Justia Energy, Oil & Gas Law Opinion Summaries

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

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

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

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

In construing an unambiguous deed, the parties’ intent is paramount, and that intent is determined by conducting a careful and detailed examination of a deed in its entirety rather than applying some default rule that appears nowhere in the deed’s text.In this case, the Supreme Court construed a deed that conveyed a mineral estate and the surface above it. At issue was whether the language of the deed passed the entire burden of an outstanding non-participating royalty interest (NPRI) to the grantees or whether the NPRI proportionately burdened the grantor’s reserved interest. The trial court ruled that the deed burdened both parties with an outstanding NPRI and that the parties must share the burden of the NPRI in proportion to their respective fractional mineral interests. The court of appeals affirmed. The Supreme Court affirmed, holding that the only reasonable reading of the deed in this case resulted in the parties bearing the NPRI burden in shares proportionate to their fractional interests in the minerals. View "Wenske v. Ealy" on Justia Law

In this dispute involving mineral interests pooled for natural gas production, lessors and other stakeholders alleged that the lessee underpaid royalties owed to them under their mineral leases and pooling agreements. The issues presented in this appeal centered on the lessee’s efforts to avoid a contractual obligation to pay royalties to the overlapping unit stakeholders for production from a zone shared by the two pooled units. The lower courts held that the agreement to pay royalties was enforceable. The Supreme Court affirmed, holding (1) ineffective conveyance of title does not preclude the lessee’s liability under a contract theory; (2) the lessee’s quasi-estoppel and scrivener’s error defenses to contract enforcement failed as a matter of law; and (3) the lessee was not entitled to recoup royalty payments from stakeholders in another pooled unit; (4) this court’s decision in Hooks v. Samson Lone Star, Ltd. Partnership, 457 S.W. 3d 52 (Tex. 2015) precluded the unpooling stakeholders’ claims; and (5) the court of appeals properly construed a proportionate-reduction clause to award royalties owed to the overlapping unit stakeholders in accordance with their fifty percent mineral-interest ownership. View "Samson Exploration, LLC v. T.S. Reed Properties, Inc." on Justia Law

ConocoPhillips Co. and Alma Energy Corp. exchanged oil and gas interests under an exchange agreement in which each indemnified the other for any environmental claims related to the properties received. Alma later filed for protection under Chapter 11 of the Bankruptcy Code. Thereafter, Noble Energy Inc. agreed to by the properties Alma had received from Conoco under the exchange agreement. After the bankruptcy proceeding concluded, an environmental contamination suit was filed against Conoco, and Noble refused to indemnify Conoco under the exchange agreement. Conoco filed suit against Noble alleging breach of the exchange agreement and seeking to recover the $63 million it paid to settle the suit. The trial court granted summary judgment for Noble. The court of appeals reversed and entered summary judgment for Conoco, concluding that the exchange agreement was an executory contract that was assumed by Alma and assigned to Noble in the bankruptcy proceeding. The Supreme Court affirmed, holding that under the terms of the bankruptcy court order confirming the plan of reorganization and the agreement for sale of Alma’s assets, Noble was assigned an undisclosed contractual indemnity obligation of Alma. View "Noble Energy, Inc. v. Conocophillips Co." on Justia Law