Justia Energy, Oil & Gas Law Opinion Summaries

Articles Posted in Oklahoma Supreme Court
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Plaintiff-appellee Revolution Resources, LLC, (Revolution), an oil and gas well operator, filed an action under the Oklahoma Surface Damages Act (SDA), to Appoint Appraisers. In February 2018, Revolution acquired and became the operator of a 30,000 acre unit that was created in 1947 pursuant to Order 20212 of the Oklahoma Corporation Commission (OCC). The unit wasknown as the West Edmond Hunton Lime Unit (WEHLU). Defendant-appellant Annecy, LLC, (Annecy) purchased the subject premises in August 2019, with the intent to build expensive luxury homes. Appellant unsuccessfully sought a temporary injunction against Appellee's operations. Appellant appealed the interlocutory order denying its motion for temporary injunction. The Oklahoma Supreme Court granted an injunction pending the appeal. Appellant was required to post a bond securing the cost and attorney fees of the Appellee if the Supreme Court determined later the temporary injunction should not have been granted. The Supreme Court concluded the injunction should not have been granted: Annecy purchased its surface estate subject to the outstanding mineral estate held by Revolution. Annecy's surface estate is servient to that of Revolution's mineral estate. Annecy did not meet its burden of proving by clear and convincing evidence that it would be irreparably harmed by Revolution's oil and gas operations. Having failed to establish one of the four factors required, i.e., irreparable harm, by clear and convincing evidence, Annecy did not meet its burden to prove all necessary factors to obtain extraordinary relief, therefore its motion for temporary injunction was correctly denied. The temporary injunction granted by the Supreme Court was dissolved, and the matter remanded for further proceedings to determine the costs and attorney fees owed the Appellee which were secured by bond. View "Revolution Resources, LLC v. Annecy, LLC" on Justia Law

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The United States Bankruptcy Court for the Western District of Oklahoma certified two questions of state law to the Oklahoma Supreme Court. White Star Petroleum, LLC, along with its wholly-owned subsidiary, White Star Petroleum II, LLC were engaged in the business of exploring, acquiring, drilling, and producing oil and natural gas, either as an operator or non-operating working interest owner of various leaseholds across Oklahoma. In 2019, several of White Star's unpaid vendors filed an involuntary bankruptcy petition against White Star. White Star and its affiliates filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. During the bankruptcy proceedings, 78 unpaid vendors filed adversary proceedings seeking adjudication of statutory lien claims under 42 O.S. 144 against White Star's interests in various wells and establishment of trust fund claims under 42 O.S. 144.2. These proceedings were stayed when White Star initiated two adversary proceedings of its own. The first sought adjudication of the priority, validity, and value of approximately 2,000 mechanic's and materialman's liens ("M&M liens") asserted by the 78 unpaid vendors over various interests held by White Star. The second sought an order of the Bankruptcy Court directing several first purchasers of oil and gas to turn over to White Star approximately 2 million dollars, which were being held in suspense after the purchasers received statutory lien notices from the M&M lien claimants. The Bankruptcy Court certified the questions to the Oklahoma Supreme Court to aid in the resolution of these two adversary proceedings. The federal court asked: (1) were the "trust funds" created by Title 42 O.S. 144.2 limited to obligations due non-operator joint working interest owners, or did such funds include payments due holders of mechanic's and materialmen's liens arising under and perfected by Title 42 O.S. 144?; and (2) did the Oil and Gas Owners' Lien Act of 2010, grant an operator and non-operator working interest owners a lien in proceeds from purchasers of oil and gas which is prior and superior to any claim of the holder of a mechanic's and materialmen's lien asserted under Title 42 O.S. 144? The Supreme Court found that answering both questions would have been dispositive of issues pending in the underlying bankruptcy proceedings and that there was then no controlling law on the subject matter of either question. The Court answered both questions in the negative: funds which must be held in trust for payment of lienable claims pursuant to 42 O.S. 144.2 were not exclusively limited to joint-interest billing payments received by operators for services rendered by the lienholders; the Oil and Gas Owners' Lien Act did not grant operators and non-operating working interest owners a lien in proceeds from the sale of oil and gas which is prior and superior to any claim of the holder of a mechanic's and materialman's lien asserted under 42 O.S. 144. View "White Star Petroleum v. MUFG Union Bank" on Justia Law

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Appellant operating company, Stephens & Johnson Operating Company (Operator), requested an award of attorney fees and costs in this case brought under the Oklahoma Surface Damages Act. Operator claimed it was entitled to the fees and costs as the prevailing party in the underlying suit since the State of Oklahoma ex rel. the Commissioners of the Land Office (Surface Owner) did not recover a jury verdict greater than the appraisers' award. The Oklahoma Supreme Court found the statutes in question did not provide for fees and costs to the prevailing party but instead imposed specific conditions which were not satisfied in this case. View "Oklahoma, ex rel. Comm'rs of Land Office v. Stephens & Johnson Operating Co., Inc." on Justia Law

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Petitioners and respondents owned real property in McClain County, Oklahoma, containing and abutting Colbert Lake (the Lake). Petitioners also owned real property containing Colbert Creek, which was the sole source of water that fed the Lake. Respondents sought a permit from the Oklahoma Water Resources Board (OWRB), to sell water from the Lake to oil companies for use in fracking operations. The only notice that the OWRB provided to petitioners of the respondents' permit application was by publication in newspapers. The permits were issued, and petitioners subsequently filed suit at the district court, arguing that they were not given proper and sufficient notice of the permit proceedings. The district court dismissed the lawsuit in a certified interlocutory order, and petitioners appealed. The Oklahoma Supreme Court granted certiorari to address the proper, constitutionally required notice to landowners in such proceedings. The Court held that the notice given was inadequate, therefore judgment was reversed and the matter remanded for for further proceedings. View "Purcell v. Parker" on Justia Law

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Plaintiff-appellee Natural Gas Pipeline Company of America LLC (NGPL) operated two interstate natural gas pipelines that crossed property owned by Defendant-appellant Foster OK Resources LP (Foster). NGPL brought a condemnation action seeking four separate easements to have consistent access to operate and maintain the pipelines and to clear title issues involving the pipelines. Foster challenged NGPL's exercise of eminent domain and whether NGPL's taking met the legal standard of necessity. After review, the Oklahoma Supreme Court held NGPL could not contract away its right of eminent domain and was not prevented from seeking the easements at issue to operate and maintain the pipelines. NGPL's condemnation of Foster's property was for public use and met the legal standard of necessity. Furthermore, the Court held the issue of the necessity of a survey in computing just compensation owed to Foster was premature and could not be determined at this time. View "Natural Gas Pipeline Co. v. Foster OK Resources, LP" on Justia Law

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Plaintiff/Appellant was the vested remainderman of his father's life estate in the surface rights of land in Canadian County, Oklahoma (the "Property"). Defendant Cimarex Energy Company was the lessee of the Property's mineral interests. Plaintiff filed suit alleging that he was entitled to compensation for the surface damages caused by the drilling of wells and entitled to be notified of negotiations to determine surface damages because he was a "surface owner" within the meaning of the Surface Damages Act (SDA), 52 O.S. sections 318.2 et seq. Defendant moved to dismiss for failure to state a claim arguing Plaintiff was not an owner within the meaning of the SDA, and even if he were an owner, his proper remedy was to seek compensation from the life tenant. The trial court sustained the Defendant's Motion to Dismiss finding the Remainderman was not a "surface owner" under the SDA. Plaintiff appealed. The Court of Civil Appeals reversed the trial court's ruling interpreting "surface owner" under the SDA to include vested remainder interests. The Oklahoma Supreme Court found the SDA's definition of surface owner was ambiguous, and was persuaded by the common meaning, expressed legislative intent, and interests of justice that the SDA's use of surface owner applies only to those holding a current possessory interest. Under the SDA, a mineral lessee must negotiate surface damages with those who hold a current possessory interest in the property. A vested remainderman did not hold a current possessory interest until the life estate has come to its natural end. The Court of Civil Appeals’ decision was vacated and the trial court affirmed. View "Hobson v. Cimarex Energy Co," on Justia Law

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This appeal centered on the trial court's judgment after a bench trial that denied the Appellant's petition to cancel Appellee's oil and gas leases, to quiet title in favor of the Appellant's "top leases," and to hold Appellee liable for slander of title. The Oklahoma Supreme Court retained the appeal to address several issues of first impression. Through this opinion, the Court declined to adopt the definition of "capability" propounded by the Appellant and affirmed the district court's finding that Appellee's wells were capable of production in paying quantities. The Court affirmed the district court's judgment insofar as it quieted title in Appellee's favor as to leasehold interests located inside those wells' spacing units. The Court reversed the district court's judgment insofar as it quieted title in Appellee's favor as to leasehold interests in lands falling outside those wells' spacing units, because the statutory Pugh clause found in 52 O.S. 87.1(b) required it. Furthermore, the Court found that the title of the bill enacting the statutory Pugh clause did not violate Article V, Section 57 of the Oklahoma Constitution and that the effect of the statutory Pugh clause upon Appellee's leasehold interests did not result in an unconstitutional taking in violation of Article II, Section 23 of the Oklahoma Constitution. Lastly, the Court reversed the district court's judgment insofar as it quieted title in Appellee's favor as to leases upon which no well had ever been drilled. View "Hall v. Galmor" on Justia Law

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On December 20, 2017, Respondents Michael Thompson, Ray Potts, and Mary Lynn Peacher (collectively, Proponents) filed Initiative Petition No. 416, State Question No. 795 (IP 416) with the Oklahoma Secretary of State. IP 416 would create a new Article XIII-C in the Oklahoma Constitution. IP 416 contains 8 sections, which Proponents asserted will levy a new 5% gross production tax on oil and gas production from certain wells, and provide for the deposit of the proceeds primarily in a new fund entitled the "Oklahoma Quality Instruction Fund" (the Fund). Monies from the Fund would be distributed: (1) 90% to Oklahoma common school districts to increase compensation and benefits for certified personnel, and the hiring, recruitment and retention thereof; and (2) 10% to the State Department of Education to promote school readiness, and to support compensation for instructors and other instructional expenses in "high-quality early learning centers" for at-risk children prior to entry into the common education system. The opponent petitioners alleged the gist of the petition was insufficient and misleading. Upon review, the Oklahoma Supreme Court held the gist of the petition was legally sufficient. View "McDonald v. Thompson" on Justia Law

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In 2013, Frank Benedetti, an employee of Schlumberger Technology Corporation, was working on an oil rig near El Reno, Oklahoma, when he slipped on an icy platform and fell more than thirty feet down a stairwell. Benedetti sued Cimarex Energy Company, the owner and operator of the well site, and Cactus Drilling Company, the owner and operator of the oil rig, for negligence. Cimarex moved to dismiss pursuant to 85 O.S. 2011 section 302(H), which provided that "any operator or owner of an oil or gas well . . . shall be deemed to be an intermediate or principal employer" for purposes of extending immunity from civil liability. The district court granted the motion to dismiss, and Benedetti appealed. The Court of Civil Appeals affirmed. Pursuant to the Oklahoma Supreme Court’s decision in Strickland v. Stephens Production Co., 2018 OK 6, ___ P.3d ___, the Supreme Court concluded section 302(H) of Title 85 was an impermissible and unconstitutional special law under Art. 5, section 59 of the Oklahoma Constitution. Subsection (H) was severed from the remainder of that provision. View "Benedetti v. Cimarex Energy Co." on Justia Law

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An employee of a trucking company was killed while on the job at an oil-well site. The employee's surviving daughter brought a wrongful death action against the owner and operator of the well site, Stephens Production Company. Stephens Production Company moved to dismiss the case pursuant to 85A O.S. Supp. 2013 sec. 5(A), which provides that "any operator or owner of an oil or gas well . . . shall be deemed to be an intermediate or principal employer" for purposes of extending immunity from civil liability. The district court denied the motion to dismiss, finding that section 5(A) of Title 85A was an unconstitutional special law. The trial court certified the order for immediate interlocutory review, and the Oklahoma Supreme Court granted certiorari review. The Supreme Court concluded that the last sentence of section 5(A) of Title 85A was an impermissible and unconstitutional special law under Art. 5, section 59 of the Oklahoma Constitution. The last sentence of section 5(A) was severed from the remainder of that provision. View "Strickland v. Stephens Production Co." on Justia Law