Justia Energy, Oil & Gas Law Opinion Summaries

This case was brought by the plaintiffs, mineral royalty owners, against defendants, mineral lessees and working interest owners, for unrecovered hydrocarbons after two wells ceased production. Following a lengthy bench trial, the district court concluded plaintiffs had not proven the operators caused any loss of hydrocarbons and dismissed their claims with prejudice. The single issue before the Louisiana Supreme Court was whether the district court committed manifest error in ruling in favor of defendants, finding their experts more credible than plaintiffs' expert. The Court of Appeal reversed. The Supreme Court found that the appellate court was incorrect in its analysis of the manifest error review standard, and after reviewing the record, the Supreme Court concluded there was a reasonable basis for the district court's conclusion on causation. Therefore, it's conclusion was not clearly erroneous. The Court reversed the Court of Appeals and reinstated the judgment of dismissal. View "Hayes Fund for the First Untied Methodist Church of Welsh, LLC v. Kerr-McGee Rocky Mountain, LLC" on Justia Law

Nathaniel Fleck and Alma Bergmann as trustees of the George J. Fleck Trust ("Fleck") appealed the grant of summary judgment quieting title to an oil and gas lease in favor of Missouri River Royalty Corp., Exxon Mobil Corp. and Mountain Pacific General, Inc. (collectively "defendants"). Fleck owns mineral interests in McKenzie County described as the south half of section 10 in range 100 west of township 150 north. In 1972, Fleck's predecessors in interest executed an oil and gas lease in favor of the defendants' predecessor in interest. The lease term was ten years and as long thereafter as oil or gas was produced. The lease also provided it would not expire if production ceased after expiration of the primary term if the lessee resumed operations to drill a well or to restore production within ninety days. In 1982, the Fleck 1 well was completed and the lease extended. In 2012, Fleck served the defendants with a notice of forfeiture and a demand for release of the lease. Fleck sued the defendants to quiet title, alleging the oil and gas lease expired due to a failure to produce oil or gas in paying quantities. The defendants answered, counterclaimed and requested the court declare the lease remained valid and in effect by the continued production of oil and gas from the Fleck 1 well and by the commencement of operations to restore production. Fleck moved for summary judgment, arguing they were entitled to a declaration quieting title to the mineral interests because the lease terminated when the Fleck 1 well stopped producing in paying quantities in 2010 and the defendants failed to engage in new drilling or reworking operations within ninety days. Pacific Mountain General and Missouri River Royalty separately moved for summary judgment, arguing the lease extended into its secondary term and remains valid and in effect based on the continued production of oil and gas by the Fleck 1 well. Exxon Mobil joined Missouri River Royalty's motion. The district court interpreted the lease and found production in paying quantities was not required to extend the lease, the well consistently produced an average of a few barrels per day, production was continuous at all relevant times and any cessation of production was temporary. The Supreme Court reversed, finding that the district court misapplied the law in interpreting the lease and that summary judgment was not appropriate. View "Fleck v. Missouri River Royalty Corp." on Justia Law

Pennaco Energy, Inc. obtained oil and gas leases and made contracts with the surface landowners, who were predecessors of Appellees. The contracts granted Pennaco use of the landowners’ land during exploration and production under the mineral leases. After several years, Pennaco assigned its interest in its coal bed methane operation to CEP-M purchase, LLC, which re-assigned those interests to High Plains Gas, Inc. After the assignment, neither Pennaco nor the assignees made any required payments under the assignments, nor did they reclaim any of the land, as required under the agreements. Appellees sued Pennaco for breach of the agreements. The district court granted summary judgment in favor of Appellees. Pennaco appealed, arguing that the district court erred in concluding that Pennaco remained liable under the agreements even after the assignment. The Supreme Court affirmed, holding that because the agreements contained indications that Pennaco’s contractual obligations continued even after assignment and because there was no express clause that terminated Pennaco’s obligations upon assigning the agreements to a third party, Pennaco remained liable to Appellees to perform the covenants in the event its assignee defaulted. View "Pennaco Energy, Inc. v. KD Co., LLC" on Justia Law

The Department of Commerce determined that utility scale wind towers from the People’s Republic of China and utility scale wind towers from the Socialist Republic of Vietnam (together, the subject merchandise) were sold in the United States at less than fair value and that it received countervailable subsidies. The International Trade Commission made a final affirmative determination of material injury to the domestic industry. The determination was by divided vote of the six-member Commission. The Court of International Trade upheld the Commission’s affirmative injury determination. Siemens Energy, Inc., an importer of utility scale wind towers, challenged the determination. The issues on appeal concerned the interpretation and effect of the divided vote. The Federal Circuit affirmed, holding that the Court of International Trade properly upheld the Commission’s affirmative injury determination. View "Simens Energy, Inc. v. United States, Wind Tower Trade Coalition" on Justia Law

Western Minnesota and intervenors petitioned for review of FERC's award of a permit for a hydroelectric project in Polk County, Iowa. The Commission concluded that the municipal preference under Section 7(a) of the Federal Power Act (FPA), 16 U.S.C. 800(a), applies only to municipalities “located in the[] vicinity” of the water resources to be developed. Petitioners claimed that the Commission’s geographic proximity test is an impermissible interpretation of the plain text of the statute. The court agreed that Congress has spoken directly to the question in defining “municipality” in Section 3(7) of the FPA. Accordingly, the court granted the petition for review, vacated the permit order and rehearing order, and remanded for further proceedings. View "Western Minnesota Municipal v. FERC" on Justia Law

The complex issues at issue in these three consolidated appeals revolved around four overlapping leases to extract oil and gas from land owned by Plaintiff. Each lease contained an arbitration clause. Plaintiff filed the instant case against Defendants seeking a declaration as to which lease was controlling as to which defendants and seeking damages from Defendants. The circuit court entered an order voiding two of the four leases, addressing the substantive terms of two other leases, and compelling the parties to arbitrate any remaining claims by Plaintiff. The Supreme Court affirmed in part and reversed in part, holding that the circuit court (1) properly found the arbitration clause in one lease to be unenforceable and correctly ruled that the entire lease was unenforceable; (2) erred in compelling certain defendants to participate in arbitration under the terms of a second lease but did not err when it made findings of fact and conclusions of law that addressed the substance of Plaintiff’s claims regarding that lease; (3) erred in voiding a third lease, and its included arbitration clause, in violation the doctrine of severability; and (4) erred in its substantive rulings interpreting a fourth lease, as the court should have referred questions about the lease to arbitration. View "Chesapeake Appalachia, LLC v. Hickman" on Justia Law

For some time, Broad Street Energy has owned many Ohio oil-and-gas leases. The market has changed to use of shale-drilling (fracking) to extract oil and gas from shale formations deeper than the formations from which Broad Street has extracted oil. Fracking requires leases of at least 640 acres, as opposed to the 20-to-40-acre leases that Broad Street required for conventional wells. Endeavor agreed to pay $35 million for many of Broad Street’s leases, plus wells, pipelines, and related property. Endeavor put $3.5 million in escrow. Broad Street delivered a list of assets and title limitations. Before closing, Endeavor conducted due diligence and told Broad Street that it found title defects affecting 40% of the leases and reducing the value of the assets by 55%. Endeavor did not seek more information or invoke the agreement’s dispute-resolution process, but terminated on the ground that the title defects reduced value by at least 30%. Broad Street responded several times, disputing those statements and insisting on at least implementing dispute-resolution procedures With no response, it sued. A jury awarded Broad Street the $3.5 million escrow, plus interest. The Sixth Circuit affirmed, noting the relative sophistication of the parties and that the contract did not permit Endeavor to terminate unilaterally based on its own assessment of title defects and their value. View "Broad St. Energy Co. v. Endeavor Ohio, LLC" on Justia Law

The parties in this case disputed who was the legal owner or holder of certain mineral rights. The United States District Court for the Southern District of Ohio, Eastern Division concluded that the interpretation of Ohio’s Dormant Mineral Act in the context of an oil and gas lease was determinative of the case and certified certain questions to the Supreme Court for answers. The questions were as follows: (1) whether a recorded lease of a severed subsurface mineral estate is a title transaction under the Act, and (2) whether the expiration of a recorded lease and the reversion of the rights granted under that lease is a title transaction that restarts the twenty-year forfeiture clock under the Act at the time of the reversion. The Supreme Court answered (1) a recorded lease of severed oil and gas rights is a title transaction under Ohio Rev. Code 5301.56(B)(3)(a) that constitutes a saving event to preclude the severed mineral rights from being deemed abandoned and reunited with the rights to the corresponding surface property; but (2) the unrecorded expiration of such a lease is not a title transaction that restarts the twenty-year clock under the Act. View "Chesapeake Exploration, LLC v. Buell" on Justia Law

After discovering hazardous contaminants at Sanford and Orlando coal gasification plants in the 1990s, the EPA concluded that Florida Power and previous owners were liable for costs of removal and remediation. In 1998 and 2003, Florida Power entered into “Administrative Order by Consent for Remedial Investigation/Feasibility Studies” (AOCs) with the EPA for the sites, under which Power agreed to conduct studies to determine the public safety threat and evaluate options for remedial action. Power agreed to pay the EPA about $534,000 for past response costs at the sites. After the investigation and study at the Sanford site, the EPA entered Records of Decision. In 2009, the court approved a consent decree for actual performance of the Sanford remediation. Regarding the Orlando site, Power submitted a draft Remedial Investigation Report, Risk Assessment, and Remedial Alternative Technical Memorandum that was under EPA review when, in 2011, Power filed this cost recovery and contribution action under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, 42 U.S.C. 9601) against a successor to a former owner-operator of the sites. The court dismissed, finding that the 1998 and 2003 AOCs were “settlement agreements” and triggered CERCLA’s three-year statute of limitations. The Sixth Circuit reversed, finding that the AOCs did not constitute “administrative settlements.” View "Fla. Power Corp. v. FirstEnergy Corp." on Justia Law

This appeal was one of many concerning natural gas wells operated from 1978 to 1998 in Beckham County, Oklahoma. In the immediately preceding appeal, the Oklahoma Supreme Court affirmed a jury verdict for damages for breach of drilling leases for $3,650,000, but reversed two other jury awards in the amounts of $4,055,000.00 and $6,845,000.00. The trial court denied prejudgment interest and the royalty owners appealed. After review, the Supreme Court held that: (1) review of the issue of prejudgment interest is not precluded by the settled-law-of-the-case doctrine; (2) the Production Revenue Standards Act, 52 O.S. 2011 sec. 570 et seq., was inapplicable to the facts presented; and (3) because the plaintiff's claims were unliquidated, prejudgment interest was not recoverable pursuant to 23 O.S. 2011 sec. 6. View "Krug v. Helmerich & Payne, Inc." on Justia Law