Justia Energy, Oil & Gas Law Opinion Summaries

Where a lessee designates tracts of land for pooling regarding horizontal drilling and production of oil and gas from the Marcellus Shale Formation, which includes nonparticipating royalty interests (NPRI), consent or ratification by the holders of the nonparticipating royalty interests is not required where the holders of the NPRIs have conveyed the oil and gas in place and the executive leasing rights thereto to the lessor.At issue was a voluntary pooling and unionization lease provision regarding horizontal drilling and production of oil and gas from the Marcellus Shale Formation. PPG Industries, Inc., the lessor, and Gastar Exploration USA, Inc., the lessee, signed a lease under which 700 acres were designated by Gastar as the Wayne/Lily Unit for purposes of pooling the oil and gas interests held by various individuals and entities. PPG and Gastar challenged the circuit court’s entry of partial summary judgment in favor of Plaintiffs, who collectively held a nonparticipating royalty interest in the oil and gas underlying a parcel included within the Wayne/Lily Unit. The Supreme Court reversed, holding that the circuit court erred in ruling that the validity of the pooling provision in the PPG-Gastar lease and the designated Wayne/Lily Unit were void until such time as pooling was consented to and ratified by Plaintiffs. View "Gastar Exploration Inc. v. Contraguerro" on Justia Law

Substantively, in three somewhat interconnected claims, Joe and Yvette Hardesty (collectively, Hardesty) attacked State Mining and Geology Board (Board) findings, contending the trial court misunderstood the legal force of his 19th century federal mining patents. He asserted he had a vested right to surface mine after the passage of SMARA without the need to prove he was surface mining on SMARA’s operative date of January 1, 1976. He argued the Board and trial court misapplied the law of nonconforming uses in finding Hardesty had no vested right, and separately misapplied the law in finding that his predecessors abandoned any right to mine. These contentions turned on legal disputes about the SMARA grandfather clause and the force of federal mining patents. Procedurally, Hardesty alleged the Board’s findings did not “bridge the gap” between the raw evidence and the administrative findings. Hardesty also challenged the fairness of the administrative process itself, alleging that purported ex parte communications by the Board’s executive director, Stephen Testa, tainted the proceedings. The Court of Appeal reviewed the facts, and found they undermined Hardesty’s claims: the fact that mines were worked on the property years ago does not necessarily mean any surface or other mining existed when SMARA took effect, such that any right to surface mine was grandfathered. However, the Court agreed with the trial court’s conclusions that, on this record, neither of these procedural claims proved persuasive. Accordingly, the Court affirmed the judgment denying the mandamus petition. View "Hardesty v. State Mining & Geology Board" on Justia Law

The trial court properly considered evidence showing the development of a gas storage market that relied exclusively on surface acres as the valuation metric.This appeal arose out of a condemnation action in which Fred Southam and Southam & Son (collectively, Southam) sought to introduce evidence of the value of their land for an underground natural gas storage project based on reservoir volume. The trial court’s in limine ruling excluded Southam’s valuation approach based on evidence all independently operated gas storage projects in California compensate landowners based on surface acres contributed to the project. The Court of Appeal concluded the trial court properly considered evidence showing the development of an independently operated gas storage market that relied exclusively on surface acres as the valuation metric. Further, the trial court did not abuse its discretion in excluding a volume-based valuation approach based on Southam’s failure to present any evidence this vaulation approach had ever been used in the market for natural gas storage leases. Southam did not establish his entitlement to cross examine an expert before that expert may give a declaration in support of a pretrial motion. The remainder of Southam’s arguments were deemed forfeited for failure to develop the argument, to cite any legal authority, or to provide any citation to the appellate record. View "Central Valley Gas Storage v. Southam" on Justia Law

Stephens Production Company sought to condemn underground natural gas storage easements and surface easements to complete an underground natural gas storage facility on and underneath approximately 900 acres of mostly rural property in Haskell County. Approximately 140 Defendants were named in the Petition. Stephens Production had previously offered such Defendants "just market value" for their respective interests, but the Defendants refused the offers. The trial court appointed three commissioners to value just compensation due for each Defendant listed in the Petition. All Defendants except one, appellant Royce Larsen, settled with Stephens Production. The Commissioners valued Larsen's property taken and the damage to the remainder at $12,400.00. Larsen objected to this amount, and his case proceeded to trial. Larsen's expert testified the just compensation value was approximately $419,000.00; Stephens Production's expert valued the just compensation at $9,000.00. The trial court determined that just compensation for the property was $9,000.00. Without any evidence from Larsen regarding the reasonable probability of combination or the market demand for underground gas storage in the area, the highest and best use of the property was the use to which it was subject at the time of the taking - natural resource, agricultural, and recreational use. The Supreme Court concluded the record supported the trial court's valuation of just compensation at $9,000.00. View "Stephens Production Co. v. Larsen" on Justia Law

This case involved a dispute over the ownership of mineral rights appurtenant to several tracts of land located in Haskell County, Kansas. Michael Leathers and his brother Ronald Leathers each inherited half of these mineral rights from their mother. But an error in a quit claim deed subsequently executed between the brothers left it unclear whether Ronald’s one-half interest in the mineral estate had been conveyed to Michael. In a series of orders spanning several years, the district court (1) reformed the quit claim deed to reflect that Ronald had reserved his one-half interest in the mineral estate; (2) awarded half of Ronald’s one-half interest to Ronald’s wife Theresa (pursuant to Ronald and Theresa’s divorce decree); and (3) held that Ronald owed approximately $1.5 million to the IRS and that the IRS’s tax liens had first priority to any present and future royalties due to Ronald from his remaining one-quarter mineral interest. Ronald appealed, but finding no reversible error in the district court’s judgment with respect to the reformation and the interests, the Tenth Circuit affirmed the district court on all grounds. View "Leathers v. Leathers" on Justia Law

Respondent, who owned a ranch, sued Petitioner, which produced natural gas on the ranch, for underpayment of royalties and underproduction of its lease. The parties resolved their dispute with two agreements that contained an arbitration provision. Respondent later sued Petitioner for environmental contamination and improper disposal of hazardous materials on the ranch. Before arbitration commenced, Respondent asked the Railroad Commission (RRC) to investigate contamination of the ranch by Petitioner. Meanwhile, an arbitration panel awarded Respondent $15 million for actual damages and $500,000 for exemplary damages. At issue on appeal was whether the RRC had exclusive or primary jurisdiction over Respondent’s claims, precluding the arbitration, and whether the arbitration award should be vacated for the evident partiality of a neutral arbitrator or because the arbitrators exceeded their powers. The Supreme Court answered in the negative, holding (1) because Respondent’s claims were inherently judicial, the doctrine of primary jurisdiction did not apply, and vacatur was not warranted for failure to abate the arbitration hearing; and (2) the arbitrators did not exceed their authority. View "Forest Oil Corp. v. El Rucio Land & Cattle Co." on Justia Law

Charles W.H. Monson, LeeAnn Tarter, and KayCee Williams ("the Monsons") appealed a district court judgment reforming a deed executed in 1980 and quieting title in favor of Steve Goodall, Robert Goodall, Anne Stout, Joanne Quale, and Darrel Quale ("the Goodalls"). This case involved the sale of mineral rights to four tracts of land executed in one deed. In 1980, George and Dorothy Hoffman executed a deed transferring an undivided 508.26/876.26 mineral interest to Francis and Alice Goodall. Subsequent to the execution of these deeds, the Hoffmans retained a total of 508.26 mineral acres out of 876.26 total acres in the subject property. This fractional interest language in the 1980 deed is at the center of this dispute. Dorothy Hoffman died in 1985. George Hoffman died intestate in 1998. The Monsons acquired by intestate succession any mineral interests the Hoffmans retained beneath the subject property. Sometime after George Hoffman's death, members of the Monson family entered into oil and gas lease agreements with Enerplus Resources and Northern Oil and Gas, Inc. In 2013, the Goodall's filed a complaint requesting the district court quiet title in their favor. The Monsons moved for summary judgment, arguing the 1980 deed was unambiguous, the Hoffmans only transferred a fractional interest to the Goodalls, and the Monsons inherited their interests from what the Hoffmans retained in the transaction. The Goodalls claimed the deed did not reflect the parties' intentions, which was to transfer all of the Hoffmans' 508.26 mineral acres to Francis and Alice Goodall. After a hearing, the district court denied the Monsons' motion for summary judgment. After review, the Supreme Court concluded the district court did not err in admitting extrinsic evidence to support the Goodalls' argument that a mutual mistake had been made, and the district court's findings supporting reformation of the deed were not clearly erroneous. View "Goodall v. Monson" on Justia Law

Jennifer Ogren, Lisa Marie Ogren Castle and Eric Marcus Ogren appeal from a summary judgment in favor of Marlene Sandaker, Karen Walden and Marlys Rulon. In 1958 Mike and Lorene Albert conveyed a 1/8th royalty interest to each of Mike Albert's seven siblings. Mike and Lorene Albert retained the mineral interest and a 1/8th royalty interest. Each of Mike Albert's siblings owned a 1/8th royalty interest. In 2009 Sandaker, Walden and Rulon leased the property to an oil company for a 3/16th royalty interest. In 2011 an attorney prepared a drilling title opinion concluding the 1958 assignment of royalty conveyed a fractional royalty to Mike Albert's seven siblings. A second title opinion in 2012 concluded the 1958 assignment of royalty conveyed a fraction of royalty to Mike Albert's seven siblings. In 2013 the Ogrens commenced an action to quiet title to the disputed royalty interests. The parties filed cross-motions for summary judgment to resolve the interpretation of the 1958 assignment. The district court entered an order and judgment in favor of Sandaker, Walden and Rulon, determining as a matter of law the 1958 assignment conveyed a fraction of royalty. The Ogrens appealed, arguing the district court erred by granting summary judgment in favor of Sandaker, Walden and Rulon because the 1958 assignment of royalty granted a fractional royalty and not a fraction of royalty. Finding no reversible error in the district court's judgment, the Supreme Court affirmed. View "Ogren v. Sandaker" on Justia Law

Plaintiffs-Appellants, a certified class of Osage tribal members who owned headrights, appealed the district court’s accounting order. Plaintiffs alleged that the government was improperly distributing royalties to non-Osage tribal members, which diluted the royalties for the Osage tribal members, the rightful headright owners. The complaint attributed this misdistribution to the government’s mismanagement of the trust assets and the government’s failure to perform an accounting. Thus, Plaintiffs sought to compel the government to perform an accounting and to prospectively restrict royalty payments to Osage tribal members and their heirs. The district court dismissed Plaintiffs’ accounting claim because it found that the applicable statute only required the government to account for deposits, not withdrawals, and that such an accounting would not support Plaintiffs’ misdistribution claim. After review, the Tenth Circuit could not say the district court abused its discretion. "The accounting the district court fashioned will certainly inform Plaintiffs of the trust receipts and disbursements and to whom those disbursements were made." View "Fletcher v. United States" on Justia Law

Plaintiff purchased property on which oil and gas operations had been conducted. Plaintiff filed suit against Hess, asserting claims for damages stemming from contamination caused by the oil- and gas-related activities on the tract. The oil and gas leases expired in 1973 and plaintiff purchased the property in 2007, when all wells had been plugged and abandoned. The district court granted Hess's motion for summary judgment, concluding that the subsequent purchaser rule barred plaintiff's claims. The court explained that a clear consensus has emerged among all Louisiana appellate courts that have considered the issue, and they have held that the subsequent purchaser rule does apply to cases, like this one, involving expired mineral leases. Because this case presented no occasion to depart from precedent, the court deferred to these precedents, and held that the subsequent purchaser doctrine barred plaintiff's claims. The court noted that although the denial of a writ is not necessarily an approval of the appellate court's decision nor precedential, the Louisiana Supreme Court has had multiple opportunities to consider this issue and has repeatedly declined to do so. Finally, the court declined to certify questions to the state court. Accordingly, the court affirmed the judgment. View "Guilbeau v. Hess Corp." on Justia Law