In Self v. BPX Operating, a case with significant implications for Louisiana operators and royalty owners, the Supreme Court of Louisiana ruled that the doctrine of negotiorum gestio in La. Civil Code art. 2292 does not allow the operator of a drilling unit created by Louisiana’s conversation laws to withhold post-production expenses (PPCs) from
The question in Self v, BPX Operating Company is how to balance the Louisiana Civil Code Art 2292 principle of negotiorum gestio against Louisiana’s conservation statutes.
When a tract of land is subject to a unit formed under La. R.S. 30:9(B) and 30:10(A(1) and the tract is not subject to a lease, the unit
The question with wide-ranging implications for Louisiana operators and mineral owners in Johnson et al. v. Chesapeake Louisiana LP et al is whether unleased mineral owners in a drilling unit established by the Commissioner of Conservation must bear their proportionate share of post-production costs.
The statutory scheme
Under Louisiana’s forced pooling statutes, the Commissioner may form drilling units and appoint an operator to drill and operate wells for all owners in the unit. Unleased mineral owners (the court called them UMO’s) are exempt from the statutory 200% risk charge for drilling costs applied to non-participating lessees. The operator is required by La. R.S 30:10(A)(3) to pay a UMO who has not elected to market his share of production the tract’s pro rata share of proceeds from the sale of hydrocarbons.
The claims and defenses
Continue Reading Louisiana Unit Operators May Deduct Post-Production Costs from Unleased Mineral Owners