Co-author Lydia WebbEver since the Sabine Oil and Gas Corp. bankruptcy (the top of the first, If it were baseball), where a New York court construed Texas property law to hold that a gathering agreement was not a covenant running with the land, we at Gray Reed, and you if you’re following, have speculated
Co-author Ethan WoodYet another entry in the Strip and Gore universe (2012’s “Beware of Strips and Gores”, and 2019’s “Strip and Gore 2: The Sequel”) comes to us from Fort Worth Court of Appeals: Richard D. Crawford v. XTO Energy, Inc.
Those of you following along with each chapter
Co-author Ethan WoodMerry 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!
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Co-author Rusty TuckerConfirming the obvious, in In re Etheridge a Texas court concluded that “personal effects,” in a last will and testament did not include mineral royalties. Let’s investigate how the case got this far.
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Co-author Kelley Clark MorrisSuing a state and its public officials is difficult because of the doctrine of sovereign immunity. There are exceptions. State of Texas v. Signal Drilling, et al. presents several of them.
The rules
The State and its agencies are immune from:
There are exceptions. For example:
Co-author Rusty TuckerLet’s talk the Duhig Rule and estoppel by deed in Texas. Don’t run away yet. We’ll get to the point quickly and then you can leave.
Under the doctrine of estoppel by deed:
In Texan Land & Cattle II, Ltd. v. ExxonMobil Pipeline Company a Texas court of appeals ruled that “oil or gas” is not limited to “crude petroleum,” but includes refined petroleum products gasoline and diesel.
The easement
Texas Land’s property in Harris County is burdened by an easement obtained by ExxonMobil from Humble Oil Company in 1919 that granted the right to lay, maintain, operate, and remove a pipeline for the “transportation of oil or gas” across Texas Land’s property. The easement does not define oil or gas.
The arguments
The sole issue was the definition of oil and gas as used in the easement. Texas Land contended that “oil and gas” granted the right to transport only “crude oil” or “crude petroleum,” but not refined products. ExxonMobil argued that “oil and gas,” as used in the early 20th century, included refined products such as gasoline and diesel.
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Co-author Rusty TuckerScribner v. Wineinger, et al. affirms that acquisition of a Texas oil and gas leasehold by limitations is not defeated if the adverse possessor’s acknowledgement of a claimant’s title comes too late.
Transaction history
Scribner’s father conveyed all of the interest to his son by the “2002 Assignment” but Scribner was unaware of the instrument until 2016. (Thanks, Dad!) In 2010, the executor of the estate of the now-deceased father assigned the interest to Latigo. Scribner, ignorant of the windfall, didn’t claim ownership. By a series of assignments between 2010 and October 2016, Parra et al (including Wineinger) obtained the interest. During that time Parra and its predecessors operated the lease, received the revenue, and paid the taxes.
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The 2019 Texas legislature enacted a new Property Code Section 5.152 to protect mineral and royalty owners from a certain species of fraudulent transactions perpetrated on trusting and/or naïve and/or out of state mineral owners. Ethan Wood and I wrote about the scam when it made its way into the courthouse.
How the scam worked
The grifter, fronting for a company with a name similar to a reputable operator, would approach the owner with an oil and gas “lease” of minerals or royalty that were already subject to an existing lease. Except that the lease was actually the sale of the mineral or royalty interest at a bargain price. The scammers would then invoke arbitration provisions they had written into the conveyance, and relying on the confidential nature of the arbitration process, would stifle publicity of the inevitable dispute.
In Mary et al. QEP Energy Company the question was, given an encroachment of a pipeline onto the property of another, what is the test for determining the good faith, or not, of the party in possession?
Ms. Mary and QED were parties to a Pipeline Servitude Agreement and what appears to be an oil and gas lease (the court could have just called it that). Ms. Mary et al claimed that QED’s gas pipelines unlawfully extended onto their property by 31 feet and 15 feet and sought disgorgement of the profits derived from the pipelines. The issue was to determine the source of the liability of QED, the encroacher, which would determine damages.
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