Must a production payment out of four oil and gas leases be proportionately reduced if two of the leases expire because production ceased? In Apache Deepwater, LLC v. McDaniel Partners, Ltd., the Texas Supreme Court says yes. Absent express language in the assignment to the contrary, this general rule applies: When an assigned
Post-Production Deductions Revisited
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
Royalty Clauses For the Lessor – This Battle is Over
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
A Lesson in Lease Administration
Co-Author Brooke Sizer
What must a Louisiana lessee do to avoid statutory penalties for non-payment of royalty, and what must a royalty owner do to put the lessee on notice that royalties are not being paid? The answers are, more than the lessee did in Samson Contour Energy E&P, LLC v. Smith and less than
Must the Lessee Be Wary of the Executive Right Owner?
You are negotiating to take a big oil and gas lease. The run sheets show you are dealing with an executive right owner on behalf of himself and his NPRI owner. His proposed terms are odd: a lower-than-market royalty and a higher-than-market bonus. After reflecting, you get it: The terms aren’t odd; they are just
The Executive Right and the NPRI – What is the Relationship?
The duty owed by the executive right holder to its non-participating royalty interest holder in Texas, long haunted by the ghost of Clinton Manges, is again examined. From KCM Financial, et al. v. Bradshaw and its precursors …
We Know This:
- The executive owes the NPRI owner a duty of utmost good and fair
The Well Operator Should Have Listened To My Mother
My mother used to give us good advice. For example: Don’t lie … do your homework. Sabella v. Appalachian Development Corporation agrees with my mother.
Sabella bought minerals in 1997 under 66 acres in Warren County, Pennsylvania, on which the Haners had two producing wells (under a 144-acre lease from the Harveys). They weren’t paying
Faulty Property Description Haunts Louisiana Servitude
Co-author Brooke Sizer
Halloween is approaching, so let’s talk poltergeists – troublesome spirits that haunt a specific location. Where do they come from? In Quality Environmental Processes, Inc. v I.P. Petroleum Company, Inc., it was from a faulty property description that lay dormant for 30 years before beginning its vexations.
The Demon is Spawned
CO2 is Good
… in the right places.
Co-author Mark Bohon
In French vs. Occidental Permian, Ltd. the Texas Supreme Court held that costs associated with injection of carbon dioxide into a reservoir in a tertiary recovery operation were properly deducted from royalties.
This case reflects court’s awareness of improvements in oil recovery created by new technology, in
North Dakota Court Dismisses Flaring Cases
Co-author Katie English
You might recall that North Dakota achieved nationwide notoriety when photos of flaring Bakken wells visible from space circulated around the news. According to the U. S. Department of Energy, at times North Dakota has flared 33% of its gas production, compared to the 1% average nationwide.
You will not be surprised