Co-author Chance Decker

You’ve seen the headlines.  The portrait is complete; the verdict is in; the clock has run down to zero. The devastation of Harvey is “unprecedented” and it’s all because of climate change. That’s not necessarily so, thanks to Powerline and Dr. Roy Spencer.  Read it and reach your own conclusion.

And now, on to the the law

Apache Deepwater, LLC v. Double Eagle Development, LLC asked whether a retained acreage clause provided for “rolling terminations” after the primary term or “snapshot termination”. As you might expect, the result depended on the language of the lease. Continue Reading Harvey and Climate Change, and Consideration of a Retained Acreage Clause

UPDATED

In light of the adverse effects the storm, floods and tornadoes will have on oil and gas production, transportation and processing operations, we offer several bits of advice:

Force majeure

Winds and floods are among the very reasons for the seldom-invoked force majeure provisions of your oil and gas leases, operating agreements, transportation agreements and other contracts. If your operations are affected by the storm, study your contracts and be mindful of what you will need to do and when in order to invoke the protections force majeure clauses offer. Continue Reading Hurricane Harvey and Oil and Gas Operations – What To Do

Like Les, except with an offense, Coach O congratulates the Tigers for subscribing to Energy and the Law

Lenders to Louisiana operators are likely to be reconsidering their business practices in light of Gloria’s Ranch v. Tauren et al.

A rather ordinary lease termination suit resulted in the lender Wells Fargo being solidarily liable with the lessees for $22.8 million in lost leasing opportunities, $242,000 in unpaid royalties, $484,000 in statutory damages, and almost $1 million in attorneys’ fees.

Here’s why: Continue Reading A New Day for Louisiana Oil and Gas Lenders?

Noble Energy Inc. v. ConocoPhillips Company, a 6-to-3 Texas Supreme Court decision, is a reminder of two things:

  • How parties to a property transaction describe what’s being acquired and what’s being left behind can have grave consequences. The purchaser can acquire specific obligations associated with purchased assets, excluding all others not mentioned. Or, he can acquire all obligations, disclaiming none, including those not even mentioned and those he doesn’t even know about. Here, the difference cost Noble $63 million.
  •  When given a choice, the Texas Supreme Court is likely to resolve a dispute by relying on the words in a contract rather than notions of equity.

Continue Reading Texas Supreme Court Dabbles in Bankruptcy Law

Co-author Chance Decker

“The only sensible way to live in this world is without rules”. The Joker to Batman, The Dark Knight

Subject-to, reservations-from, and exceptions-to problems have been lurking in the shadows of Texas jurisprudence for a while now, and the courts have been all over the map in recent holdings (Title nerd and proud of it? Compare this example with this one.)

In Wenske v. Ealy, the Supreme Court channeled our superhero’s painted friend, essentially jettisoning the old rules and confirming the new rule in deed construction cases: There are no “rules”.  Continue Reading Does Texas Have a New “Rule” in Conveyancing?

Co-author Sheena Shaghaghi

Benjamin Franklin would be relieved. Just when it seems that the taxman always wins, he doesn’t.  In CGG Americas, Inc. v. Commissioner the U. S. Tax Court concluded that a taxpayer need not own underlying hydrocarbons in order to take a deduction for geological and geophysical expenses. Counterintuitive, you say? Read on.

Continue Reading Seismic Expenses are Deductible for the Seismic Shooter

Co-author Brooke Sizer

Rozel Operating v. Crown Point Holdings, LLC, et al., reminds one of the need to understand and apply the meaning of terms used in a statute one is attempting to enforce. And imaginative theories don’t work without evidence to support them. Continue Reading How Not to Secure an Oil Well Lien in Louisiana

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

Co-author Chance Decker

Enterprise Products Partners, L.P. et al v. Energy Transfer Partners, L.P. et al reversed one of the largest jury verdicts in Texas history.  You will like this decision if:

  • You believe a party has the right to rely on the sanctity of a written contract.
  • You believe that it is proper for a court to be guided by “law and equity”.

You will not like it if:

  • You favor “partnership by ambush”, as one of Enterprise’s lawyers put it.
  • You regret that pesky pleading rules and required jury findings take the “Wild West” out of jury trials.

Continue Reading Pipeline Partnership Verdict Reversed

Co-author Chance Decker

You are selling properties. The buyer thinks you own the deep rights but you know your long-time partner owns them. You attend the closing. You don’t tell the buyer that he’s got the ownership wrong. You are protected by a contract. Do you fess up? What if it means $6.8 million?

In Freeman, et al v. Harleton Oil & Gas Chesapeake agreed to buy three-year term assignments of Buffco’s and Twin Eagle Resources’ interest in 14,000 acres in East Texas for $232 million. Continue Reading An Oil Patch Morality Play – Part 1