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

By Kevin Connolly:

In Nitschke v. Circle Ridge Production, Inc., No. 12-09-00150CV, _____ S.W.3d ____ (Tex. App.—Tyler 5/5/2010), the Tyler Court of Appeals upheld a trial court’s findings of fact and conclusions of law with respect to the termination of an oil and gas lease for failure to pay shut-in royalty payments to the proper party.   The case involved a dispute between the original lessee and a top lessee.  Ultimately the original lessee lost its lease because it made shut in payments to its lessee, rather than the current royalty owner, to whom those payments were owed.

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By Robert L. Theriot

In EOG Resources Inc. v. Chesapeake Energy Corp., No. 09-30362, __ F.3d __ (5th Cir. 4/29/10), the Fifth Circuit reinstated EOG's contractual claim against Chesapeake under the parties' joint operating agreement (JOA).  EOG claimed that Chesapeake had unilaterally drilled three wells in the parties' pooled mineral leases in Bossier Parish, Louisiana, without first obtaining EOG's written consent as required by their JOA.  The trial court dismissed EOG's claim, finding the contractual claim was barred as an impermissible "collateral attack" on the orders of the Louisiana Commissioner of Conservation, because the Commissioner had approved Chesapeake's application to drill the wells as alternative unit wells for the pooled zones.  On appeal, the Fifth Circuit reversed and vacated.  It found that EOG's contractual claim was not barred as a collateral attack on the Commissioner's orders and remanded for a determination of EOG's claims.  The author represented EOG in the trial court and on appeal.

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