In Zarvona Energy v. Black Stone Minerals Company, a Texas Court of Appeals reiterated that the cessation-of-production clause in an oil and gas lease cannot be read in absolute terms as a lessor might want it to be. The Court also grappled with ambiguities among four different provisions in the lease.
In Cromwell v. Anadarko E & P Onshore LLC the Supreme Court of Texas did what it so often does: In order to provide “legal certainty and predictability”, the Court considered the plain language of a contract in order to arrive at the parties’ intent.
At issue were habendum clauses in two oil and gas
Co-author David LeonardIf perpetuation of a mineral lease beyond the primary term is contingent upon continuous operations, do traditional notions of “production in paying quantities” always matter? Spoiler: No.
In Thistle Creek Ranch, LLC v. Ironroc Energy Partners, LLC, an appellate court affirmed partial summary judgment in favor of lessee Ironroc Energy Partners under these odd clauses in the Kettler lease.
The habendum clause:
Unless sooner terminated … this lease shall remain in force for a term of three (3) years from the date hereof, hereinafter called “primary term,” and as long thereafter as operations, hereinafter defined, are conducted upon said land with no cessation for more than ninety (90) consecutive days.
The lease defined “operations” as:
“ … any of the following: drilling, testing, completing, reworking, recompleting, deepening, plugging back or repairing of a well in search for or in any endeavor to obtain production of oil [or] gas, … production of oil [or] gas, … whether or not in paying quantities.
The oddity, of course, is that the lease could be perpetuated by operations, whether or not there was production in paying quantities.
Continue Reading Lease Perpetuated Beyond Primary Term Without Production in Paying Quantities
How many different meanings can parties attribute to a term in an oil and gas lease? Answer: As many as they want, but the court will only use one, says King Operating et al v. Double Eagle Andrews, LLC et al.
The facts
The Robisons own 50% of the minerals in Tract 1, and 100%
Co-author Rusty TuckerPPC Acquisition Co., LLC, et al. v. Delaware Basin Res., LLC, et al. addressed retained acreage clauses in three separate oil and gas leases covering the same 640-acre tract in Reeves County, Texas.
Did the lessees hold acreage under the leases based on one producing well, the Colt #1 that was completed in 2003? OR, did the lessees’ failure to drill additional wells, re-classification of the well from gas to oil, and failure to timely file a RRC Form P-15 with a limited acreage designation terminate the leases for all or part of the acreage?
The facts
Continue Reading Texas Court Parses Three Retained-Acreage Clauses – Part 1