Justia Energy, Oil & Gas Law Opinion Summaries

In 2021, Contango Resources, LLC purchased oil and gas production and processing facilities in Fremont and Sweetwater Counties, Wyoming. In 2022, the Fremont County Assessor assessed the taxable value of the property located in Fremont County. Contango appealed the assessment to the Fremont County Board of Equalization, arguing that the County Assessor and her expert consultant failed to properly use the purchase price of the property in their valuations and used improper trending and depreciation factors. The County Board upheld the valuation.The State Board of Equalization and the district court both affirmed the County Board's decision. Contango then appealed to the Wyoming Supreme Court. The main issues on appeal were whether the County Board’s decision to uphold the County Assessor’s rejection of the property’s purchase price as a starting point for valuation was supported by substantial evidence and in accordance with law, and whether the County Board’s decision to uphold the County Assessor’s application of trending and depreciation factors in the valuation was in accordance with law.The Wyoming Supreme Court affirmed the lower court's decision. The Court held that the County Assessor was justified in rejecting the purchase price as a starting point for valuation due to the lack of detailed information and the complexity of the Purchase and Sale Agreement (PSA). The Court also found that the Assessor’s use of trending and depreciation factors outside those recommended by the Department of Revenue was permissible under the Department’s rules, as long as the sources were credible. The Court concluded that the County Board’s rulings were supported by substantial evidence and in accordance with law. View "Contango Resources, LLC v. Fremont County" on Justia Law

Chesapeake Exploration, LLC (Chesapeake) and Morton Production Company, LLC (Morton) entered into a joint operating agreement for oil and gas development in Converse County, Wyoming. Morton sued Chesapeake for breach of contract, violation of the Wyoming Royalty Payment Act (WRPA), and conversion after Chesapeake adjusted Morton’s ownership interest and withheld production proceeds. Chesapeake counterclaimed for breach of contract, unjust enrichment, and breach of the implied covenant of good faith and fair dealing. The district court granted summary judgment in favor of Morton.Chesapeake appealed, challenging the district court’s summary judgment on Morton’s breach of contract claim, the supplemental decision on Chesapeake’s counterclaims and affirmative defenses, and the determination that Chesapeake violated the WRPA. The Wyoming Supreme Court reviewed the case.The Wyoming Supreme Court affirmed the district court’s decision. It held that Chesapeake breached the contract by adjusting Morton’s ownership interest and billing for costs beyond the twenty-four-month limitation period specified in the 1985 COPAS Form, which was incorporated into the joint operating agreement. The court found the language in the COPAS Form unambiguous and declined to consider extrinsic evidence. The court also upheld the district court’s use of Rule 60(a) to correct a clerical error in its original order and found that Chesapeake’s counterclaims were properly dismissed as they were rendered moot by the summary judgment on Morton’s claims. Additionally, the court ruled that Chesapeake violated the WRPA by withholding production proceeds without placing the disputed funds in escrow, as required by the statute. View "Chesapeake Exploration, LLC, v. Morton Production Company, LLC" on Justia Law

Appellee filed a complaint against Appellant alleging breach of written agreements for the lease of oil storage tanks. During the bench trial, the district court amended the complaint to include an oral guarantee to pay for the leases, which Appellant was not allowed to rebut. The court found Appellant breached the oral guarantee and awarded damages to Appellee.The District Court of Campbell County initially found in favor of Appellee, determining that Appellant breached the oral guarantee and awarded $114,537.56 in damages. Appellant raised multiple issues on appeal, including the admission of evidence, the application of the statute of frauds, and the effect of a settlement with a co-defendant.The Supreme Court of Wyoming reviewed the case and found that the district court did not abuse its discretion in admitting various exhibits into evidence. The court also held that the statute of frauds defense was waived as it was not raised at trial. Additionally, the court found that the settlement with the co-defendant did not preclude Appellee from pursuing claims against Appellant.However, the Supreme Court of Wyoming determined that the district court abused its discretion by not allowing Appellant to testify regarding the oral guarantee. The court affirmed the district court's rulings on the other issues but reversed and remanded the case for the limited purpose of allowing Appellant to testify about the oral guarantee. The remand is specifically for reconsideration of the personal guarantee and to provide both parties an opportunity to introduce evidence on that issue. View "Sorum v. Sikorski" on Justia Law

The Supreme Court affirmed the decision of the Board of Equalization affirming the Wyoming Departments of Audit and Revenue's mineral tax audit assessments of Chesapeake Operating, LLC's oil and gas production, holding that the State Board of Equalization did not misinterpret Wyo. Stat. Ann. 39-14-203(b)(iv) when it found that Chesapeake's field facilities did not qualify as processing facilities.On appeal, Chesapeake argued that the Board erred in concluding that Chesapeake's facilities qualified as processing facilities under the mineral tax statutes and that the proper point of valuation for its gas production was at the custody transfer meters. The district court certified the case directly to the Supreme Court, which affirmed, holding that the Board correctly interpreted and applied Wyo. Stat. Ann. 39-14-201(a)(xviii) when it found that the seven facilities at issue were not processing facilities. View "Chesapeake Operating, LLC v. State, Dep't of Revenue" on Justia Law

The Supreme Court affirmed the decision of the Board of Equalization upholding the final determinations of the Department of Revenue (DOR) increasing the taxable value of Jonah Energy LLC's natural gas liquids (NGL) production for 2014 through 2016, holding that Jonah was not entitled to relief on its allegations of error.On appeal, Jonah argued that the Board misinterpreted the NGL purchase agreement between Jonah and the purchaser of its NGL, Enterprise Products Operating LLC, by refusing to account for deficiency fees Jonah paid to Enterprise in determining the NGL's taxable value. The Supreme Court affirmed, holding (1) the Board did not misinterpret the NGL purchase agreement at issue; and (2) the Board did not err by failing to take the facts and circumstances surrounding execution of the purchase agreement into account when interpreting it because there was no basis for losing outside the four corners of the purchase agreement to determine its meaning. View "Jonah Energy LLC v. Wyo. Dep't of Revenue" on Justia Law

The First Circuit affirmed in part and reversed in part Petitioners' petition for a writ of review seeking interlocutory review of the orders of the district court denying Petitioners' motion to dismiss and motion to set aside default, holding that the district court abused its discretion in denying the motion to set aside the default judgment.At issue was subject matter jurisdiction and personal jurisdiction based on service by publication. Petitioners argued that the failure to serve Defendants with a summons stripped the district court of both subject matter jurisdiction and personal jurisdiction. The First Circuit held (1) absent a statute or rule to the contrary, no summons is required when service is accomplished by publication; (2) the district court correctly determined that a summons is not required as to those defendants who are properly subject to service by publication; but (3) the court erred in finding the service by publication conferred personal jurisdiction over the defendants with a known address. View "Hopeful v. Etchepare, LLC" on Justia Law

The Supreme Court affirmed the judgment of the district court affirming the decision of the Board of County Commissioners of Albany County approving ConnectGen Albany County LLC's application for a Wind Energy Conversion System (WECS) permit to construct a wind farm on Albany County land, holding that Appellants were not entitled to relief.Specifically, the Supreme Court held (1) contrary to Appellants' argument on appeal, ConnectGen was not required to obtain a conditional use permit in addition to the WECS special use permit; (2) the Board's approval of the WECS special use permit was not arbitrary or capricious; and (3) Appellants failed to establish that the Board's approval of the WECS special use permit was a taking of private property in violation of Wyo. Const. art. 1, 32. View "Aanonsen v. Bd. of County Commissioners of Albany County" on Justia Law

The Supreme Court reversed the judgment of the district court ruling that North Silo Resources, LLC, the mineral lessee in this case, did not have standing to quiet title or to claim breach of its lease and that North Silo's mineral lease encumbered fifty percent of the mineral estate, holding that the district court erred as to both issues.North Silo brought an action seeking a declaratory judgment and to quiet title in certain minerals underlying property located in Laramie County and bringing a breach of lease claim against the mineral owner. The district court concluded (1) North Silo did not have standing to quiet title or to claim breach of its lease; and (2) North Silo's mineral lease encumbered only fifty percent of the mineral estate. The Supreme Court reversed, holding (1) North Silo had standing to quiet title and to assert a claim for breach of lease; and (2) North Silo's lease encumbered 100 percent of the mineral estate. View "North Silo Resources, LLC v. Deselms" on Justia Law

The Supreme Court affirmed the judgment the district court denying TEP Rocky Mountain LLC's (TEP RM) motion to dismiss this action, granting summary judgment to Record TJ Ranch Limited Partnership (TJ Ranch) on several issues, and ruling that TEP RM had breached the parties' agreements, holding that there was no error.TJ Ranch brought this action seeking payment under a surface use and damage agreement governing oil and gas development and production of ranch lands. TEP RM filed a motion to dismiss for lack of personal jurisdiction, which the district court denied. The court ultimately concluded that TJ Ranch was entitled to payment. The Supreme Court affirmed, holding that the district court (1) correctly exercised personal jurisdiction over TEP RM; (2) did not clearly err in its findings; and (3) did not abuse its discretion in denying TEP RM's motions to stay. View "TEP Rocky Mountain LLC v. Record TJ Ranch Limited Partnership" on Justia Law

The Supreme Court affirmed in part and reversed in part the decision of the Wyoming Board of Equalization (Board) concluding that WPX Energy Rocky Mountain, LLC was entitled to deduct some of its "reservation fees," holding that the Board erred in interpreting the plain language of Wyo. Stat. Ann. 39-14-203(b)(vi)(C) in its decision.At issue on appeal was whether and to what extent WPX was entitled to deduct "reservation fees" under the "netback" severance tax valuation method, section(vi)(C), for natural gas production years 2013-2015. The Board concluded that WPX was entitled to deduct some of its reservation fees. The Supreme Court reversed in part, holding (1) the statute allows WPX to fully deduct its pipeline reservation fees for months when some but not the full reserve capacity of gas was transported on that pipeline; (2) the statute does not allow WPX to deduct its Bison Pipeline reservation fees for months when it shipped no gas on the pipeline; and (3) the Board's conclusion that WPX cannot deduct any portion of its Bison Pipeline reservation fees it used to recoup pipeline construction costs was contrary to the plain language of the statute and the Bison agreement. View "Wyo. Department of Revenue v. WPX Energy Rocky Mountain, LLC" on Justia Law