Energy Lawyer & Attorney : Liskow & Lewis Law Firm : Gulf Coast, Offshore

By Anna Knull:

In Hamilton v. Morris Resources, Ltd., the San Antonio Court of Appeals affirmed a decision in favor of holders of oil and gas deeds executed in the 1920s and 1930s over the claims of lessor, holding that, based on the four corners of the conveyances in question, the original deed holders did not intend to convey mineral estates differing in magnitude and duration, and that they had conveyed a mineral interest that did not convert to a fixed royalty interest under a subsequent Correction Deed.

Hamilton v. Morris Res., No. 04-05-00904-CV, 2007 WL 460648 (Tex. App.--San Antonio Feb. 14, 2007).

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By Marie Carlisle:

Boldrick v. BTA Oil Producers, No. 11-06-00029-CV, 2007 WL 865811 (Tex. App.—Eastland March 22, 2007). 

The Eleventh Court of Appeals of Texas recently affirmed a District Court ruling granting summary judgment to BTA Oil Producers (BTA) on the basis that that the joint operating agreement (JOA), which governed the assignment of an overriding royalty interest to Plaintiff/Appellant, specifically provided guidelines for payments owed on an overriding royalty interest created by a non-consenting party. As BTA’s actions were consistent with the JOA, the court upheld the decision that no funds are due to Boldrick until the non-consent penalty provisions of the JOA are fully recouped and BTA itself receives payment for production from the well at issue.

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By Leta Seletzky:

In Seagull Energy E & P, Inc. v. Railroad Comm'n, No. 03-0364, 2007 WL 1299163 (Tex. May 4, 2007), the Texas Supreme Court affirmed a decision by the Austin Court of Appeals upholding the Railroad Commission of Texas' authority to regulate both drilling and production of commingled oil and/or gas deposits and to treat commingled deposits as one reservoir. The petitioner, who unsuccessfully sought a permit from the Commission to reopen a shut-in well to produce from one of three discontinuous, lenticular gas sands in a field, argued that the permit it sought was a drilling permit rather than a production permit, and thus the Commission lacked authority to deny it. The petitioner also asserted that the Commission's denial of the permit amounted to an unconstitutional taking of gas in the sand from which the well would produce. The Court rejected these arguments, holding that the Commission has broad authority to regulate commingled oil and gas. The Court also concluded that a mineral owner's property interest in its fair share of minerals on and under its property does not extend to specific oil and gas beneath its property and is in any event subject to the state's police power to conserve and develop natural resources. 

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By Jana Grauberger:

Recently, Amy Myers Jaffe of Rice University's Baker Institute spoke to the Women's Energy Network of Houston on the topic of "The Changing Role of National Oil Companies in International Energy Markets." One interesting fact she presented is that, based on the amount of oil and gas reserve holdings, 14 of the top 20 upstream oil and gas companies in the world are national oil companies or newly privatized national oil companies. The focus of her speech was to share some of the results of case studies that the Baker Institute has done on several of these national oil companies to explore their company cultures, priorities, etc. To learn more about this project and to view the actual case studies, see the attached link.

www.rice.edu/energy/research/nationaloil/index.html

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In Duplantier v. BP Amoco, et al., the Louisiana Fourth Circuit court of appeal recently issued a ruling on trial court procedure under Act 312 of 2006, La. R.S. 30:29.  Click here to view the opinion.  Act 312, which became effective June 8, 2006, requires involvement of the Louisiana Department of Natural Resources (DNR) in litigation alleging environmental contamination, including submission of any remediation plan to DNR for approval, and the deposit of remediation funds into the registry of the court for expenditure on actual remediation rather than payment of those funds to the plaintiffs.  For more on Act 312, click on this blog's "Environmental" archive.

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By Jana Grauberger

Two recent federal district court decisions have reached differing results in considering the scope of exculpatory clauses in JOA disputes. In PYR Energy Corp. v. Samson Resources Co., 470 F. Supp. 2d 709 (E.D. Tex. 2007), the court found itself bound to follow Fifth Circuit precedent set in Stine v. Marathon Oil Co., 976 F.2d 254 (5th Cir. 1992), which held JOA exculpatory language limiting operator liability to situations of gross negligence of willful misconduct applicable to all good faith actions undertaken by the operator under the JOA, including performance of its contractual duties. By contrast, in Forest Oil Corp. v. Union Oil Co., 2006 WL 905345 (D. Alaska Apr. 7, 2006), the court followed the Tenth Circuit and refused to require a showing of gross negligence or willful misconduct in holding an operator liable for breach of contract regarding its duties to charge for NORM disposal.

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By Jana Grauberger

Oil prices of $60/barrel are expanding the industry and providing incentive and opportunities for more small independent "wildcatter" companies. For some interesting statistics concerning exploration trends and a profile of one wildcatter, Cobalt International Energy, see the attached article from the New York Times.

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By Dana M. Douglas

On April 20, 2007, the Louisiana Department of Natural Resources (“DNR”) issued regulations establishing procedures for agency hearings and the submission and approval of remediation plans under Act 312 of 2006.  Act 312, which enacted La. R.S. 30:29, made sweeping changes to the procedures for litigation involving potential environmental damage to oilfield sites, in order to ensure that remediation awards are actually expended on remediation.  To view the new regulations, which are codified at La. Admin. Code tit. 43, § XIX, Ch. 6, click here.  Most significantly, the regulations establish that Statewide Order 29-B is the basis upon which the agency will evaluate such remediation plans.

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As previously reported, the trial court in M. J . Farms v. ExxonMobil held Act 312 of 2006, governing remediation of oilfield sites, to be unconstitutional.  The Louisiana Supreme Court has now held that the plaintiff did not properly raise the issue of constitutionality at the trial court level, and remanded to allow the plaintiff to specifically plead the unconstitutionality of the act.  M. J. Farms, Ltd. v ExxonMobil Corp.,  No. 07-CA-0450 (La. 4/27/07).  The Court noted that appellate jurisdiction was not invoked because the issue was first raised in a memorandum rather than a pleading.

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By Jonathan A. Hunter

In Weyerhaeuser Co. v. A. D. Hinton,  No. 07-30117 (5th Cir., May 1, 2007), the Fifth Circuit upheld a decision by the Federal District Court for the Western District of Louisiana rejecting a challenge to a group of mineral servitudes created in 1971. The plaintiff landowner, Weyerhaeuser Company, asserted that a series of formal "acknowledgments" executed by its corporate predecessor to interrupt prescription were part of an attempt to create fifty-year mineral servitudes in violation of Louisiana law. In a Memorandum Ruling, the district court held that the challenged acknowledgments fully complied with Louisiana Mineral Code articles 54 and 55; accordingly, the acknowledgments interrupted prescription running against the mineral servitudes. Weyerhaeuser Co. v. A. D. Hinton, et al., No. 06-0272 (W.D. La., Dec. 29, 2006, Walter, J.). On May 1, 2007, the Fifth Circuit heard oral argument on Weyerhaeuser’s appeal. That same day, the Fifth Circuit issued its per curiam decision upholding the district court’s ruling.   Click here to view the ruling.

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