On June 2, 2017 the Louisiana Second Circuit Court of Appeal affirmed a trial court’s judgment cancelling a mineral lease under Mineral Code article 140 and provided further clarity on a production in paying quantities analysis under Louisiana Mineral Code article 124.[1] The dispute in Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc., arose from a 2004 mineral lease covering nearly 1,400 acres in Sections 9, 10, 15, 16, and 21, Township 15 North, Range 15 West, in Caddo Parish.[2] The lease was granted by Gloria’s Ranch, L.L.C. (“Gloria’s Ranch”) to Tauren Exploration, Inc. (“Tauren”) and contained a three year primary term as well as a horizontal and vertical Pugh clause.[3] Tauren subsequently assigned a 49% interest in the lease to Cubic Energy, Inc. (“Cubic”).[4]
Continue Reading Louisiana Second Circuit Provides Clarity on Production in Paying Quantities and Affirms Lease Cancellation Under Mineral Code Article 140 for Failure to Pay Royalties
Fifth Circuit Holds that Unpatented Products Can Be Given Patent-Like Protection by Contract
In a breach of contract case involving the overlay of intellectual property and contract law, Luv n’ care, Ltd, a global leader in the design and sale of baby products, filed suit against its former distributor, Groupo Rimar, a.k.a. Suavinex, S.A. (“Suavinex”), for breach of Suavinex’s contractual obligation not to copy any of Luv n’ care’s product designs.
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Louisiana Second Circuit Addresses: (1) Creation of Mineral Servitudes Via Notarial Acts of Correction; (2) Obstacles Suspending the Prescription of Nonuse from Running Against Mineral Servitudes; and (3) Payment of Court Costs in Concursus Actions
In Petro-Chem Operating Co., Inc. v. Flat River Farms, L.L.C., the Louisiana Second Circuit addressed issues affecting the creation and preservation of mineral servitudes and payment of court costs in a concursus action.[1] In the case, an operator initiated a concursus action seeking to resolve ownership interest in minerals underlying property on which it was operating. The dispute as to ownership arose because of questions as to: (1) whether or not a notarial act of correction could be used to perfect a mineral reservation in agreements that did not initially include language effecting such a reservation[2] and (2) whether or not inclement weather or the failure to timely obtain a permit could serve as obstacles sufficient to suspend the prescription of nonuse from running against a mineral servitude under Louisiana Mineral Code article 59.[3]
Continue Reading Louisiana Second Circuit Addresses: (1) Creation of Mineral Servitudes Via Notarial Acts of Correction; (2) Obstacles Suspending the Prescription of Nonuse from Running Against Mineral Servitudes; and (3) Payment of Court Costs in Concursus Actions
Louisiana Third Circuit Addresses Payment of Royalties in Situations Involving Production Under a Mineral Lease Pursuant to a Conditional Allowable Prior to Unitization
In Gladney v. Anglo-Dutch Energy, L.L.C., the Third Circuit addressed the question of whether or not a mineral lessee must pay its lessor full lease-basis royalties for production undertaken during the effective period of a conditional allowable but prior to the effective date of a unit order.[1] In the case, the Plaintiffs granted a mineral lease to the Defendant-Lessee that provided for a 1/5 royalty in 2009.
Continue Reading Louisiana Third Circuit Addresses Payment of Royalties in Situations Involving Production Under a Mineral Lease Pursuant to a Conditional Allowable Prior to Unitization
EPA Publishes Proposed Renewables Enhancement and Growth Support Rule
On November 11, 2016, the EPA published a proposed rule designed to update its Renewable Fuel Standards Program and support the growth of renewable fuel use. With the stated goal of removing barriers to production and distribution of renewable fuels, the proposed rule has three main components:
(1) Updated Regulatory Structure to Address Biofuel Processing at Multiple Facilities – In some circumstances, biofuel producers can decrease the costs of production by processing feedstock at one facility and converting that material—called a biointermediary—into a biofuel at another facility.
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Servitudes: Didn’t They Get the Memo?
The question often arises whether, in Louisiana, a party can file in the public record a “memorandum of servitude” rather than the full servitude. If the parties do that, any unrecorded provisions may not be binding on third parties. Other states’ laws may provide that recordation of such a memorandum of easement, the common law equivalent of a servitude, suffices to bind third parties to all the provisions in the unrecorded easement.
Continue Reading Servitudes: Didn’t They Get the Memo?
Texas Supreme Court Agrees to Review Three Oil and Gas Cases in 2016
On September 2, 2016, the Texas Supreme Court agreed to review three oil and gas cases involving issues pertinent to the industry and land and mineral owners.
- BP America Production Company v. Red Deer Resources, LLC
In BP America Production Company v. Red Deer Resources, LLC, the lessee of a top lease, Red Deer, sued the lessee of the base lease, BP, contending that the prior lease had terminated due to a cessation of production in paying quantities.
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Offshore Companies Face Surge in BSEE Enforcement Actions and Penalties
In recent years, offshore companies have witnessed a marked uptick in the number of enforcement actions undertaken by the Bureau of Safety and Environmental Enforcement (BSEE).[1] Operators face more BSEE inspections, Incidents of Non-Compliance (INCs), and civil penalties than ever before. Meanwhile, the average penalty amount has grown. For example, in 2014 the agency imposed a civil penalty of $1,230,000—an unprecedented figure in the history of the BSEE civil penalty program. BSEE has also begun to target offshore contractors, who, until recently, have not faced exposure to agency enforcement actions. See Island Operating Co., Inc., 186 IBLA 199 (2015). Together, these developments will undoubtedly lead to more litigation and a higher cost of doing business on the Outer Continental Shelf.
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Louisiana Flooding – Legal Update
The Liskow & Lewis family stands by our friends and neighbors throughout the unprecedented flooding in our community. As we begin the long process of recovery, here is a brief legal update on the response of various courts and state agencies:
- State courts: Governor John Bel Edwards has issued an executive order which purports to
All or Nothing: Regulators Strictly Define Pipeline Abandonment
On August 16th, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) issued an advisory bulletin to clarify the regulatory requirements that may vary depending on the operational status of a pipeline under 49 C.F.R. Parts 192 and 195 (2016).
Continue Reading All or Nothing: Regulators Strictly Define Pipeline Abandonment