Energy Law Updates

Can Consent of an Assignment be Withheld Arbitrarily?

In Carrizo Oil & Gas, Inc. v. Barrow-Shaver Res. Co., No. 12-15-00083-CV, 2017 App. LEXIS 821 (Tex. Civ. App. -Tyler January 31, 2017) the Court of Appeals concluded that if a consent-to-assignment provision fails to include a reasonableness clause, the consenting party has an unqualified right to withhold consent. Texas law does not require reasonableness or good cause....Read More

Interpretation of Mineral Deed to Grant Mineral Interest Despite "Lease-like" Language

In Richardson v. Mills, No. 12-15-00170-CV, 2016 App. LEXIS 7316 (Tex. Civ. App. - Tyler, July 12, 2016) the Court of Appeals concluded that an instrument that used the word "forever" in the habendum and warranty clauses was not a mineral lease, but was an unambiguous mineral deed. Although the instrument included consideration for future...Read More

New Lease or Top Lease? Lessor's Intent Will Govern

In Anadarko Petroleum Corp. v. TRO-X, L.P., No. 08-15-00158-CV, 2016 Tex. App. LEXIS 2861, the El Paso Court of Appeals concluded that the execution of new leases operated to terminate and release old leases covering the same lands. Id., at *22. The Court recognized that there was not enough evidence to show (i) that the...Read More

Washout of Production Payments Upon Expiration of the Underlying Leasehold

The Texas Supreme Court, in Apache Deepwater, LLC v. McDaniel Partners, Ltd., No. 14-0546, 2016 Tex. LEXIS 179 (February 26, 2016), addressed the issue of the calculation of production payments reserved in the assignment of four oil and gas leaseholds, and whether, after two of the leases terminated, the production payment should be adjusted to...Read More

Statutory Subordination of Liens to Oil and Gas Leases

In a measured victory for oil and gas companies operating in Texas, the 84th Texas Legislature has passed House Bill 2207, codified as TEX. PROP. CODE § 66.001, and titled "Sale of Property Subject to Oil or Gas Lease." Chapter 66 became effective January 1, 2016, and applies with respect to foreclosure sales or judicial...Read More

New Mexico State Lease Recording Requirements

The New Mexico State Land Office ("SLO") is the government agency responsible for leasing oil, gas and other minerals owned by the State of New Mexico. The Oil, Gas and Mineral Resources Section of the SLO has two separate divisions: the Oil, Gas, and Minerals Division ("OGMD") and the Royalty Management Division ("RMD"). The OGMD...Read More

Avoiding Unintended Consequences Caused by Retained Acreage Clauses

Retained acreage clauses permit the lessee to retain acreage around a producing well in the event of a forfeiture of a lease. Typically, retained acreage clauses become the subject of litigation when the lease contains a continuous drilling obligation and the lessee has ceased its drilling. The retained acreage clause permits a lessee in that...Read More

Off-Lease Drilling Locations and Claims of Subsurface Trespass (Part Two)

In Lightning Oil Co. v. Anadarko E&P Onshore LLC, No. 04-14-00903-CV, 2015 Tex. App. LEXIS 8673 (Aug. 19, 2015), the San Antonio Court of Appeals concluded that a mineral estate owner was not entitled to prevent an adjacent mineral estate owner from drilling horizontal wells crossing through the other party's mineral estate to access the adjacent...Read More

Ownership of Coalbed Methane Gas Linked to the Ownership of the Coal

In Kennedy v. Consol Energy Inc., 116 A.3d 626 (Pa. Super. Ct. 2015), Earl Kennedy and other interest holders (the "Kennedys") brought an action to quiet title to coalbed methane gas and for trespass and conversion against the owner and operator of the coal, Consol Energy Inc. and CNX Gas Co. ("Consol"). The first issue...Read More

Top Leases Can Survive the Rule Against Perpetuities

In BP Am. Prod. Co. v. Laddex, Ltd., 07-13-00392-CV, 458 S.W.3d 683, Tex. App. LEXIS 1521 (February 17, 2015), the Amarillo Court of Appeals upheld the validity of a top lease and remanded the case to determine whether there was a cessation of production in paying quantities which potentially terminated the underlying lease. In...Read More

Royalty Free of Post-Production Costs

The Texas Supreme Court, in Chesapeake Exploration, L.L.C. v. Hyder, No. 14-0302, 2015 Tex. LEXIS 554 (June 12, 2015), addressed the issue of allocation of post-production costs and whether, based on a certain lease royalty provision, an overriding royalty must bear its share of post-production costs. The dispute in Hyder centered on the interpretation of...Read More