By Sarah Steward-Lindsey

In ERG Resources, LLC v. Merlon Texas, Inc., the First Court of Appeals in Houston held that oil which had been severed and stored in tanks on site was personal property and thus was transferred by an assignment of the oil and gas property on which the tanks were located. Merlon agreed to purchase oil and gas property owned by ERG pursuant to an “Assignment and Bill of Sale,” which stated that oil produced before January 1, 2008, and contained in the storage tanks on the land subject to the assignment “was the sole property of ERG.” After the assignment became effective, ERG submitted an invoice to Merlon for the value of the oil, which Merlon refused to pay. The court noted that the assignment expressly conveyed ERG’s “right, title, and interest in [the land], . . . inclusive, without limitation, the properties and/or oil and gas units located thereon, . . . together with . . . the personal property thereon, appurtenant thereto, or used or obtained in connection with said properties and/or oil and gas units.” (Emphasis by the court). The oil was personal property on the land as of the effective date of the assignment, and was thus conveyed to Merlon under the terms of the assignment.

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