Co-author Trevor Lawhorn ∗Escondido and Justapor. Next up on Tiny Desk Concert? Good guess, but no. They are the parties in Escondido v. Justapor, a Texas case presenting the perils of lease termination clauses and vaguely-drawn contracts.
The agreements
Justapor as lessor and Escondido as lessee entered into an oil and gas lease
Behold Mr. Clean. Even he can’t remove a pesky stain as skillfully as the landman who framed the conversation in a way that washed out a lessee. See Anadarko Petroleum Corporation v. TRO-X, LP
Did the lessee retain any interest in the mineral estate after its sublessee and the lessors filed a release of the
Apparently unsatisfied with its analysis in Chesapeake Exploration v. Hyder, the Texas Supreme Court revisited its original opinion on an overriding royalty clause. The Hyders remain the winners. In effect, the court replaced its reliance on earlier decisions interpreting royalty clauses with its own analysis (which looks a lot like the original).
The Basics
Let’s
Co-author Brooke SizerA baseball question: You’ve got men on late in the game; a base hit to the right side wins. Do you put the bat on the ball for a single or swing for the deep seats, risking the game-ending strikeout?
The Stiles leases were executed in 1907, when Honus Wagner was in
Special thanks to Gray Reed colleagues Paul Yale and Dominic Salinas for this post.
Weary of having to solicit those pesky subordinations of pre-existing mortgages to your recently-acquired oil and gas leases? Tired of chasing down the third assistant to the fourth vice president for loan servicing just to obtain one simple document? The 2015
Creativity abounds: Your 16-year old “explaining” the empty Southern Comfort bottle and the roach clip; President Obama justifying his rejection of Keystone. The Louisiana Supreme Court isn’t much of a supporter, at least in statutory construction. Today we revisit McCarthy v. Evolution Petroleum Corp. As
The result was like others we’ve seen. Lessors Win. These wells are in Johnson and Tarrant County, Texas. Lessee Chesapeake Exploration sells to affiliate Chesapeake Marketing through affiliate-operator Chesapeake Operating. Plaintiffs sued Exploration and Operating for underpayments of royalty and overrides.
The Takeways
Political actions have consequences. A force majeure clause in New York oil and gas leases does not modify the primary term of the habendum clause and the leases are not extended because of the state ban “moratorium” on hydraulic fracturing.
We recently discussed failure to produce in paying quantities. Another decision involving the same lessee had a different result. Why?
The question in both cases was whether the well was capable of producing in paying quantities and whether a reasonably prudent operator would continue to operate the well.
In the new
What is your guiding principle when writing agreements?
“The more the words the less the meaning, and how does that profit anyone?” Ecclesiastes 6:11.
or
“The beginning of wisdom is the definition of terms.” Socrates
The Legal Issue
A lease grants “a perpetual, cost-free (except only its portion of production taxes) overriding royalty of five