Co-authors Preston Kamin and Ryan FrankelSchools are closing, major events have been cancelled, businesses are telling workers to stay home, and Texas oil and gas producers are preparing to see how the coronavirus will affect their operations.
Many oil and gas contracts – leases and JOAs for example – have force majeure clauses. The
Co-authors Paul Yale and Rusty TuckerThe concurrence and dissent in Briggs et al v. Southwestern Energy Production Company appears to be of little help to property owners complaining of trespass by fracking where there is no invasion of frack fluids on to the neighbor’s property. Justice Dougherty, joined by Justice Donohue, agreed with the majority that the rule of capture “remains effective in Pennsylvania to protect a developer from trespass liability where there has been no physical invasion of another’s property.” And they believed the majority correctly recognized that “if there is such a physical invasion the rule of capture will not insulate a developer engaged in hydraulic fracturing from trespass liability.”
The dissenters spent most of their time on issues of pleading and procedure, arguing that it was erroneous to suggest that Briggs didn’t allege a physical invasion. They would have affirmed the Superior Court’s disposition insofar as it vacated summary judgment and remanded it for further factual development, in particular completion of discovery on the factual question of physical invasion.
Continue Reading Pennsylvania Says No Trespass by Fracking – the Dissent
Co-authors Paul Yale and Rusty TuckerHerein, highlights from the Pennsylvania Supreme Court in Briggs, et al. v. Southwestern Energy Production Company. The rule of capture applies to oil and gas produced from wells completed using hydraulic fracturing and precludes trespass liability for drainage from under nearby property, where the well is drilled solely on and beneath the driller’s own property and frack fluids are injected solely beneath the driller’s own property.
Why is this a big deal?
This decision is only the second application by a state supreme court of the rule of capture to hydraulic fracturing (from Texas, Coastal Oil & Gas Corp. v. Garza Energy Trust was the first). The Pennsylvania Supreme Court has reached a similar result – drainage resulting from hydraulic fracturing does not itself constitute trespass.
Continue Reading Pennsylvania Supreme Court Says No Trespass by Fracking
Quick answer: It depends on what the lease says. Last week featured a tug-of-war between a producer and the community in which it operates; this week in HJSA No. 3 LP v. Sundown Energy LP it’s the producer and the lessor.
HJSA owns the mineral estate under 30,540 acres in Ward County, Texas. Sundown is the lessee. After six years the lease could be maintained only as to individual tracts from which there was production in paying quantities and as to other tracts only if Sundown was engaged in a “continuous drilling program”.
Dueling lease provisions (emphasis mine)
Paragraph 7B says:
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 the commencement of drilling operations on the next ensuing well.
Paragraph 18 is a 90-day temporary cessation clause that defines drilling operations as:
“ … actual operations … (spud-in with equipment capable of drilling to Lessee’s objective depth); reworking operations, including fracturing and acidizing; and reconditioning, … “.
Continue Reading Spudding? Reworking? What are “Operations” Under an Oil and Gas Lease?
In Town of Flower Mound v. Eagle Ridge Operating LLC, an operator’s injunction against enforcement of a local ordinance was dissolved. EagleRidge operates gas wells in the Flower Mound. A Town ordinance prohibits work on gas wells (other than drilling) at times other than between 7 a.m. and 7 a.m. Monday through Friday and certain times on Saturday.
EagleRidge tried to avoid enforcement of the ordinance by:
Continue Reading Gas Well Operator’s Injunction Against Texas Town is Dissolved
Nabors Offshore Corp. v. Whistler Energy II LLC is the rare bankruptcy case where the outcome was consistent with the realities of operating in the oil patch rather than the artificial constraints of the Bankruptcy Code. The Fifth Circuit balanced the debtor’s interest in minimizing the costs of administering its estate with a counterparty’s economic interest in its property sitting idle in the debtor’s possession. The counterparty was not made to eat the costs for the time its equipment sat unused after rejection of their contract.
Continue Reading Bankruptcy Ruling Sides With Oil Field Realities
It’s still true, “Whiskey’s for drinkin’, water’s for fightin’.” Gray Reed lawyers Brock Niezgoda and Stephen Cooney spoke to TIPRO’s summer conference on the use, control and ownership of water in oil and gas operations. Here is their PowerPoint.
The takeaways:
Groundwater
Continue Reading Water: The Hot Commodity in the Permian and Elsewhere
Co-authors Ethan Wood and Chance Decker
Less than a year ago, we discussed the “Unanswered Questions” left in the wake of Devon Energy Prod. Co., LP v. Apache Corp. (which did answer the question, “Who is a ‘Payor’ Under the Texas Natural Resources Code?”). We asked:
“But if the non-participating working interest owner is not paying royalties—what is keeping the lease alive? Absent pooling of the leases or a JOA, the non-participating working interest owner cannot rely on the operator’s actions to perpetuate its leases. A sly operator can obtain top leases from the non-participating working interest lessors and run out the clock on those leases …”
In Cimarex Energy Co. v. Anadarko Petroleum Corp., the operator did just that …
Continue Reading Operator Runs Out the Clock on Co-Tenant
Co-author Chance DeckerIt’s a tale as old as the oilfield: A non-operator doesn’t pay joint interest billings, operator sues, non-payer claims the expenses were unwarranted and the operator was negligent—no, grossly negligent—for incurring them in the first place. Welcome to OBO, Inc. v. Apache Corporation et al. Despite a creative argument by non-operator OBO that contract operator Apache didn’t have authority to charge JIB’s in the first place, OBO must pay.
The facts
Continue Reading Contract Operator Not Liable for Breach of a Unit Operating Agreement
No, at least not in Dimmit County, Texas, under the facts of In Re: Wood Group PSN, Inc. et al. Twenty-nine contractors and producers were sued by Dimmitt County for damaging a 6.9 mile long non-asphalt county road by their trucks, heavy equipment and other oilfield traffic. Twenty-two moved to dismiss the case. The trial court, in its sound discretion while no-doubt mindful of who votes and where his paycheck comes from, denied the motions. The appellate court reversed.
Continue Reading Are Oilfield Contractors Liable For Road Damage?