Let’s begin with a quiz:

What is a “Labor” ? Assuming you met one face to face, how big is would you expect it to be?*

From Great Western. Drilling, Ltd. v. Pathfinder Oil & Gas, Inc. we learn that if you want one agreement to be conditioned on execution of another one, you’d better say so … in writing … in the first one. Texas courts look for ways to avoid conditions precedent.
Continue Reading Offer to Acquire Leases Could Not be Conditioned on a JOA

Co-author Kelley Clark Morris

Geary v. Two Bow Ranch Limited Partnership* is an example of the havoc an unusual contract provision can create.

In 1981, Geary and other Grantors executed a warranty deed conveying 2,614 acres (let’s call it the Property) in Bandera County, Texas, to Meader, Two Bow’s predecessor. The Grantors reserved an undivided one-half mineral interest, and conveyed one-half. The deed conveyed to Meader the ”executory rights” to its minerals and reserved the same to Grantors over their half. The deed included this “Provisional Authority” language:

“Grantee may control the executory rights pertaining to the minerals provided the Grantors and Grantee share equally in any and all proceeds related thereto.”
Continue Reading “Provisional Authority” to Control Executive Rights Not Assignable

Co-author Rusty Tucker

Contract construction cases are fact-specific, but one can take lessons of general application from all of them. Here are the takeaways from Jones Energy, Inc. v. Pima Oil & Gas, L.L.C.,

  • In assigning an ORRI, it matters whether the parties intend to exclude production from a particular interval of a formation or from a particular wellbore.
  • It also matters, when two documents relate to the same subject, which one will control.
  • Courts rely on the grammatical meaning of words and phrases. If in doubt when writing or reviewing a document, brush up on your eighth grade grammar.

Caveat: If this analysis doesn’t make total sense (or, God forbid, makes no sense at all), it’s because the agreements are complicated and we don’t have the space to dive into them in detail. Focus on the takeaways.
Continue Reading Lessons from an Override Assignment

Here we continue our discussion of the Texas Supreme Court’s opinion in Piranha Partners et al. v. Joe B. Neuhoff et al. determining that an assignment of an overriding royalty in minerals unambiguously conveyed the override in production under an entire lease. The Court concluded that circumstances surrounding the transaction didn’t matter. Here was the

Co-author Ethan Wood

Merry Christmas and Happy Holidays from all of us at Gray Reed! Assuming that most of you have been good this year (stay tuned for 2019’s Bad Guys in Energy to see who hasn’t), we hope Santa brought you everything on your Amazon Wish List. Our sympathies go out to those in the oilfield services industry in Texas—it looks like you got a lump of coal. In Mesa Southern CWS Acquisition v. Deep Energy Exploration Partners the Houston Court of Appeals upended the long-held view that mineral lien waivers violate public policy. Bah Humbug!
Continue Reading Oil Field Services: What is the Status of Mineral Lien Waivers?