Let’s start with a quiz:
Which of these predictions is most likely to come true:
Co-author Paul YaleWhat’s good for the goose is not always good for the gander, at least in some places. It appears that the North Dakota Supreme Court has adopted the minority “ Marketable Product Rule” in connection with a 1979 North Dakota state oil and gas lease. We say “it appears” because not so long ago, in its 2009 decision in Bice v. Petro-Hunt, LLC, the Court held that North Dakota was an “at the well” state, like Texas and the majority of other oil producing states. This latest decision is Newfield Exploration Company, et al v. State of North Dakota et al.
The difference between the “Marketable Product Rule” and the “at the well” rule has to do with the deductibility of post-production costs of transporting, compressing, treating and processing from royalty payments. In an “at the well” state such costs are charged proportionately against the royalty owner. In a “Marketable Product” state they are not. Continue Reading North Dakota: A Different Rule for Post-Production Costs In a State Lease.
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
How long – if ever – has it been since you pondered the difference between a “tenancy in common” and a “joint tenancy”? Same for us, until the wheels came off a family relationship and a lawsuit was filed in Wagenschein v. Ehlinger. This brings to us – and you – the opportunity to review a little Texas property law. Landmen and title examiners, perk up.
Tenancy in common v. joint tenancy Continue Reading Tenancy in Common and Joint Tenancy Explained
In January I commented on the partnership that wasn’t and the lawyer whose actions give the rest of us a bad name. That was Stephens et al. v. Three Finger Black Shale Partnership et al. The court of appeal has substituted its original 66-pages with a 67 page opus. Save yourself the trouble of reading the whole thing and go to pages 41 to 44.
The court concluded that as a result of the recent Supreme Court decision in Agar Corp. v. Electro Circuits Int’l, LLC, several Thunderbird entities and their owner, sleazy lawyer Stephens, were jointly and severally liable to L W Hunt Resources and Raughton for actual and exemplary damages. There were three different conspiracy scenarios for the jury to consider: conspiracy to commit a breach of fiduciary duties related to the attorney-client relationship, breach of fiduciary duties arising from related to the “Alpine Group”, and conspiracy to commit fraud. The jury found a conspiracy on each ground.
The court originally found that because there was no separate jury finding as to the amount of damages related specifically to the conspiracy, the conspiracy findings would not be upheld. Since then the Supreme Court held that a plaintiff’s injury is the damage from the underlying wrong, not the conspiracy. Civil conspiracy is not independent tort. Thus, the Stephens jury didn’t need to answer a conspiracy damage issue separate from a damage issue relative to the underlying tort.
Why does this matter?
Now, a bad player can be liable for conspiring with his own limited liability companies because they are entities separate from their sole member. If your scammer scammed through his LLC you can recover a judgment against the company as well as the scammer. That bodes well for post-judgment collection efforts.
Trigger warnings!
If you agree with the New York Times that all oil exploration everywhere should cease immediately, stop reading now and retire to your safe space. If not, consider this article from Watts Up With That! and a correction casting doubt on the economic sustainability of wind energy.
Not saying you need to accept the premises of the article, but know there are contrarian opinions that don’t attract much attention from the MSM.
We’re running out of Neville Brothers
In Barrow-Shaver Resources Company v. Carrizo Oil & Gas, Inc the Supreme Court of Texas has held again, here in a consent-to-assign dispute, that a contract means what the words say, even if in negotiations a landman said something he didn’t mean, … or changed his mind later, and even if “industry custom” is to the contrary. Continue Reading Industry Custom Does Not Supersede Contract Language
Today is a two-fer. The questions: When does the “merger doctrine” not work in Texas, and how do courts treat technological developments created after a contract becomes effective?
In Murphy Land Group LLC v. Atmos Energy Corporation, Atmos constructed and operated pipelines under three easements from the ‘50’s and ‘60’s and the parties had a 2012 Roadway Lease granting Atmos a 40 foot roadway lease, which expired under his own terms in 2015.
The merger doctrine Continue Reading Smart Pig Technology … and the Texas Merger Doctrine
Co-author Niloufar HafiziAs mentioned last week, the 86th Legislature amended the Texas Citizens Participation Act, Texas’ Anti-SLAPP law and defendants’ go-to weapon of destruction in a diverse range of cases.
The TCPA was intended to prevent harassing lawsuits by plaintiffs seeking to quell constitutionally protected activity, in particular the exercise of free speech, the right to association, and the right to petition.but has been much-criticized for being overly broad and subject to abuse and misuse. The old TCPA was frequently applied in oil and gas litigation, which is why we are benefiting you with our observations.
Continue Reading The TCPA Revisions Are Good for (Not Only) the Oil Business
Co-author Nilofaur HafiziThe answer depends on what part of “the oil business” you care about. The 86th Legislature produced a few, but not many, changes in laws affecting the business, (most going into effect on September 1). Here are some that passed and some that failed:
WINNERS Continue Reading Was the 86th Texas Legislature Good to the Oil Business?