Photo of Charles Sartain

Co-author Trevor Lawhorn

*Kind of; this is a federal court predicting what the Ohio Supreme Court would do.

In Ohio, in calculating royalties in a market-value-at-the-well lease (as distinguished from a “proceeds” lease), post-production costs are to be shared proportionately by the working interest and royalty owners. The lessee’s duty to market does not extend to expenses incurred in sales not at the well-head. This is consistent with other producing states such as Texas and Pennsylvania. 
Continue Reading Ohio Takes a Position on Market-Value-at-the-Well Royalty Clauses*

Lukewarm apology: the headline is clickbait. This post is all about the whiskey, not the oil.

In my quest for the perfect Sazerac (as reported here and here) I’ve concluded that perfection is on the palate of the beholder. From this moment on I will refrain from declaring whether a particular offering is good, bad or indifferent. I’m a guidepost, not your conscience. Quid pro quo: Don’t tell me which King I should prefer: Albert, Freddie or BB.
Continue Reading Searching for Oil … and a Sazerac

Co-author  Chance Decker

What does it take these days to get money from a Texas jury? Not much, it seems; in XTO v. Goodwin the trick was convincing a higher court that you should keep it.

Let’s start with the minefield that is the law of evidence:

  • Expert opinion testimony must be based on facts, and sound reasoning and methodology.
  • Conclusory or speculative opinion testimony is not relevant.
  • An opinion with no factual substantiation is speculative or conclusory.
  • Expert testimony based on unreliable data or flawed methodology is unreliable and does not satisfy the relevancy requirement.
  • Unreliable expert testimony is legally no evidence.

Continue Reading Trespass But no Damages in a Texas Case

Co-author Chance Decker

In the spirit of Halloween, Le Norman Operating v. Chalker Energy Partners III  is about a scary statute: The Texas Uniform Electronic Transactions Act, the UETA.

The Facts

A group of sellers led by Chalker went “by the book” in selling oil and gas assets in the panhandle. They set up a formal bidding process and hired Raymond James to advise. When LNO expressed interest, the parties signed a confidentiality agreement providing that Chalker would not be bound, “ … unless and until a definitive agreement has been executed and delivered[.]”
Continue Reading Oil, Gas and the Electronic Transactions Act

Welcome to the binary edition, where you have a choice: An informative and engaging stroll through the history of the oil and gas business in Texas, or a wonkish and also informative legal analysis.

First, at the recent summer meeting of the Texas Independent Producers and Royalty Owners, TIPRO (and Drilling Info) president Allen Gilmer

Semco, LLC v. The Grand, LTD. is nominally about a $15 million liftboat construction contract and the legal issues one would expect after a long trial and a big verdict. This post is more about how to administer and perform a contract, especially one with a friend:

The lessons

  • Be Ronald Reagan: Trust but verify vague assurances.
  • Contract formalities have a purpose. Adhere to them.
  • “You snuck in that contract revision” = “I didn’t bother to read it”.
  • Didn’t warn of increased costs in writing? Why not?
  • “Money and friends are like oil and water.” Michael Corleone, Godfather Part III.
  • A disgruntled ex-employee is never good for your case.
  • Failure to sign an agreement to clarify increased costs = worse things to come.

Continue Reading Lessons from a Liftboat Contract

Occasionally we visit issues larger than one-off courthouse decisions. Here are a few selected stories on the extent to which fracking contributes to rising levels of methane and, maybe, to climate change. There are conflicting facts and opinions, so decide for yourself. If you find a tilt in one direction, we’re just levelling the field. See the last entry.
Continue Reading What’s New in the Methane Debate?