Justia Energy, Oil & Gas Law Opinion Summaries

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

T-4 permit to Denbury Green Pipeline-Texas, LLC to obtain common-carrier status, which would give it eminent domain authority pursuant to the Natural Resources Code. Denbury Green, which was formed to build and operate a carbon dioxide pipeline known as “the Green Line” as a common carrier in Texas, filed suit against Texas Rice Land Partners, Ltd. for an injunction allowing access to certain tracts of land so that it could complete a pipeline survey. While the suit was pending, Denbury Green took possession of Texas Rice’s property pursuant to Tex. Prop. Code 21-021(a). The trial court concluded that Denbury Green was a common carrier with eminent domain authority. The Supreme Court reversed and remanded for proceedings consistent with the common-carrier test the Court established. The trial court granted summary judgment for Denbury Green. The court of appeals reversed, concluding that reasonable mind could differ regarding whether, at the time Denbury Green intended to build the Green Line, a reasonable probability existed that Green Line would serve the public. The Supreme Court reversed the judgment of the court of appeals and reinstated the trial court’s judgment, holding that Denbury Green is a common carrier as a matter of law. View "Denbury Green Pipeline-Texas, LLC v. Texas Rice Land Partners, Ltd." on Justia Law

In this case the trial court entered judgment terminating a bottom lease based on jury findings that the lease failed to produce in paying quantities over a specified period of time. The court of appeals reversed and remanded for a new trial, concluding (1) the rule against perpetuities did not invalidate the top lease, and (2) the trial court erred in charging the jury on the production-in-paying-quantities question. The Supreme Court affirmed, holding that the court of appeals correctly remanded for a new trial where (1) the top lease did not violate the rule against perpetuities; and (2) the trial court erred in charging the jury on cessation of production in paying quantities. View "BP America Production Co. v. Laddex, Ltd." on Justia Law

ExxonMobile Corporation conducted oil and gas drilling and production operations on the Lazy R Ranch for nearly sixty years. After ExxonMobil sold its operations, the Ranch filed suit, claiming soil and groundwater contamination. The Ranch originally claimed remediation costs as money damages, but shortly before ExxonMobil moved for summary judgment, the Ranch dropped its claim and sought only an injunction ordering ExxonMobil to remediate the contamination. The ranch also requested an injunction mandating abatement of the contamination. The trial court granted summary judgment for ExxonMobil without specifying the grounds. The court of appeals reversed, concluding that that fact issues remaining regarding ExxonMobil’s statute of limitations defense. The Supreme Court affirmed in part and reversed in part, holding (1) some claims, but not all, were barred by limitations; and (2) the Court declines to consider the availability of injunctive relief to remedy such contamination because the issue was not properly raised in the trial court. Remanded. View "ExxonMobil Corp. v. Lazy R Ranch, LP" on Justia Law

An oil-and-gas lessor sued the lessee for failure to pay royalties. The trial court concluded that the lessor’s neighboring landowners were necessary parties to the suit and dismissed the case without prejudice because the lessor failed to join them. The court of appeals affirmed, concluding that the trial court did not abuse its discretion in requiring joinder. The Supreme Court reversed, holding that the trial court abuse its discretion in requiring joinder under Tex. R. Civ. P. 39 and dismissing the case because the adjacent landowners did not claim an interest relating to the subject of the lessor’s suit against the lessee. Remanded for further proceedings. View "Crawford v. XTO Energy, Inc" on Justia Law

Denbury Green Pipeline-Texas, LLC was formed to build and operate a carbon dioxide pipeline known as “the Green Line” as a common carrier in Texas. Denbury Green filed a permit application with the Texas Railroad Commission to obtain common carrier status, which would give it eminent domain authority pursuant to the Texas Natural Resources Code. The Railroad Commission granted Denbury Green the permit. Denbury Green then filed suit against Texas Rice Land Partners, Ltd., James Holland, and David Holland (collectively, Texas Rice) seeking an injunction allowing access to certain real property so that it could complete a pipeline survey. While the suit was pending, Denbury Green took possession of Texas Rice’s property and then surveyed for and constructed the Green Line. The trial court granted summary judgment to Denbury Green. On remand, the court of appeals reversed, concluding that reasonable minds could differ regarding whether, at the time Denbury Green intended to build the Green Line, a reasonable probability existed that the Green Line would serve the public. The Supreme Court reversed, holding that Denbury Green is a common carrier as a matter of law because there was a reasonable probability that, at some point after construction, the Green Line would serve the public, as it does currently. View "Denbury Green Pipeline-Texas, LLC v. Texas Rice Land Partners, Ltd." on Justia Law

Southwest Royalties, Inc., an oil and gas exploration company, filed a tax refund claim with the Comptroller, arguing that it was entitled to a tax exemption for some of its equipment related to oil and gas production operations such as casing, tubing, and pumps, together with associated services. The Comptroller denied relief. Southwest subsequently sued the Comptroller and the Attorney General, asserting that the equipment for which it sought refunds was used in separating oil, gas, and associated substances (collectively, hydrocarbons) into their different components. The trial court rendered judgment for the State, concluding that Southwest failed to meet its burden of proving that the exemption applied. The Supreme Court affirmed, holding that Southwest was not entitled to an exemption from paying sales taxes on purchases of the equipment because it did not prove that the equipment for which it sought a tax exemption was used in “actual manufacturing, processing, or fabricating” of hydrocarbons within the meaning of Tex. Tax Code Ann. 151.318(2), (5), or (10). View "Southwest Royalties, Inc. v. Hegar" on Justia Law

Four oil and gas leases were assigned in one instrument. At issue in this case was how to calculate a production payment reserved in the assignment of the four leaseholds. When two of the leases terminated, the payor asserted that the production payment should be reduced to reflect the loss of the underlying mineral-lease interests. The payee responded by asserting that the production payment burdened the four leases jointly and that the assignment included authorization to adjust the payment. The trial court construed the assignment as allowing for the production payment’s adjustment based on the expiration of an underlying lease. The court of appeals reversed, concluding that the production payment could not be reduced because the assignment failed to include “express language providing for a piecemeal reduction of the production payment.” The Supreme Court reversed, holding that the trial court rendered the correct judgment in this case. View "Apache Deepwater, LLC v. McDaniel Partners, Ltd." on Justia Law

In general, an overriding royalty on oil and gas production must bear its share of postproduction costs unless the parties agree otherwise. The Hyder family leased 948 mineral acres to Chespeake Exploration, LLC. The Hyders and Chesapeake agreed that the overriding royalty in the parties’ lease was free of production costs but disputed whether it was also free of postproduction costs. The trial court rendered judgment for the Hyders, awarding them postproduction costs that Chesapeake wrongfully deducted from their overriding royalty. The court of appeals affirmed. The Supreme Court affirmed, holding that the parties’ lease clearly freed the overriding royalty of postproduction costs. View "Chesapeake Exploration, LLC v. Hyder" on Justia Law

In 2008, the Railroad Commission of Texas issued orders to plug a number of inactive offshore wells operated in the Gulf of Mexico. Gulf Energy Exploration Corporation was the lessee of the offshore area that included one of wells subject to the plugging order. The Commission and Gulf Energy reached an agreement that the Commissioner would delay plugging this well. A few months later Gulf Energy discovered that the well was plugged. Gulf Energy sued the Commission with legislative permission. The jury returned a favorable verdict on Gulf Energy’s negligence and breach-of-contract claims. The court of appeals affirmed. The Supreme Court reversed, holding (1) the trial court erred in refusing to submit a jury question on a statutory good-faith defense; and (2) a question of fact existed as to whether the Commission and Gulf Energy entered into a binding contract before the well was plugged. Remanded for a new trial. View "R.R. Comm’n of Texas v. Gulf Energy Exploration Corp." on Justia Law