Energy & the Law

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Co-author Rusty Tucker Howard, et al. v. Matterhorn Energy, LLC, et al. [6th Dist.] May 4, 2021 considered the Texas Citizens Participation Act as amended, effective on September 1, 2019. Background The lessors leased their minerals in 1,100+ acres in Harrison County to Matterhorn. To induce the deal, Matterhorn several representations to the lessors and agreed to a continuous development program. The lease required lessors to give 60 days’ notice of a breach before filing suit. Before the primary term expired gas prices dropped and Matterhorn decided to sell the lease. The lessors sued Matterhorn for damages and rescission based…
Co-author Rusty Tucker Ridgefield Permian, LLC, et al. v. Diamondback E & P LLC, et al. addresses the scope of a property interest foreclosed upon by a tax suit in Reeves County, Texas. In this post we will shortcut the complicated facts and discuss the takeaways. The rules are what you need. Royalty interests that were subject to an oil and gas lease were foreclosed upon and sold by the sheriff. The lease then terminated. Both the purchaser of the foreclosed interest (Magnolia, LLC) and the assignee (the Trust) of the former royalty owner whose interest was foreclosed upon (Albert)…
Co-author Rees LeMay* “Ratification is not a game of ‘gotcha’”, said the Texas Supreme Court in BPX Operating Co. v. Strickhausen.  The Court, in a 5-4 opinion, addressed the standard for an oil and gas lessor’s implied ratification of an unauthorized pooling. Among other lessons, this decision warns royalty owners to be careful when cashing those royalty checks.…
Co-author Brittany Blakey In Headington Royalty, Inc. v. Finley Resources, Inc., this release was included in an acreage swap agreement: Headington waives, releases, acquits and discharges Petro Canyon and its affiliates and their respective… predecessors and representatives for any liabilities… related in any way to the Loving County Tract…” The swap agreement did not explicitly mention Finley Resources, and Finley did not execute the agreement. The question Was “predecessors” limited to prior corporate forms of the released party and its affiliates, or did it include predecessors-in-title?  The court held that Finley was not a corporate predecessor of Petro Canyon or its…
Co-author Rusty Tucker What if you pay good money for a mineral interest and record the deed in the official public records, thereby securing your title? What if your predecessors-in-title decide among themselves they made a material mistake in a conveyance way back in the chain of title, fix the alleged error, and record the correction deed? What if they don’t seek your approval and don’t even bother to tell you about the fix? What if that is deemed to be an acceptable way of correcting real property instruments? Here’s what: Chaos, loss of your property rights, not to mention…
In the fifth and final installment on the climate change debate, Gray Reed energy partner Paul Yale considers (and responds to) another criticism of Bjorn Lomborg’s False Alarm: How Climate Panic Costs Us Billions, Hurts the Poor, and Fails to Fix the Planet. Joseph Stiglitz in the New York Times negatively reviewed False Alarm … .  Stiglitz, well-qualified as a professor of economics at Columbia University and a Nobel Prize laureate, accuses Lomborg of being simple and simplistic and implies that Lomborg admits there’s not much we can do about climate change. This is not an accurate portrayal of the…
CORRECTED Co-author Ashley Atwood* Apache Corporation v. Castex Offshore Inc. et al, answers the question, What constitutes willful misconduct in oil field operations? This was a breach of contract suit involving operator Apache and non-operator Castex. In the exculpatory clause of the model form JOA, the operator can be liable only in the event of gross negligence or willful misconduct. In considering willful misconduct, under both the Texas and Louisiana definitions of “willfulness”, intent to cause harm is not required. The question is whether the evidence establishes that a defendant-operator intentionally or deliberately engaged in improper behavior or mismanagement, without…
In Opiela v. Railroad Commission of Texas and Magnolia Oil and Gas Operating, LLC, an Austin district court determined that the Commission’s Final Order granting a permit for a Production Sharing Agreement well in Karnes County did not comply with the Administrative Procedure Act. Here is the Commission’s hearing examiners’ recommendation. It is 18 pages, but we won’t venture into the weeds. In particular, the court said that the Commission erred in: Approving the initial unit well permit for the Audioslave A 102H well in Karnes County; Determining it had no authority to review whether an applicant seeking…