Justia Energy, Oil & Gas Law Opinion Summaries

Latigo Oil & Gas, Inc., an Oklahoma corporation, filed a lawsuit against BP America Production Company, a Delaware corporation, to enforce its preferential right to purchase certain mineral interests that BP had offered for sale as part of a package deal to a third party. Prior to trial, Latigo requested a temporary restraining order and preliminary injunctive relief to prevent BP from selling the interests to the third-party buyer pending trial. The trial court granted Latigo's request for preliminary injunctive relief.The Court of Civil Appeals reversed the trial court's decision, finding that the evidence did not show Latigo was likely to succeed on the merits. The court held that BP did not owe Latigo a duty to provide a good-faith allocation of value to the interests burdened by Latigo's preferential right. It found that whether the allocations provided by BP were inflated as alleged by Latigo was irrelevant, as the notices provided by BP met the terms of the operating agreements.The Supreme Court of the State of Oklahoma granted certiorari and held that the trial court's grant of injunctive relief was not an abuse of discretion. The court noted that while there was no binding precedent on whether an allocation of value within a package deal must be made in good faith, substantial support for Latigo's position could be found in both Oklahoma precedent and in other jurisdictions. The court affirmed the trial court's decision to grant preliminary injunctive relief and remanded for further proceedings consistent with its opinion. View "LATIGO OIL & GAS v. BP AMERICA PRODUCTION CO." on Justia Law

The dispute revolves around which of two oil and gas leases controls the royalty payments for nine wells collectively called the Bernhardt Wells. The Supreme Court of the State of Oklahoma affirmed the trial court's summary judgment in favor of defendant, Devon Energy Production Company, L.P. The plaintiffs, trustees of The Eunice S. Justice Amended, Revised, and Restated 1990 Revocable Trust Agreement, argued that a 1978 Lease entitles them to a 3/16 royalty, while Devon maintained that a 1973 Lease, entitling the Trust to a 1/8 royalty, controls. The court found that the dispute over which lease controls is best characterized as a quiet title claim, subject to a 15-year statute of limitations, which began when the injury occurred in 1978. Thus, the Trust's quiet title claim, filed more than 15 years later, was time-barred. The court also held that the trial court did not err in denying the Trust's motion to compel the production of various title opinions in Devon's possession. View "BASE v. DEVON ENERGY PRODUCTION" on Justia Law

Plaintiff Oil Valley Petroleum, LLC and defendant Clay Moore (Moore) sought equitable relief to adjudicate title based upon two oil and gas leases. Plaintiff requested the trial court to quiet title, cancel an oil and gas lease, and declare its top-lease to be in force and effect. Both parties moved for summary judgment. The district court granted defendant's motion and denied plaintiff's motion. Plaintiff appealed and the Court of Civil Appeals reversed the district court and directed judgment for plaintiff. Defendant sought certiorari to review the Court of Civil Appeals' opinion. The Oklahoma Supreme Court held: (1) exhibits presented during summary judgment proceedings were insufficient to show a material fact that a well was commercially profitable for the purpose of the habendum clause of an oil and gas lease; (2) an overriding royalty interest may be extinguished by an extinguishment of the working interest from which it was carved by a lessee's surrender of the lease in substantial compliance with the lease, unless the surrender is the result of fraud or breach of a fiduciary relationship; and (3) prevailing party status for the purpose of an attorney fee is determined by the trial court when not determined on appeal. The opinion of the Court of Civil Appeals was vacated and the Court reversed the order granting Moore a partial summary judgment and remanded for additional proceedings. View "Oil Valley Petroleum v. Moore" on Justia Law

Nicole Fitzpatrick obtained a dissolution of her marriage to Jeremy Fitzpatrick. The couple had minor children and significant marital assets, including real property, bank accounts, investments, and personal possessions. Among these were investments in oil and gas assets. The issue this case presented for the Oklahoma Supreme Court’s review centered on the Court of Civil Appeals decision regarding the division of the oil and gas assets. During the course of the marriage, Husband pursued a mutual goal of investments in oil and gas assets through two different ventures. He inextricably tied the Bakken and Energy deals and encumbered marital assets. The trial court found that all the A and B units of both the Bakken and Energy properties were acquired during the marriage through joint efforts of both parties, and were marital property subject to division. Because part of the properties' value lay in their future growth, the trial court considered the most equitable form of property division. The court ordered that future distributions and proceeds flowing from both sets of A and B units were to be held in constructive trust for both parties' benefit, and for Husband to distribute her equal marital share to Wife. COCA reversed the trial court's decisions regarding the Energy A and B units, finding that the trial court should have determined the units' value and set a valuation date. COCA also found that the trial court's use of a constructive trust for the Energy units was not proper. However, COCA did not disturb the trial court's use of a constructive trust with regard to the Bakken units. The Supreme Court affirmed the trial court’s authority to distribute the assets although they could not be valued at the time of the divorce decree; the Court concurred with the trial court’s imposition of a constructive trust to ensure protection of the assets’ future value. View "Fitzpatrick v. Fitzpatrick" on Justia Law

In 2018, ONEOK Arbuckle II Pipeline, LLC began construction of a natural gas liquid pipeline to transport Oklahoma production to the interstate market. The pipeline required electricity to operate a series of pump stations, including the Binger II Pump Station. The location for the proposed Binger II was in the certified territory of CKenergy Electric Cooperative, Inc., which has exclusive rights to provide electricity in the area pursuant to the Retail Electric Supplier Certified Territory Act. Relying on the large-load exception to the RESCTA, OG&E submitted a bid to provide service to the Binger II, which ONEOK accepted, and the parties contracted for service. CKenergy appealed this contract to the Oklahoma Corporation Commission asserting that it was a violation of its exclusive rights under the RESCTA. The Commission enjoined OG&E's service, concluding that the meaning of "extending its service" in section 158.25(E) limited the manner or mechanism which OG&E could use to provide service under the large-load exception. OG&E and ONEOK appealed, the Oklahoma Supreme Court retained both appeals, and consolidated the cases. The Supreme Court held that section 158.25(E) allowed OG&E to extend its service to large loads in the manner proposed. Therefore, the Commission's order enjoining OG&E was vacated and remanded for further proceedings. View "Okla. Gas & Electric Co. v. State ex rel. Okla. Corp. Comm'n" on Justia Law

Plaintiff-respondent Tres C, LLC was an Oklahoma limited liability company whose members were Viola "Tincy" Cowan, her son David Cowan, her daughter Karlea Cowan Ewald, her grandson Scot Meier, and her granddaughter Marsha Bukowski. Tres C was a successor-in-interest to certain mineral interests a the 320-acre lot in Blaine County, Oklahoma, that were formerly owned by the parents of Tincy's late husband, George and Coral Cowan. In February 1955, George and Carol Cowan executed an oil and gas lease in favor of J.J. Wright (hereinafter "the Lessee") concerning those mineral interests. Under its habendum clause, the Cowan Lease would remain valid for a primary term lasting 10 years and then--so long as a producing well was drilled--for a secondary term lasting "as long thereafter as oil, gas, casinghead gas, casinghead gasoline, or any of the products covered by this lease is or can be produced." Defendants-petitioners were the Lessee's current successors-in-interest under the Cowan Lease. This appeal concerned the trial court's judgment that granted Plaintiff's petition to cancel defendant's oil and gas lease and to quiet title in its favor so that a third party could exercise the option of executing a new lease. The Court of Civil Appeals conditionally affirmed the trial court's judgment, but remanded the matter with instructions to address the noncontractual defense of obstructions, set forth in Jones v. Moore, 338 P.2d 872. The Oklahoma Supreme Court granted certiorari to address whether the trial court erred in applying a rule of law that analyzed only a 3-month window of time for assessing whether a dip in the existing well's production was a cessation of production in paying quantities such that defendants' lease expired by its own terms. On de novo review, the Court found the trial court did err insofar as it relied upon the lease's cessation-of-production clause to define the time period for assessing profitability. The Court vacated the Court of Civil Appeals' opinion, reversed the trial court's judgment, quieted title in favor of Defendants, and remanded the case for further proceedings. View "Tres C, LLC v. Raker Resources" on Justia Law

In 2018, Mwande Serge Kpiele-Poda ("Employee") was injured at a wellsite while repairing a conveyor that activated and crushed his legs. While Employee's Workers' Compensation claim was still pending, he filed a petition asserting negligence and products liability against his employers, two wellsite operators, and the manufacturers and distributors of the conveyor. Ovintiv Mid-Continent, Inc. was named in the body of the petition but omitted from the caption. After the statute of limitations period expired, Employee amended his petition to add Ovintiv Mid-Continent, Inc. as a defendant in the petition's caption. A second amended petition added other parties. Ovintiv Mid-Continent, Inc. moved to dismiss arguing the claim was time-barred because the amended petition did not relate back to the first petition. Employee's employers also moved to dismiss arguing the Administrative Workers' Compensation Act and Oklahoma precedent precluded employees from simultaneously maintaining an action before the Workers' Compensation Commission and in the district court. The district court granted each dismissal motion and certified each order as appealable. The Oklahoma Supreme Court retained and consolidated Employee's separate appeals, holding: (1) the district court erred when it dismissed Employee's action against Ovintiv Mid-Continent, Inc. as time-barred; and (2) the district court properly dismissed Employee's intentional tort action for lack of subject matter jurisdiction. View "Kpiele-Poda v. Patterson-UTI Energy, et al." on Justia Law

Crown Energy Company ("Crown") brought suit against Mid-Continent Casualty Company ("Mid-Continent") seeking declaratory judgment that two commercial general liability policies issued to Crown provided coverage for claims of property damage brought against Crown in a separate action. The claims arose out of seismic activity allegedly caused by Crown's use of waste water disposal wells in its oil and gas operations. Mid-Continent filed a counterclaim, seeking declaratory judgment that the claims were not covered under the policies because the seismic activity did not constitute an "occurrence" and that the claims fell within a pollution exclusion to the policies. The trial court granted summary judgment in favor of Crown. Mid-Continent appealed, and the Court of Civil Appeals affirmed the trial court's judgment. After its review, the Oklahoma Supreme Court found that the seismic activity did constitute an occurrence under the policies, and that the pollution exclusion did not bar coverage. The Court of Civil Appeals’ judgment was reversed and the trial court affirmed. View "Crown Energy Co. v. Mid-Continent Casualty Co." on Justia Law

The United States District Court for the Western District of Oklahoma certified two questions of law to the Oklahoma Supreme Court relating to the Oklahoma Consumer Protection Act, and whether it applied to conduct outside of Oklahoma. The matter concenred a dispute between Continental Resources, Inc. (Continental), an oil and gas producer headquartered in Oklahoma, and Wolla Oilfield Services, LLC (Wolla), a North Dakota limited liability company that operated as a hot oil service provider in North Dakota. Continental alleged the parties entered into an agreement for Wolla to provide hot oil services at an hourly rate to Continental's wells in North Dakota. As part of the contract, Wolla agreed to submit its invoices through an "online billing system" and to bill accurately and comprehensively for work it performed. A whistleblower in Wolla's accounting department notified Continental about systematic overbilling in connection with this arrangement. Continental conducted an audit and concluded Wolla's employees were overbilling it for time worked. Wolla denies these allegations. The Oklahoma Supreme Court concluded: (1) the Oklahoma Consumer Protection Act does not apply to a consumer transaction when the offending conduct that triggers the Act occurs solely within the physical boundaries of another state; and (2) the Act also does not apply to conduct where, even if the physical location is difficult to pinpoint, such actions or transactions have a material impact on, or material nexus to, a consumer in the state of Oklahoma. View "Continental Resources v. Wolla Oilfield Services" on Justia Law

Plaintiff Magnum Energy, Inc. appealed a Board of Adjustment for the City of Norman (Board) decision denying Plaintiff's application for a variance from the City's business licensing requirement that oil and gas operators maintain two million dollars in umbrella liability coverage. The trial court granted summary judgment in Plaintiff's favor, finding that the requirement conflicted with State law and was therefore unenforceable. The Board appealed the trial court's order; the Court of Civil Appeals reversed the order, finding no conflict between the requirement and State law. The Oklahoma Supreme Court reversed the appellate court, finding the requirement conflicted with 52 O.S.Supp.2015 section 137.1, rendering the requirement invalid and unenforceable. View "Magnum Energy v. Bd. of Adjustment for the City of Norman" on Justia Law