Co-author Chance Decker

We recently discussed Freeman v. Harleton. The opinion shows the transaction as a bunco job. Here’s more:

• Bufkin and Wayne Freeman have done business together since the 1980s. They had a co-development agreement with Harleton.
• Long-standing agreements among the three of them made it clear that Harleton owned 50 percent of the Geisler Unit.
• Chesapeake never talked to the Freeman defendants, who were not parties to the letter agreement for the sale.
• Chesapeake didn’t contract non-ops because Chesapeake believed the letter agreement prevented them from doing so.
• Bufkin would bring non-ops to each closing, and they would receive offers to sell on the same terms as Buffco.
• Wayne Freeman, who attended his closing, knew Harleton’s ownership interest in the unit but did not raise the issue because, ”It did not occur to him to do so.” He said “[I]t was Chesapeake’s obligation to figure out who owned what” in the unit.
• As a non-op and non-signatory Freeman never made representations or warranties.
• To Chesapeake it became obvious that Bufkin had known when he closed that the ownership in the Geisler Unit was different than what he said it was.
• The due-diligence landman’s work was entirely from Buffco/Twin files. He didn’t check the county records because he was told by Bufkin and team that his title determination was correct.
• The landman came to believe that Buffco removed materials from files that would have revealed Harleton’s interest in the deep rights.
• See the opinion for federal Judge Gilstrap’s view of the defendants’ activities. it was adopted by the state court trial judge.

Continue Reading An Oil Patch Morality Play – Part 2