Justia Energy, Oil & Gas Law Opinion Summaries

The Supreme Court affirmed the judgment of the court of appeals reversing the orders of the trial court granting TotalEnergies E&P USA, Inc.'s motion to stay arbitration before the American Arbitration Association (AAA) and denying MP Gulf of Mexico, LLC's motion to compel that arbitration, holding that the parties' contracts required them to resolve their controversies through arbitration.In the underlying dispute involving oil and gas leases Total E&P filed this suit seeking a declaratory construing the parties' cost sharing agreement. Thereafter, MP Gulf initiated an arbitration proceeding asserting that Total E&P breached the agreement. At issue was whether the parties clearly and unmistakably delegated arbitrability issues to the arbitrator by agreeing to arbitrate their controversies in accordance with the AAA Commercial Rules. The trial court granted Total E&P's motion to stay the AAA arbitration and denied MP Gulf's motion to compel that arbitration. The court of appeals reversed and compelled AAA arbitration. The Supreme Court reversed, holding that the parties clearly and unmistakably delegated to the AAA arbitrator the decision of whether the parties' controversy must be resolved by arbitration. View "TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC" on Justia Law

The Supreme Court reversed the opinion of the court of appeals reversing the trial court's holding that, as a matter of law, a statutory "safe-harbor" provision applied and relieved an operator of oil-and-gas wells from any obligation to pay interest in the amounts withheld, holding that the safe-harbor provision applied as a matter of law.At issue was the "safe harbor" provision that permits operators to withhold payments without interest under certain circumstances. In reliance with the safe harbor provision the operator in this case withheld production payments it was contractually obligated to make to one of the wells' owners. The owner brought suit seeking to recover the payments with interest. The operator made the payments but without interest. The trial court concluded that the safe-harbor provision allowed the operator to withhold the funds. The court of appeals reversed. The Supreme Court reversed, holding that the operator established as a matter of law that it was entitled to withhold distribution of production payments without interest under the statutory safe-harbor provision of Tex. Nat. Res. Code 91.402(b)(1)(A) and (b)(1)(B)(ii). View "Freeport McMoRan Oil & Gas LLC v. 1776 Energy Partners, LLC" on Justia Law

The Supreme Court affirmed the judgment of the court of appeals reversing the trial court's conclusion that contract language releasing claims against a named entity's predecessors barred the releasor's recovery against an unaffiliated and unrelated predecessor in title, holding that the court of appeals correctly rendered judgment that, as used in the release agreement, the term "predecessors" refers only to corporate predecessors.On appeal, Appellants argued that the neither the contract language nor the circumstances surrounding the execution of the release supported limiting the term "predecessors" to "corporate" predecessors and that "predecessors" naturally refers to predecessors in title. The Supreme Court affirmed, holding (1) the release was not ambiguous as to the meaning of "predecessors"; and (2) Appellees were entitled to summary judgment on the affirmative defenses of release, waiver, and third-party beneficiary. View "Finley Resources, Inc. v. Headington Royalty, Inc." on Justia Law

The Supreme Court reversed the judgment of the court of appeals in this contract dispute, holding that the court of appeals erred by failing to apply a common-law default rule to the parties' dispute involving the sale of working interests in 109 oil-and-gas leases.According to the Court, Texas cases have long followed a default common-law rule in the circumstances that the words "from" or "after" a specific date to measure a length of time. Under the rule, courts must treat the time period as excluding the specified date (measuring date), and therefore, a period measured in years "from" or "after" a measuring date ends on the anniversary of the measuring date, not the day before. In the instant case, the parties asked the Supreme Court to resolve key issues of contract construction. Noting that the parties could have easily departed from the default rule by indicating as much within the four corners of the relevant lease, the Supreme Court held that because the parties' agreement implicated the default rule without displacing it, the default rule must be applied to the dispute. View "Apache Corp. Apollo Exploration, LLC" on Justia Law

In this mineral lease dispute, the Supreme Court reversed the judgment of the court of appeals concluding that a lease deadline and untimely scheduled drilling date were irrelevant for invoking a force majeure clause and thus reversing the trial court's judgment and remanding the case, holding that the court of appeals erred.In reversing the trial court's judgment, the court of appeals determined that fact issues existed both as to whether the force majeure clause applied and as to each element of the lessee's tortious-interference claims. The Supreme Court reversed and remanded the case, holding (1) construed in context, the phrase "Lessee's operations are delayed by an event of force majeure" does not refer to the delay of a necessary drilling operation already scheduled to occur after the deadline for perpetuating the lease; (2) the force majeure clause in this case did not save the lease; and (3) to the extent the lessee's tortious-interference claims were predicated on the force majeure clause's saving the lease, a take-nothing judgment is rendered in part. View "Point Energy Partners Permian, LLC v. MRC Permian Co." on Justia Law

The Supreme Court affirmed the judgment of the court of appeals reversing the orders of the trial court granting TotalEnergies E&P USA, Inc.'s motion to stay an American Arbitration Association (AAA) arbitration and denying MP Gulf of Mexico, LLC's motion to compel that arbitration, holding that the parties clearly and unmistakably delegated to the AAA arbitrator the decision of whether the parties' controversy must be resolved by arbitration.In this dispute arising over interests in a group of oil-and-gas leases Total E&P sought a declaration construing the parties' "Cost Sharing Agreement." On the same day, Total E&P initiated an arbitration proceeding asking the International Institute to determine the parties' rights under their "Chinook Operating Agreement." MP Gulf subsequently initiated the AAA arbitration proceeding. Total E&P filed a motion to stay the arbitration, which the trial court granted. The court of appeals reversed and compelled AAA arbitration. The Supreme Court affirmed, holding that the parties agreed to delegate the arbitrability issue to the arbitrator. View "TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC" on Justia Law

The Supreme Court affirmed the summary judgment in favor of Landowners in this oil-and-gas dispute over how to calculate Landowners' royalty under the terms of a mineral lease with Producers, holding that there was no error in the proceedings below.At issue in a declaratory judgment action was whether, based on language in the subject leases, Landowners' royalty was payable not only on gross proceeds but also on an unaffiliated buyer's post-sale postproduction costs if the producers' sales contracts stated that the sales price had been derived by deducting such costs from published index prices downstream from the point of sale. The trial court granted summary judgment for Landowners as to these types of marketing arrangements. The Supreme Court affirmed, holding that the broad language of the lease unambiguously contemplated such a royalty base. View "Devon Energy Production Co., L.P. v. Sheppard" on Justia Law

In this "double-fraction" dilemma arising from antique mineral conveyances in which the parties used two fractions, the Supreme Court held that the meaning of a 1924 deed's mineral reservation of "one-half of one-eighth" equalled one-half of the mineral estate.The parties in this case were the parties who derived from the grantees (White parties) and the parties whose interests derived from the grantors (Mulkey parties). The ownership of certain royalties turned on which side correctly interpreted the 1924 deed's mineral reservation of "one-half of one-eighth." The trial court entered an order granting the White parties' motion for partial summary judgment on the construction of the deed, and the court of appeals affirmed. The Supreme Court reversed, holding that the lower courts erred in holding that the Mulkey parties did not have a one-half interest in the minerals because (1) the presumption that "1/8" was used as a term of art to refer to the "mineral estate" was not rebutted in this case; and (2) alternatively, the presumed-grant doctrine would confirm that the Mulkey parties had title to one-half of the mineral estate. View "Van Dyke v. Navigator Group" on Justia Law

In this oil and gas case, the Supreme Court reversed the judgment of the court of appeals reversing the trial court's summary judgment, holding that a fact issue remained on Plaintiffs' claim for breach of the lease and that Plaintiffs' argument was not barred by res judicata but that the court of appeals erred by reversing a take-nothing summary judgment as to Plaintiffs' tort and statutory claims.At issue was the meaning and application of an express covenant to protect against drainage that appeared in a lease addendum that expressly limited the location of wells that may trigger Defendant-Lessee's obligation to protect against drainage but did not directly address the location of wells that may cause drainage. Plaintiffs-Lessors argued that the covenant allowed for separate triggering and draining wells and that Defendant breached the covenant by failing to protect against drainage from a non-triggering well. In response, Defendant argued that it had a duty to protect only against drainage from the limited class of triggering wells. The Supreme Court held (1) the addendum was ambiguous because both interpretations of the covenant were reasonable; (2) the court of appeals improperly reversed the trial court's take-nothing summary judgment on Plaintiffs' tort and statutory claims; and (3) remand was required for further proceedings on Plaintiffs' claim for breach of the lease. View "Rosetta Resources Operating, LP v. Martin" on Justia Law

In this premises-defect case, the Supreme Court denied the petition for writ of mandamus brought by Eagleridge Operating, LLC seeking relief from a trial court order striking its responsible-third-party designation under Chapter 33 of the Texas Civil Practice and Remedies Code, holding that Eagleridge failed to establish that it was entitled to the writ.In this action, Eagleridge argued that a former well site owner-operator bore continuing responsibility for injuries caused by a burst gas pipeline because the former owner acted as an independent contractor in constructing, installing, and maintaining the pipeline. The lower courts concluded that Occidental Chemical Corp. v. Jenkins, 478 S.W.3d 640 (Tex. 2016), was controlling and that the former owners' responsibility for premises defects did not survive the conveyance of its ownership interest. The Supreme Court agreed, holding that an agreement between tenants in common to allocate expenses, assign responsibilities, and compensate for disparate efforts in a joint endeavor does not create an exception to Occidental as to improvements each party would otherwise have been free to construct without the consent of the other. View "In re Eagleridge Operating, LLC" on Justia Law