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

Suggestions to Texas lessors after ExxonMobil v. Lazy R Ranch, et al:  Claiming that you were not aware of contamination from oil spills you’ve known about for 20 years is a tough sell, and suing your long-time lessee for millions right after it sells your lease looks a wee bit opportunistic.

For nearly 60 years Exxon operated wells on the 20,000 acre Lazy R Ranch before selling the lease in 2008. The Ranch hired an environmental engineer who identified a total of 1.2 acres in four areas where hydrocarbon contamination exceeded levels set by state law.

In 2009 the Ranch sued Exxon for contamination and sought damages for remediation of the 1.2 acres that would cost $6.3 million. (At least they waited to bite until the hand was no longer dispensing the groceries).

The damage claim presented a problem for the Ranch. Under Texas law the recovery for damages for a permanent injury to real property is generally limited to the difference in value of the property before and after the injury. Continue Reading Another Oil Field Contamination Plaintiff Waits Too Long

There’s no better place in the oil patch to play the blame game than 10,000 feet of leaky wellbore.

What went wrong?

In Justiss v. Oil Country Tubular Corporation, Justiss, a drilling contractor, entered into an IADC model turnkey drilling contract for a well in Beauregard Parish. The contract specified 12,500 feet of intermediate casing to be LTC pipe with buttress threads. The contract depth was 15,000 feet. Justiss purchased the casing from OCTC.

The operation was star-crossed. Justiss discovered a hole in the surface casing, which it repaired by cementing the casing in place. This made it impossible to remove the intermediate casing string when things got bad. Beginning at 3,500 feet the casing wouldn’t maintain adequate pressure and Justiss performed 13 squeeze jobs in an effort to remedy the problem. These and other efforts to fix the leaks lasted five weeks and cost millions of dollars.  At 13,596 feet the casing would not maintain pressure and, for fear of losing well control, the operation was terminated.

Read this if you sell a product or a service Continue Reading Blame Game Fails Louisiana Casing Vendor

casingCo-author Chance Decker

By now, you’ve heard the Trump Administration is conducting a “Section 232 Investigation” into the effect of imported steel and aluminum products on national security. Here’s a primer on the topic.

What is this Section 232 thing anyway? Continue Reading Section 232 and Oil Country Tubular Goods

confusedCo-author Chance Decker

Here is what we believe is an unusual situation: A gas unit is formed. The gas well ceases to produce. Another gas well produces from an oil unit, but the lease at issue is not included in the oil unit. Is the lease perpetuated by production from the second gas well?

In Yarbrough v. ELC Energy, LLC The answer is, in Texas, Yes.  Read on for why, and decide for yourself  if this result makes sense. Continue Reading An Unusual Way To Hold an Oil and Gas Lease

hysteriaThe climate change debate is too complex, agenda-driven, and politicized to be addressed adequately in these pages. But the hysteria and faux outrage over President Trump’s decision to withdraw from the Paris Climate Accord is enough to incite a bad case of the red-keister. So, if you are in need of ammo to repel those who are experiencing intense displeasure from the decision, here are a few well-considered reasons why the result just might be the correct one. You should read the articles themselves, and you aren’t being asked to agree.

It wasn’t such a big deal to begin with. Foreign Affairs

The US’s pledge is more burdensome relative to baseline projections then the pledges of the other major emitters. Three of the six can increase their emissions. This article is not one-sided, and suggests the best policy would have been to remain in the PCA but revise it so our goals are more consistent with other major emitters. American Action Forum

The agreement would have burdened the US with huge costs and no economic benefits. Americans for Tax Reform Continue Reading Why Leaving the Paris Climate Accord Could Be a Good Thing

shysterAccording to Mr. Bumble, the law is an ass. I disagree (Know a lawyer who’s an ass? That’s another conversation). In Davis v. Mueller the law was not an ass, per se, but as applied by the Texas Supreme Court it showed little mercy.

A refresher on conveyances

  • According to the Statute of Frauds, a writing conveying real property must furnish within itself, or by reference to some other existing writing, the means or data by which the land to be conveyed may be identified with reasonable certainty.
  • A Mother Hubbard clause is a catchall in a deed to capture small, overlooked, or incorrectly described interests.
  • A Mother Hubbard clause is not effective to convey a significant property interest not adequately described in the deed.
  • In Texas a general conveyance of all of a grantor’s property in a geographic area is given effect.

Continue Reading Texas Mineral Deeds Survive the Statute of Frauds

too lateWhen must a neighbor sue for nuisance and trespass or else be barred by limitations? It’s a tricky question. In Town of Dish et al v. Atmos Energy et al, the Texas Supreme Court concluded that the claims were time-barred. The limitations train had left the station.

The rules

Here are factors considered by the court that govern when these cases must be brought:

  • Limitations runs two years from the time the claim accrues.
  • When a claim accrues (and the limitations clock begins to tick) is a question of law for Her Honor, not the jury.
  • Trespass and nuisance claims accrue once a “known injury begins.”
  • Normally, such claims don’t accrue when the source is under construction. However, once operations begin and interference occurs, the clock starts.
  • Once a claimant learns of a wrongful injury, limitations begins to run even if the claimant doesn’t yet know the specific cause of the injury, the party responsible, the extent, or the chances of avoiding it.
  • A claimant’s subjective belief as to the accrual date doesn’t matter. A nuisance is a condition causing unreasonable annoyance to persons of ordinary sensibilities. Its an objective test.

Continue Reading Limitations Runs on Nuisance Claims