Justia Energy, Oil & Gas Law Opinion Summaries

Greggory Tank appealed an amended judgment quieting title to royalty interests in property located in McKenzie County, North Dakota in favor of several of the defendants. In June 2014, Tank sued numerous defendants seeking to quiet title to royalty interests in proceeds from the production from an oil and gas well. Most of the defendants did not appear or settled with Tank. The remaining defendants who were the appellees in this appeal contested the quiet title action. The royalty interests at issue were subject to several possible conveyances. Tank claims ownership of a 16 percent royalty interest based on an unbroken chain of title utilizing filed county records dating back to the federal fee patent. Included within that chain of title was a 1931 purchase of the property by McKenzie County under a tax foreclosure sale. The County subsequently sold and transferred the property in 1945. The defendants claimed various percentages of royalty interests under a recorded 1938 assignment of an 11 percent royalty to oil and gas produced on the property. The North Dakota Supreme Court reversed the district court's amended judgment quieting title to the royalty interests in favor of the defendants and directed the entry of judgment quieting title in favor of Tank. A county's tax deed gives it title or color of title to the whole estate in the land including the royalty interests. A tax deed, valid upon its face, creates a presumptive title to the entire estate in the land which continues until it has been overcome by the affirmative action in court, by suit or counterclaim on the part of a person who has a sufficient interest to challenge the title. Royalty interests cannot be "possessed" for purposes of the statute of limitations or adverse possession. The Court remanded this case to the district court for determination of whether Tank was barred from the recovery of royalty payments previously made to the defendants and, if not barred, the amount of the recovery. View "Siana Oil & Gas Co., LLC v. Dublin Co." on Justia Law

A majority of the Supreme Court held (1) Va. Code 56-49.01(A) allows a natural gas company to gain access to private property for the purpose of conducting surveys and other activities that are only necessary for the selection of the most advantageous route; and (2) the trial court did not misapply section 56-49.01 in this case.Atlantic Coast Pipeline, LLC (ACP), which was engaged in the regulatory approval process to build a natural gas pipeline, sought permission to enter Landowners’ properties to conduct preliminary surveys and other activities. Landowners withheld their consent. ACP filed the instant second amended petition for declaratory judgment seeking an order affirming ACP’s authority to enter Landowners’ properties for the purposes defined in section 56-49.01. The trial court granted ACP permission to enter the properties to conduct the necessary activities. The Supreme Court affirmed, holding (1) the trial court did not err in its construction of section 56-49.01(A); and (2) the trial court’s application of section 56-49.01 was not improper. View "Barr v. Atlantic Coast Pipeline, LLC" on Justia Law

The Supreme Court affirmed the district court’s grant of summary judgment in favor of Hiland Crude, LLC in this declaratory action challenging the tax classification of Hiland Crude’s crude oil gathering pipelines in Montana. Hiland Crude owns and operates crude oil gathering and transmission systems in Montana. The Department of Revenue began centrally assessing Hiland Crude’s property in 2013 and classified all of its pipeline systems within the State as class nine property. Hiland Crude filed this suit asserting that gathering pipeline systems should be taxed as class eight property, regardless of whether the property is centrally assessed, because they are “flow lines and gathering lines” under the class eight statute. The district court agreed and granted summary judgment for Hiland Crude. The Supreme Court affirmed, holding that the district court properly granted summary judgment in favor of Hiland Crude. View "Hiland Crude, LLC v. State, Department of Revenue" on Justia Law

The Supreme Court reversed the judgment of the court of appeals holding that the royalty interest reserved to the grantor in a 1951 deed was fixed - or set at a specific percentage of production - rather than floating - dependent on the royalty amount in the applicable oil and gas lease.Plaintiffs sought a declaratory judgment that the deed reserved a floating one-half royalty interest. The trial court declared that the deed reserved a floating one-half royalty interest. The court of appeals reversed, concluding that the royalty interest was fixed. The Supreme Court reversed in light of the language and structure of the reservation at issue, holding that the deed unambiguously reserved a floating one-half interest in the royalty in all oil, gas, or other minerals produced from the conveyed property. View "U.S. Shale Energy II, LLC v. Laborde Properties, L.P." on Justia Law

A landowner brought suit against several mineral lessees for breach of the obligations of the mineral lease. The mortgagee of one of the lessees was also named as a defendant. The lower courts held all lessees and the mortgagee jointly liable for damages resulting from the failure to furnish a recordable act evidencing the expiration of the lease (i.e., failure to release the lease). The Louisiana Supreme Court granted consolidated writ applications to determine: (1) whether the mortgagee was properly held jointly liable as an “owner” of the lease under La. Mineral Code art. 207 and a “lessee” under La. Mineral Code art. 140; (2) whether the imposition of joint liability was correct with regard to the owner of a portion of the shallow rights; (3) whether La. Mineral Code art. 140’s calculation of damages contemplated the inclusion of unpaid royalties (the amount due) in addition to double the amount of unpaid royalties (as a penalty) or whether the maximum damage award allowed is twice the amount of unpaid royalties; and (4) whether $125,000 in attorney fees for work done on appeal was excessive. The Court found: (1) the mortgagee was not an “owner” for purposes of La. Mineral Code art. 207 and was, therefore, not liable for failure to release the lease. For the same reasons, the Court found the mortgagee was not a “lessee” for purposes of La. Mineral Code art. 140 and, was, therefore, not liable for failure to pay royalties that were due. (2) The Court found Tauren is jointly liable for the damages because the failure to release the lease was an indivisible obligation under the particular facts of this case. (3) The Court held La. Mineral Code art. 140 authorized as damages a maximum of double the amount of unpaid royalties. (4) Last, the Court amended the award of attorney fees. View "Gloria's Ranch, LLC. v. Tauren Exploration, Inc." on Justia Law

The common law rule against perpetuities does not invalidate a grantee’s future interest in the grantor’s reserved non-participating royalty interest (NPRI).Lorene Koopmann and her two children sought declaratory judgment against Burlington Resources Oil & Gas Company, L.P. and Lois Strieber to construe a warranty deed by which Strieber conveyed fee simple title to a tract of land to Lorene and her late husband. Under the deed, Strieber reserved a fifteen-year, one-half NPRI. The Koopmans claimed that they were the sole owners of an NPRI as of December 27, 2011. They also asserted claims against Burlington, which leased the tract from the Koopmanns, for breach of contract and other claims. The trial court granted summary judgment for the Koopmans as to the declaratory action and granted summary judgment for Burlington on the negligence and negligence per se claims. The court of appeals affirmed in part and reversed in part. The Supreme Court held (1) the rule against perpetuities does not invalidate the Koopmann’s future interest in the NPRI; (2) Tex. Nat. Res. Code 91.402 does not preclude a lessor’s common law claim for breach of contract; and (3) the court of appeals properly entered judgment as to attorney’s fees pursuant to Tex. R. Civ. P. 91a. View "ConocoPhillips Co. v. Koopmann" on Justia Law

The Supreme Court affirmed the decision of the Board of Oil, Gas, and Mining to impose a joint operating agreement (JOA) on J.P. Furlong Company’s relationship with the party operating a drilling unit that included Furlong’s mineral lease.Furlong complained that the Board accepted, without making any of the changes to the JOA that Furlong wanted, the JOA the operator proposed. On appeal, Furlong argued that the Board erroneously applied the law to conclude that the JOA was just and reasonable and that there was not substantial evidence to support the Board’s decision. The Supreme Court affirmed, holding that the Board correctly applied the law and rendered a decision supported by substantial evidence. View "J.P. Furlong Co. v. Board of Oil & Gas Mining" on Justia Law

The Parker County Appraisal District did not employ a facially unlawful means of appraising Taxpayers’ property, which appeared to derive much of its market value from saltwater disposal wells in which wastewater from oil and gas operations could be injected and permanently stored underground.When valuing for tax purposes Taxpayers’ tracts of land in Parker County, the Parker County Appraisal District assigned one appraised value to the wells and another appraised value to the land itself. Taxpayers argued before the trial court that the Tax Code did not permit the County to appraise the wells separately from the land itself where both interests are owned by the same person and have not been severed into discrete estates. The trial court granted summary judgment for Taxpayers. The court of appeals reversed. The Supreme Court affirmed, holding (1) there was nothing improper in the District’s decision to separately assigned and appraise the surface and the disposal wells, which were part of Taxpayers’ real property and contributed to its value; and (2) the Tax Code does not prohibit the use of different appraisal methods for different components of a property. View "Bosque Disposal Systems, LLC v. Parker County Appraisal District" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals reversing the trial court’s ruling that TRO-X, LP was entitled to a back-in percentage of the working interest in five mineral leases under which Anadarko Petroleum was lessee.TRO-X sued Anadarko, asserting claims for breach of contract and trespass to try title and seeking a declaratory judgment that the leases were top leases and therefore subject to TRO-X’s back-in interest. The trial court concluded that the leases were top leases, in which TRO-X retained a back-in interest, rather than new leases, which washed out TRO-X’s interest. In reversing, the court of appeals concluded that the leases were not top leases. The Supreme Court agreed, holding that the leases at issue were not top leases subject to TRO-X’s back-in interest. View "TRO-X, L.P. v. Anadarko Petroleum Corp." on Justia Law

Vendors and contractors provided materials and services in connection with an offshore mineral lease. Under the Louisiana Oil Well Lien Act, La. Rev. Stat. 9:4863(A)(1), 9:4864(A)(1), they secured liens on the lessee’s operating interest upon the commencement of labor. They timely recorded the liens. The lessee later sold “term overriding royalty interests” to OHA. In the lessee’s subsequent bankruptcy proceeding, the service providers intervened, seeking to enforce their liens on OHA’s royalty interests. The district court agreed with the bankruptcy court and dismissed their complaints, concluding that the statute that created the liens extinguished them via a safe-harbor provision. The Fifth Circuit affirmed. The safe-harbor question is one of statutory interpretation: Was OHA’s purchase of the overriding royalties a purchase of “hydrocarbons that are sold or otherwise transferred in a bona fide onerous transaction by the lessee or other person who severed or owned them” at severance? The royalties were “sold,” the transaction was “bona fide,” and the seller was a “lessee.” OHA purchased more than an interest in proceeds; it purchased an interest in the to-be-produced hydrocarbons themselves. A purchase of overriding royalties is a purchase of “hydrocarbons” under the statute, so the lienholders’ failure to provide pre-purchase notice renders their liens extinguished. View "OHA Investment Corp. v. Schlumberger Technology Corp." on Justia Law