Co-author Justin CowanDoes a former working-interest owner of a well bear continuing responsibility for a defective gas line despite having conveyed its ownership interest? The line was constructed by the former owner as operator of record, and it received a fee as operator. (One could assume there was a RRC Form P-4 on file
Co-author Stephanie Snyder-Zuasnabar*
A subcontractor’s mineral lien in Texas is invalid when, at the time the mineral owner receives notice of the lien affidavit, the mineral owner is not yet obligated to pay the contract price to its contractor. So says Pearl Resources Operating Co., LLC v. Transcon Capital, LLC,
The real takeaway that
Foote and Cypert v. Texcel Exploration and Decker determined that cattle loitering uninvited around a well and tank battery and causing destruction are trespassers, not licensees.
How it happened
Foote arranged with Yates to graze 650 head of cattle on Yates’ pasture and paid Cypert to take care of them. Texcel operated the Hertel oil
Co-author Brittany BlakeyIn Texas, what happens to an obligation to bury pipelines when, after creation of the obligation, the surface and minerals are severed? Henry v. Smith explains.
Henry et al own the surface estate of the Camp Creek Ranch, a 15,000-acre tract in Archer County. Smith et al are lessees in three oil
Lollygag: To fool around and waste time; dawdle. As in, “I lollygagged for 15 years after filing my suit and obtained a less-than-optimal result.”
Gramwich Oil and Gas Corporation et al v. Meng addressed claims for lease termination, repudiation, laches, cessation of production, and failure to produce in paying quantities. The facts are dense and the savings clause at issue is sui generis, so I won’t go into lots of detail. The takeaway: If you have a claim, prosecute it.
The facts
Continue Reading Lessor Prevails in Texas Lease Termination Dispute
In Plaquemines Parish et al. v. Chevron et al., the U. S. Fifth Circuit has ruled on whether 42 suits brought by six parishes and the Louisiana Attorney General against a number of oil companies belongs in federal court or state court. The allegations are that the companies’ operations over the years essentially destroyed the Louisiana coastal marshes. Billions of dollars are at stake. The immediate issue was whether the defendants’ removal was timely. They were, the result of which is that the cases are likely to remain in federal court.
A short history
Continue Reading Louisiana Coastal Zone Litigation Likely to Remain in Federal Court
CORRECTEDApache Corporation v. Castex Offshore Inc. et al, answers the question, What constitutes willful misconduct in oil field operations? This was a breach of contract suit involving operator Apache and non-operator Castex.
In the exculpatory clause of the model form JOA, the operator can be liable only in the event of
Co-author Rusty TuckerAs Humpty Dumpty would have said to Alice if he were Justice Dumpty of the Texas Supreme Court, the term means whatever the parties to an oil and gas lease say it means, neither more nor less. In Sundown Energy LP, et al. v. HJSA No. 3, Ltd. P’ship the term “drilling operations” meant that activities other than spudding-in new wells were sufficient to satisfy a continuous operations clause.
The lease
In a lease in Ward County, 19,570 acres from the surface to the base of the Pennsylvanian formation were “Producing Areas”. The remainder covered all depths as to 10,880 acres plus depths in the Producing Areas below the Pennsylvanian. During the primary term, production in paying quantities from anywhere on the leased premises would maintain the entire lease. At the end of the primary term lessee Sundown was required to reassign its rights in each tract not then held by production unless Sundown was engaged in a “continuous drilling program.” The continuous drilling clause in Paragraph 7(b) read:
The obligation . . . to reassign tracts not held by production shall be delayed for so long as Lessee is engaged in a continuous drilling program on that part of the Leased Premises outside of the Producing Areas. The first such continuous development well shall be spudded-in on or before the sixth anniversary of the Effective Date, with no more than 120 days to elapse between completion or abandonment of operations on one well and commencement of drilling operations on the next ensuing well.
Sundown spudded-in three development wells prior to the end of the primary term and then spent over $40 million drilling 14 more wells from 2006 to 2015.
Continue Reading What are “Drilling Operations”?
Co-author Rusty TuckerWhat is the standard of care imposed by the Model Form JOA on the well operator? Crimson Exploration Op., Inc. v. BPX Op. Co. gives us the answer, and it is no surprise.
Background
Under a Model Form JOA, BPX as operator and Crimson and other non-operators drilled the McCarn A1H well. After a problem that prevented further drilling the parties agreed to plug and abandon the well.
BPX billed Crimson for its proportionate share of drilling expenses; Crimson refused to pay. In BPX’s suit to recover Crimson’s share of costs, Crimson asserted the affirmative defense of prior material breach by BPX’s failure to act as a prudent operator in drilling the well. Crimson argued the standard of care was a “reasonably prudent operator” while BPX relied on the exculpatory clause in Art. V.A of the JOA that excused liability unless BPX acted with gross negligence or willful misconduct.
Continue Reading Well Operator Protected by the Model Form JOA
What could possibly go wrong when drill pipe and a delivery ticket are sent to a well location? Well …
The facts
In Knight Oil Tools v. Rippy Oil Company, Knight rented drill pipe to Rippy for an Eagle Ford well. A delivery ticket represented that the pipe complied with API premium class standards. The pipe, marked with two white bands, was supposed to meet standards for API premium class pipe. Some of the pipe did not comply with the standards.
(The physical condition of used drill pipe is indicated by an industry-recognized system of colored bands, with each color representing a certain physical condition.)
The pipe broke in the hole because of what the parties agreed was fatigue. Rippy abandoned the well and an offset well was unsuccessful. Rippy sued Knight to recover damages for the lost well and Knight counterclaimed for unpaid invoices.
Partial summary judgment for the customer
Continue Reading Defective Drill Pipe+Delivery Ticket=Lawsuit