You may recall our report that the Supreme Court of Texas was to take up the question of whether an insurance policy required indemnification of over $100 million in defense costs related to the Macondo well blowout. The court has ruled in Anadarko Petroleum Corp. v. Houston Casualty Company. Anadarko, the insured, prevailed on
Texas Court Addresses Bad Acts in a Lease Play
An opinion that observes “Obviously the jury was not overly enamored with Appellants.” is worth discussing. The decision is Stephens et al v. Three Finger Black Shale Partnership et al.
What to know about partnerships
Parties to a transaction need to be mindful that if a business deal is a partnership, there will be rights and duties not present in arms-length commercial transactions. The main question in Stephens: Was a partnership formed by a letter agreement, a participation agreement and the actions of the parties?
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Contract Operator Not Liable for Breach of a Unit Operating Agreement
Co-author Chance Decker
It’s a tale as old as the oilfield: A non-operator doesn’t pay joint interest billings, operator sues, non-payer claims the expenses were unwarranted and the operator was negligent—no, grossly negligent—for incurring them in the first place. Welcome to OBO, Inc. v. Apache Corporation et al. Despite a creative argument by non-operator OBO that contract operator Apache didn’t have authority to charge JIB’s in the first place, OBO must pay.
The facts
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Rejection of Mid-Stream Agreements Upheld … Again
Co-author Lydia Webb
Q: How many New York federal judges does it take to make a mess of Texas property law?
A: In In Re: Sabine Oil and Gas Corp., five. One to get it wrong, another to affirm the wrongness, and three more for reinforcement.
For the third time, a federal court in
Texas Supreme Court to Consider Macondo Blowout Insurance Dispute
Co-author Niloufar “Nikki” Hafizi
The 2012 Macondo Well blowout and Deepwater Horizon rig explosion gave rise to a slew of lawsuits. Our subject today is one of them. In Houston Casualty Company v. Anadarko Petroleum Corp. the Beaumont court of appeals construed an insurance policy’s excess liability coverage provision. At stake was whether Underwriters had to indemnify Anadarko for over $100 million in defense costs. In an opinion much-decried by energy companies, the court thought not.
The Texas Supreme Court will review the decision, so let’s look at what the court of appeals said.
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Landmen, Ohio Has a Surprise For You
Are you buying oil and gas leases in Ohio and expecting to be paid for your work? Consider Dundics v. Eric Petroleum, in which the Ohio Supreme Court concluded that land professionals who do not possess an Ohio real estate broker’s license are not entitled to bring suit to recover compensation for acquiring oil and gas leases.
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Choice of Law Matters in an Oilfield Indemnity Suit
Did Texas law or New Mexico law apply to knock-for-knock indemnity provisions in a Master Work and Services Agreement? When a contract explicitly calls for Texas law, that is likely to be the outcome, as it was in North American Tubular Services LLC v. BOPCO, LP.
Takeaways
- Decide before something bad happens what law you want to apply to a transaction.
- Think about it. You’ll have to live with the choice.
- Providing a safe work place is a moral imperative; financial risk goes a long way toward assuring the imperative is satisfied.
- (Better left for another post: Does that also apply to leaking methane?)
- The parties’ choice of law was was bolstered because under the contract the indemnity and insurance requirements would be liberally construed in order to effectuate their enforceability.
- It would have helped the choice of law if the contract had also said that the choice was without regard for the chosen state’s conflict of law provisions.
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Attempt to Prove a Texas Partnership Fails
Like breaking into CIA headquarters, sneaking into the Vatican, or hanging off the side of the Burj Khalifa, sometimes getting the deal done seems impossible. The key to any successful mission is planning for disastrous contingencies—be they rats in an air duct, malfunctioning suction gloves, or having to reach out to a third party to finance the bid you just won. Your mission—should you choose to accept it—is to learn how to avoid the fallout of an oil and gas acquisition gone bad by studying Pacific Energy & Mining Co. v. Fidelity Exp. & Prod. Co.
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MSA Indemnity Denied Under the Louisiana Oilfield Indemnity Act
Co-author Brittany Blakey*
Cardoso-Gonzales v. Anadarko Petroleum Corp. addressed the all-important indemnity and insurance provisions in Master Service Agreements in light of the Outer Continental Shelf Lands Act and the Louisiana Oilfield Indemnity Act.
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Texas Supreme Court Affirms Washout of a Back–in Interest
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.
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