggs v. Southwestern Energy is another way to say “chaos” in Pennsylvania. The Superior Court ruled that fracking may constitute a trespass when subsurface frac-fluid and proppants cross boundary lines and extend into the subsurface estate of an adjoining property owner from whom the operator does not have a mineral lease, resulting the extraction of natural gas from beneath the adjoining property.
Continue Reading Trespass by Fracking Recognized in Pennsylvania

Scenes from the trial lawyer’s conference room:

Client: “Lookee here! This paragraph says we win!”

Lawyer: Yes, but what about all the other paragraphs?”

“Those don’t matter.”

Why is that?”

“Because they don’t help us. Did you graduate from law school?”

“But the court will harmonize all the provisions in the document.”

“If I want harmony I’ll go with the Everlys. If you’re afraid of a fight, I’ll find me a lawyer with a backbone. I’m thinking the tough, smart lawyer. That one that’s always on TV.”

and:

Client: “@*^& the words. I’ll tell ’em what the deal really was.”

(Repeat client disappointment)

In XTO Energy v. EOG Resources, a title dispute over the mineral estate in 1,653 acres in Atascosa and McMullen counties, Texas, the loser tried both, to no avail.
Continue Reading Foreclosure Included the Minerals Because the Documents Said So

Co-author Chance Decker

What could go wrong when the well recovers two times its costs in nine months? Plenty, as we see in Dimock v. Sutherland Energy.

In a Seismic Exploration and Farmout Agreement, Dimock farmed out a 15-section area in Hardeman County, Texas, to Sutherland to drill the Hamrick #3.  Project payout was that point when revenues equaled two times Sutherland’s capital costs. The parties disagreed over whether payout occurred. The question was whether a $1 million seismic shoot after the well was drilled was a capital cost.

First, why do I care?

  • “Boilerplate” in contracts is there for a reason.
  • Should important terms be defined? This case suggests yes.
  • Grammar matters. An errant comma cost one of the parties money and time.
  • Defending a fiduciary duty claim will not be an enjoyable experience due to the high standard of behavior required of fiduciaries in Texas. Avoid fiduciary duties if you can. Seek them from the other guy if you can.

Continue Reading Farmout Agreement Worked Over by the Court