News & Analysis as of

TX Supreme Court Mineral Leases

Oliva Gibbs LLP

Muscled Out While “Muscling In”: The Role of Actual Drainage in MIPA

Oliva Gibbs LLP on

In Ammonite Oil & Gas Corp. v. R.R. Comm’n of Tex., the Texas Supreme Court held that the Railroad Commission (the “RRC”) did not abuse its discretion in denying a “muscle in” application under the Texas Mineral Interest...more

Gray Reed

No Compound Interest on Unpaid Royalties Under Texas Oil and Gas Lease

Gray Reed on

It’s not exactly Deuteronomy 23:19, but the Supreme Court of Texas has an opinion about interest. They don’t like it if it’s compounded. Samson Exploration LLC v. Bordages addressed interest to be charged on unpaid royalties...more

Porter Hedges LLP

Wellbore Transactions Update - Conveyances, Reservations And Related Lease Severance Issues

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This article focuses on the state of Texas law regarding wellbore rights and various related issues raised by transactions involving such rights (and other similar lease severance issues) and provides some practical tips to...more

McGuireWoods LLP

Producers May Subtract Gas Used to Power Post-Production Activities From “At-the-Well” Royalty Payments

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In Carl v. Hilcorp Energy Co., the Texas Supreme Court—addressing certified questions from the Fifth Circuit—held that producers may subtract the volume of gas powering post-production activities from “at-the-well” royalty...more

White & Case LLP

Implications of the Texas Supreme Court and the Fifth Circuit Court of Appeals Ruling on Fuel Gas Royalties

White & Case LLP on

On June 4, 2024, the United States Court of Appeals for the Fifth Circuit affirmed the dismissal of an "at the well" royalty holder's class action lawsuit after the Texas Supreme Court held that Hilcorp Energy Co. properly...more

Locke Lord LLP

The Texas Supreme Court Holds Interest Must Be Simple Absent an Express, Clear, and Specific Provision for Compounding

Locke Lord LLP on

The Texas Supreme Court has clarified Texas law concerning how to calculate interest that is being paid pursuant to an agreement or statute. Samson Exploration, LLC v. Bordages, No. 22-0215, 2024 WL 2869049 (Tex. June 7,...more

Houston Harbaugh, P.C.

Texas Supreme Court Addresses Fuel Gas Question

Many oil and gas leases across Pennsylvania allow the driller to divert and use volumes of raw gas to power and fuel production operations both on and off the leasehold. Is a driller obligated to pay a royalty on that volume...more

Gray Reed

Supreme Court of Texas Sorts Out Complicated Assignment of Oil and Gas Leases

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In Occidental Permian, Ltd. et al v. Citation 2002 Investment LLC  the Supreme Court construed a 1987 assignment from Shell Western E& P Inc. to Citation of a large number of properties. The instrument contained these...more

Gray Reed

Supreme Court of Texas Decides Another Post-Production Cost Dispute

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In Carl v. Hillcorp Energy the Supreme Court of Texas addressed the relationship between the lessee’s use of gas off-premises under a free-use clause and the lessor’s burden to share post-production costs (PPCs) under the...more

Houston Harbaugh, P.C.

Texas Supreme Court to Address the Obligation to Calculate Royalty on Gas Used to Fuel Off-Lease Operations

Houston Harbaugh, P.C. on

Let’s assume you own 165 acres in Tioga County. In 2019, you sign a new oil and gas lease with ABC Drilling. You negotiate an 18% net royalty. The royalty clause, however, requires ABC Drilling to calculate the royalty on...more

Oliva Gibbs LLP

Flipping the Switch on Disputed Gas Royalty Payments: On Lease v. Off Lease

Oliva Gibbs LLP on

I. Introduction - The dispute over a lessee’s obligation to pay royalty amounts for gas used off-premises continues as the Fifth Circuit certified two questions to the Texas Supreme Court last month. At issue, is whether...more

Hicks Johnson

Texas Supreme Court to Review Rejected Forced Pooling Applications

Hicks Johnson on

The Texas Supreme Court will review a state regulator’s rejection of 16 applications submitted by Ammonite Oil & Gas Corp. (“Ammonite”) to force pool its mineral estate with adjacent wells operated by EOG Resources Inc....more

Houston Harbaugh, P.C.

Texas Supreme Court Rules That Scheduling Mistake Does Not Qualify as Force Majeure Event

Houston Harbaugh, P.C. on

Let’s assume you signed a new oil and gas lease with XYZ Drilling in August 2018 (the “2018 Lease”). Your lease contains a “continuous drilling” clause which requires XYZ Drilling to commence a new well within ninety (90)...more

Gray Reed

Texas Supreme Court Rules on Suspension of Proceeds of Oil and Gas Production

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Freeeport-McMoRan Oil and Gas, LLC and Ovintiv USA Inc. v. 1776 Energy Partners LLC  presented a recurring question faced by Texas oil and gas producers:  When can proceeds of production be withheld by the operator without...more

Houston Harbaugh, P.C.

Texas Supreme Court Rules That 1924 Deed Conveyed One Half Of The Oil and Gas Estate

Houston Harbaugh, P.C. on

The calculation of production royalties and the deduction of post-production costs remains a controversial topic here in Pennsylvania. As we have written before, there is another frustrating and often confusing...more

Houston Harbaugh, P.C.

Texas Supreme Court Rules That Post-Sale Costs Must be Added Back to Gross Proceeds Calculation

Houston Harbaugh, P.C. on

Let’s assume you own 185 acres in Washington County. In 2020, you negotiate a new oil and gas lease with ABC Drilling. During the negotiations, you insist on a “gross royalty” which prohibits the deduction of post-production...more

Gray Reed

Texas Supreme Court Rules on “Bespoke” Add-Back Royalty Clause

Gray Reed on

In Devon Energy Production Company, LP et al v. Sheppard et al, the Supreme Court of Texas construed what it referred to as a “bespoke” and “highly unique” royalty clause in several oil and gas leases to prohibit the...more

Gray Reed

Long-Running Texas Boundary Dispute Continues

Gray Reed on

Ellison v. Three Rivers Acquisition LLC et al., on remand from the Texas Supreme Court, is the third round of a boundary dispute between mineral lessees in Irion County.   For the history of Ms. Ellison’s odyssey from...more

Gray Reed

Clause to Protect Against Drainage in a Mineral Lease Deemed Ambiguous

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Today we will skip our usual routine of explaining how court rulings on the question of the day might affect your interests. Instead we will discuss the fallout from abysmal document drafting. In Rosetta Resources Operating...more

Holland & Knight LLP

A Closer Look at Nettye Engler Energy, LP, v. BlueStone Natural Resources II, LLC

Holland & Knight LLP on

The Supreme Court of Texas has once again tackled the heavily contested issue of postproduction costs in royalty calculations. In Nettye Engler Energy, LP, v. BlueStone Natural Resources II, LLC, No. 20-0639, the Court was...more

Gray Reed

Texas Supreme Court Clarifies Postproduction Cost Decision

Gray Reed on

It was jurisprudential Groundhog Day as the Supreme Court of Texas handed down Nettye Engler Energy v. Bluestone Natural Resources, another in a series of postproduction cost disputes, only two days after Puxsutawney Phil...more

McDermott Will & Emery

Reasonably Prudent Operator or Good and Workmanlike Manner: Does Your Contract Have the Right Standard of Care?

McDermott Will & Emery on

The standard of care is an important provision in any operating, management or services agreement because it sets forth the expectations of the parties as to how the contract should be carried out. It also functions as the...more

Alston & Bird

Is “Into the Pipeline” the Equivalent of a Wellhead Valuation? Not So Fast, Says Texas Supreme Court

Alston & Bird on

Our Oil & Gas Team parses a ruling from Texas that reminds courts to look at the entire contract, not just a favorite word or phrase. The parties disagreed about where along the pipeline royalty valuation should occur. The...more

Gray Reed

Texas Supreme Court to Review the Lessee’s Covenant to Protect Against Drainage

Gray Reed on

First, a word for you scriveners: Preserve your reputation and the honor of your law school writing instructor by preparing clear and understandable contracts. ...more

Gray Reed

Tax Foreclosure on Royalty Did Not Include Possibility of Reverter

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Ridgefield Permian, LLC, et al. v. Diamondback E & P LLC, et al. addresses the scope of a property interest foreclosed upon by a tax suit in Reeves County, Texas. In this post we will shortcut the complicated facts and...more

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