Justia Energy, Oil & Gas Law Opinion Summaries

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

The Supreme Court affirmed the judgment of the court of appeals in this case requiring interpretation of retained-acreage provisions in oil-and-gas lease instruments, holding that acreage “included within the proration unit for each well…prescribed by field rules” refers to acreage set by the field rules, not acreage assigned by the operator.XOG Operating, LLC conveyed to Chesapeake Exploration Limited Partnership and Chesapeake Exploration, LLC (collectively, Chesapeake) its rights as lessee under four oil-and-gas leases in three sections of land. Under a retained-acreage provision, the assigned interest would revert to XOG after the primary term. As relevant to appeal, Chesapeake would retain for each well drilled the acreage “included within the proration…unit” “prescribed by field rules.” The acreage not retained by Chesapeake would revert to XOG on termination of the assignment. Chesapeake completed six wells during the primary term of the assignment, five of which were located in an area for which the Railroad Commission had promulgated field rules. The sixth well was located in an area for which there were no field rules. In Chesapeake’s view, it retained all of the assigned acreage. XOG sued Chesapeake to construe the retained-acreage provision. The Supreme Court affirmed the trial court's decision that the none of the land at issue reverted to XOG under the retained-acreage provision. View "XOG Operating, LLC v. Chesapeake Exploration Limited Partnership" on Justia Law

In this case involving competing claims to mineral-lease interests in two tracts of land, the Supreme Court affirmed the judgments of the trial court and court of appeals that the acreage Endeavor Energy Resources, LP and Endeavor Petroleum, LLC (collectively, Endeavor) retained under “retained-acreage clauses” in expired leases did not include the two tracts at issue.Discovery Operating, Inc., which drilled producing wells on the two subject tracts, claimed the mineral-lease interests based on leases acquired directly from the mineral-estate owners. Endeavor based its claim on prior leases with the same owners covering land that included the two subject tracts. Endeavor never drilled on the tracts, and Endeavor’s leases’ terms had expired. However, the leases included “retained-acreage clauses” providing that the leases would continue after they expired as to a certain number of acres associated with each of the wells Endeavor drilled on adjacent tracts. Supreme Court affirmed the judgment of the lower courts, holding that “a governmental proration unit assigned to a well” refers to acreage assigned by the operator, not by field rules. View "Endeavor Energy Resources, LP v. Discovery Operating, Inc." on Justia Law

In this action alleging claims under the West Virginia Surface Coal Mining and Reclamation Act, W. Va. Code 22-31 to 22-3-38, the Supreme Court answered several questions of law certified to it by the federal court. The Court answered, inter alia, that (1) a 1902 deed provision transferring the right to mine coal “without leaving any support for the overlying strata and without liability for any injury which may result to the surface from the breaking of said strata” prohibits a surface owner from pursuing a common law claim for loss of support arising from subsidence caused by the extraction of the coal from below the surface; (2) assuming the surface lands and residence of a landowner have been materially damaged from subsidence that is a natural result of underground mining, the surface owner is limited to the remedies provided for in the West Virginia Code of State Rules 38-2-16.2.c to 38-2-16.2.c.2; and (3) if a surface owner proves that his or her person or property was injured through a coal operator’s violation of a rule, order, or permit, the surface owner can receive monetary compensation for such injury pursuant to W. Va. Code 22-3-25(f). View "McElroy Coal Co. v. Schoene" 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). In addition, section 91.402 of the Texas Natural Resources Code does not preclude a lessor’s common law claim for breach of contract.The court of appeals concluded that the rule did not bar the grantees’ future interest in the NPRI. The court, however, found that the reservation’s savings clause was ambiguous and remanded the case for a jury to determine the proper interpretation. The court held that section 91.402 does not bar a claim for breach of contract. Finally, while determining that several of the grantees’ claims failed as a matter of law, the court of appeals upheld the trial court’s award of attorney’s fees against the grantor pursuant to Tex. R. Civ. P. 91a. The Supreme Court affirmed. View "ConocoPhillips Co. v. Koopmann" 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). In addition, section 91.402 of the Texas Natural Resources Code does not preclude a lessor’s common law claim for breach of contract.The court of appeals concluded that the rule did not bar the grantees’ future interest in the NPRI. The court, however, found that the reservation’s savings clause was ambiguous and remanded the case for a jury to determine the proper interpretation. The court held that section 91.402 does not bar a claim for breach of contract. Finally, while determining that several of the grantees’ claims failed as a matter of law, the court of appeals upheld the trial court’s award of attorney’s fees against the grantor pursuant to Tex. R. Civ. P. 91a. The Supreme Court affirmed. View "ConocoPhillips Co. v. Koopmann" on Justia Law

The lessee of certain mineral interests could not justifiably rely on extra-contractual representations by the lessor’s agent despite “red flags” and a negation-of-warranty clause in the sales documents explicitly placing the risk of title failure on the lessee.In its complaint, the lessee alleged breach of contract, fraud, and negligent misrepresentation. Following a pre-trial conference, the trial court issued an order under Tex. R. Civ. P. 166(g) disposing of all of the lessee’s claims, concluding (1) the unambiguous terms of the letter of intent and leases precluded the lessee’s contract claim; and (2) as a matter of law, the lessee could not establish the justifiable-reliance element of its fraud and negligent-misrepresentation claims. The court of appeals affirmed the trial court's ruling regarding the contract claim but reversed on fraud and negligent misrepresentation. The Supreme Court reversed the court of appeals and reinstated the trial court’s judgment, holding (1) justifiable reliance was an essential element of the lessee’s remaining causes of action; and (2) as a matter of law, the lessee could not show justifiable reliance. View "JPMorgan Chase Bank, N.A. v. Orca Assets G.P., LLC" on Justia Law

The lessee of certain mineral interests could not justifiably rely on extra-contractual representations by the lessor’s agent despite “red flags” and a negation-of-warranty clause in the sales documents explicitly placing the risk of title failure on the lessee.In its complaint, the lessee alleged breach of contract, fraud, and negligent misrepresentation. Following a pre-trial conference, the trial court issued an order under Tex. R. Civ. P. 166(g) disposing of all of the lessee’s claims, concluding (1) the unambiguous terms of the letter of intent and leases precluded the lessee’s contract claim; and (2) as a matter of law, the lessee could not establish the justifiable-reliance element of its fraud and negligent-misrepresentation claims. The court of appeals affirmed the trial court's ruling regarding the contract claim but reversed on fraud and negligent misrepresentation. The Supreme Court reversed the court of appeals and reinstated the trial court’s judgment, holding (1) justifiable reliance was an essential element of the lessee’s remaining causes of action; and (2) as a matter of law, the lessee could not show justifiable reliance. View "JPMorgan Chase Bank, N.A. v. Orca Assets G.P., LLC" on Justia Law

At issue in these forty appeals, consolidated into four for purposes of appeal, was whether the individual landowners were entitled to an award of attorney fees under Neb. Rev. Stat. 76-726.Just prior to TransCanada Keystone Pipeline, LP’s eminent domain proceedings seeking to acquire right-of-way and other property interests in constructing an oil pipeline, certain property owners - including some of the same landowners involved in these eminent domain proceedings - filed a constitutional challenge to the pipeline route. TransCanada then dismissed its condemnation petitions, except that the Holt County petitions were dismissed in order for TransCanada to pursue approval of a pipeline route by the Public Service Commission. The landowners filed motions for attorney fees and costs. In each case, the county court granted the requests for attorney fees. The Supreme Court disagreed, holding that none of the landowners established that they were entitled to attorney fees under the circumstances. View "TransCanada Keystone Pipeline, LP v. Nicholas Family Ltd. Partnership" on Justia Law

The Supreme Court denied the petition for a writ of mandamus filed by a group of landowners (“Landowners”) seeking an order compelling the Ohio Department of Natural Resources’ Division of Oil and Gas Resources Management (“the Division”) and its chief to commence appropriation proceedings to compensate Landowners for their land that was included in an oil and gas drilling unit. Landowners objected an an order issued by the chief requiring that a reservoir of oil and gas underlying multiple tracts of land be operated as a unit to recover the oil and gas, arguing that the order amounted to a taking of their property for which they must be compensated. The Supreme Court denied Landowners’ petition for a writ of mandamus, holding that Landowners had an adequate remedy by way of appeal to the county court of common pleas. View "State ex rel. Kerns v. Simmers" on Justia Law