Justia Energy, Oil & Gas Law Opinion Summaries

For some time, Broad Street Energy has owned many Ohio oil-and-gas leases. The market has changed to use of shale-drilling (fracking) to extract oil and gas from shale formations deeper than the formations from which Broad Street has extracted oil. Fracking requires leases of at least 640 acres, as opposed to the 20-to-40-acre leases that Broad Street required for conventional wells. Endeavor agreed to pay $35 million for many of Broad Street’s leases, plus wells, pipelines, and related property. Endeavor put $3.5 million in escrow. Broad Street delivered a list of assets and title limitations. Before closing, Endeavor conducted due diligence and told Broad Street that it found title defects affecting 40% of the leases and reducing the value of the assets by 55%. Endeavor did not seek more information or invoke the agreement’s dispute-resolution process, but terminated on the ground that the title defects reduced value by at least 30%. Broad Street responded several times, disputing those statements and insisting on at least implementing dispute-resolution procedures With no response, it sued. A jury awarded Broad Street the $3.5 million escrow, plus interest. The Sixth Circuit affirmed, noting the relative sophistication of the parties and that the contract did not permit Endeavor to terminate unilaterally based on its own assessment of title defects and their value. View "Broad St. Energy Co. v. Endeavor Ohio, LLC" on Justia Law

This appeal was one of many concerning natural gas wells operated from 1978 to 1998 in Beckham County, Oklahoma. In the immediately preceding appeal, the Oklahoma Supreme Court affirmed a jury verdict for damages for breach of drilling leases for $3,650,000, but reversed two other jury awards in the amounts of $4,055,000.00 and $6,845,000.00. The trial court denied prejudgment interest and the royalty owners appealed. After review, the Supreme Court held that: (1) review of the issue of prejudgment interest is not precluded by the settled-law-of-the-case doctrine; (2) the Production Revenue Standards Act, 52 O.S. 2011 sec. 570 et seq., was inapplicable to the facts presented; and (3) because the plaintiff's claims were unliquidated, prejudgment interest was not recoverable pursuant to 23 O.S. 2011 sec. 6. View "Krug v. Helmerich & Payne, Inc." on Justia Law

Trona is a sodium carbonate compound that is processed into soda ash or baking soda. Because oil and gas development posed a risk to the extraction of trona and trona worker safety, the Bureau of Land Management (BLM), which manages the leasing of federal public land for mineral development, indefinitely suspended all oil and gas leases in the mechanically mineable trona area (MMTA) of Wyoming. The area includes 26 pre-existing oil and gas leases owned by Barlow. Barlow filed suit, alleging that the BLM’s suspension of oil and gas leases constituted a taking of Barlow’s interests without just compensation and constituted a breach of both the express provisions of the leases and their implied covenants of good faith and fair dealing. The Federal Circuit affirmed the Claims Court’s dismissal of the contract claims on the merits and of the takings claim as unripe. BLM has not repudiated the contracts and Barlow did not establish that seeking a permit to drill would be futile. View "Barlow & Haun, Inc. v. United States" on Justia Law

Randy Braswell sued Ergon Oil Purchasing, Inc. in Amite County over some oil contracts. Two days later, Ergon brought a declaratory judgment action against Braswell in Rankin County over those same contracts. Ergon removed the Amite County action to federal court, where it remained for eighteen months before it was remanded. In the meantime, Ergon obtained summary judgment against Braswell in Rankin County. Braswell appealed, arguing that the Rankin County judge erred when he granted summary judgment in Ergon's favor and when he refused to transfer the action to Amite County. The Supreme Court agreed with Braswell that the action should have been transferred to Amite County, and reversed the judgment of the Rankin County circuit judge based on the doctrine of priority jurisdiction, and remanded the case to the circuit court. View "Braswell v. Ergon Oil Purchasing, Inc." on Justia Law

Irish Oil & Gas, Inc. was an oil and gas exploration, production, and brokerage company. Border Resources, LLC provided landman services to clients, including acquiring leases, performing due diligence, and providing title curative work. This case involved Border's claim against Irish Oil for breach of contract for landman services Border provided to Irish Oil and Irish Oil's counterclaim against Border for breach of fiduciary duty in performing those services. Irish Oil appealed the judgment entered after a bench trial, that awarded Border damages and prejudgment interest and dismissed Irish Oil's counterclaim for breach of fiduciary duty. After review, the Supreme Court concluded the district court did not clearly err in finding Border did not breach its fiduciary duty while providing professional landman services to Irish Oil and in finding leases Border acquired for Irish Oil were sold for $1,100 per net mineral acre. Furthermore, the Court concluded the trial court did not abuse its discretion in denying Irish Oil's motion to amend its counterclaim to add individual landmen as counterclaim defendants. View "Border Resources, LLC v. Irish Oil & Gas, Inc." on Justia Law

Knickel approached Macquarie Bank about a loan to develop North Dakota oil and gas leases, providing confidential information about leased acreage that he had assembled over 10 years. Macquarie entered agreements with Knickel’s companies, LexMac and Novus. His other company, Lexar was not a party. Macquarie acquired a mortgage lien and perfected security interest in the leases and in their extensions or renewals. Royalties and confidential information—reserves reports on the acreage, seismic data, and geologic maps—also served as collateral. The companies defaulted. Because of the lack of development or production, many leases were set to expire. Knickel claims he agreed to renew only leases that included automatic extensions. Macquarie claims that Knickel promised to renew all leases serving as collateral in the names of LexMac and Novus. Upon the expiration of the leases without automatic extensions, Knickel entered into new leases in the name of Lexar, for development with LexMac and Novus, since they owned the confidential information. A foreclosure judgment entered, declaring that LexMac and Novus’s interest in the leases would be sold to satisfy the debt: $5,296,252.29,. Marquarie filed notice of lis pendens on Lexar’s leases, leased adjoining acreage, used the confidential information to find a buyer, and sold the leases at a profit of about $7,000,000. Marquarie filed claims of deceit, fraud, and promissory estoppel, and alleged that the corporate veil of the companies should be pierced to hold Knickel personally liable. The defendants counterclaimed misappropriation of trade secrets and unlawful interference with business. The Eighth Circuit affirmed summary judgment on all but one claim and judgment that Macquarie had misappropriated trade secrets. View "Macquarie Bank Ltd. v. Knickel" on Justia Law

Plaintiffs own mineral interests in Chalybeat Springs and granted 21 oil and gas leases based on those interests. EnerQuest and BP America are the lessees. The property interests in Chalybeat, including the leases at issue, are subject to a Unit Agreement that establishes how the oil and gas extracted from certain formations will be divided and provides for a unit operator with the exclusive right to develop the oil and gas resources described in the Unit Agreement. In the late 1990s, PetroQuest became the operator of the Chalybeat Unit. Unhappy with the level of extraction, lessors filed suit against EnerQuest and BP, seeking partial cancellation of the oil and gas leases on the ground that EnerQuest and BP breached implied covenants in the leases to develop the oil and gas minerals. The district court granted the companies’ motion for summary judgment, reasoning that the lessors had not provided EnerQuest and BP with required notice and opportunity to cure a breach. The Eighth Circuit affirmed, rejecting an argument that the plaintiffs’ earlier effort to dissolve the Chalybeat Unit constituted notice. View "Lewis v. Enerquest Oil & Gas, LLC" on Justia Law

In a 1996 purchase and sale agreement Torch Energy Advisors Inc. sold its leasehold interests in undeveloped oil and gas fields located under federal waters. Certain interests were excluded from the conveyance. A decade later, a federal court determined that the federal government had repudiated the mineral leases because a statute enacted before the conveyance had been applied in a manner that precluded development of the leasehold interests. Consequently, the purchaser’s successor in interest, Plains Exploration & Production Company, was awarded restitution of the lease-bonus payments that Torch’s predecessor had paid to secure the leases. Torch claimed an ownership interest in approximately half of the judgment based on the terms of the excluded-assets provision in the 1996 agreement. Plains declined to pay. Torch sued, alleging contract and equitable theories of recovery. The trial court entered a take-nothing judgment in Plains’s favor. The court of appeals reversed in part and remanded the equity claim for a trial on the merits, concluding that Torch’s equitable claim hinged on the proper construction of the 1996 agreement’s terms. The Supreme Court reversed, holding that the relevant excluded-assets provisions in the 1996 agreement were unambiguous and, as a matter of law, Torch did not retain ownership of the claimed asset. View "Plains Exploration & Prod. Co. v. Torch Energy Advisors, Inc." on Justia Law

Kachina Pipeline Co., a pipeline operator, and Michael Lillis, a natural-gas producer, entered into a Gas Purchase Agreement. Kachina bought, transported, and resold Lillis’s gas according to the Agreement. Lillis later entered into a separate purchase agreement and constructed his own pipeline to one of Davis Gas Processing’s plants. Thereafter, Lillis sued Kachina, asserting that Kachina breached the Agreement by deducting the costs of compression that occurred after Lillis delivered the gas to Kachina. Lillis also brought a fraud claim, asserting that Kachina represented it would release him from the Agreement. Kachina counterclaimed for breach of the Agreement and seeking declarations that it had the right to deduct compression charges under the Agreement. The trial court granted summary judgment for Kachina, declaring that the Agreement entitled Kachina to deduct the costs of compression from its payments to Lillis and that the Agreement gave Kachina the option to extend the arrangement for an additional five-year term. The court of appeals reversed. The Supreme Court affirmed, holding that the Agreement unambiguously allowed neither the disputed deductions nor a five-year extension. Remanded. View "Kachina Pipeline Co., Inc. v. Lillis" on Justia Law

Plaintiff, a crew member aboard a supply vessel that was mud-roped to the Deepwater Horizon and was off-loading drilling mud on the night of the 2010 blowout, filed suit claiming that he sustained physical injuries when the explosion rocked the vessel and threw him against a bulkhead. On appeal, BP challenged the district court's judgment in favor of plaintiff where the district court, over BP's objection, enforced a putative settlement agreement against BP in plaintiff's favor. The court held that the parties formed a binding settlement agreement; the district court correctly excused plaintiff’s failure to sign the release document where BP's refusal to send plaintiff the release excused that failure; but the district court should have held an evidentiary hearing to determine whether plaintiff fraudulently induced BP into entering the settlement agreement. Therefore, the court affirmed the district court’s order in part, but vacated the judgment and remanded for further proceedings. View "Young v. BP" on Justia Law