Devon Energy Production Company, L.P. v. Sheppard is a royalty dispute between several lessees, Devon Energy Production Co., L.P., et. al., and several lessors, Michael A. Sheppard, et. al., concerning a novel royalty term that may have a huge impact on the way oil and gas royalties are paid in the future.  See 13-19-00036-CV, 2020 WL 6164467, at *12 (Tex. App.—Corpus Christi Oct. 22, 2020, pet. filed).  The novel term, referred to as an “add-back” or “add-to-proceeds” provision, requires any deductions to the sale of production to be added back to the proceeds in order to determine the appropriate royalty base.  The lessors argue that under this term, the deductions in the lessees’ sales contracts attributable to the buyers’ post-transfer costs must be added to the gross proceeds in order to establish a royalty base above the gross proceeds.  The lessees disagree, countering that the clear intent of the provision is merely to prohibit the deduction of their own post-production costs, not the post-transfer costs of the buyers.  The lessors won in the trial court; the court of appeals affirmed.  Now the case is before the Texas Supreme Court, with a recently submitted amicus brief containing the argument that could turn the tides back in the lessees’ favor.
Continue Reading New Developments in Shocking Case Before the Texas Supreme Court Regarding Construction of Novel Oil & Gas Royalty Term

Perhaps the most important right granted in a solar development agreement is the right of the solar developer to use the surface of the property to evaluate, construct, and operate the solar farm.  But how can the solar developer ensure that its right to use the surface of the property is not encumbered by or inferior to the rights of others?  Or, more specifically, how can the solar developer ensure that a mineral estate owner will not be able to locate a well in the middle of its solar farm?  This issue is at the forefront of the minds of the renewables industry and was the subject of a recent Texas Court of Appeals decision.  As renewable energy projects continue to multiply, clashes between solar developers and mineral interest owners will increase as well.
Continue Reading Solar Leasing in Louisiana: The Accommodation Doctrine

On June 9, 2021, Texas Governor Greg Abbott signed House Bill 1284 (“HB 1284”), which was introduced along with its Senate companion, SB 450, during the state’s 87th legislative session.  HB 1284 grants the Texas Railroad Commission (“RRC”), the governmental agency that regulates the state’s oil and gas industry, sole jurisdiction over Class VI Injection Wells and carbon capture, use, and sequestration (“CCUS”) activities in Texas.
Continue Reading New Legislation Signals Strong Support for CCUS in Texas

Bringing to mind the infamous Hatfield-McCoy family feud, Concho Resources, Inc. v. Ellison is a classic boundary dispute between a leasehold owner and neighboring lessees with allegations of fraud and more than $1 million at stake.  See 2021 WL 1432222 (Tex. Apr. 16, 2021).  The plaintiff, Martha Ellison d/b/a Ellison Lease Operating, alleged that the defendant lessees, Samson Resources Company (“Samson”), COG Operating LLC (“Concho”), drilled and operated a well on her leasehold.  The defendants—relying on a boundary stipulation and a written acceptance of such stipulation signed by Jamie Ellison, Mrs. Ellison’s deceased husband—claimed that Mr. Ellison ratified the agreed boundary line before his passing, foreclosing any claims of trespass.  What ensued was a long legal battle with an ironic outcome.  The defendants won in the trial court; the court of appeals reversed.  The tables turned again at the Texas Supreme Court, which ultimately held that the boundary stipulation was valid and that the defendants conclusively established their ratification defense, but the case is still ongoing.
Continue Reading Texas Supreme Court Update: Boundary Dispute Between Leasehold Owner and Lessees of Adjacent Tract

During his first  hours in the Oval Office, President Biden issued Executive Order 13990, entitled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” Section 6 of the Order revoked TransCanada Keystone Pipeline, L.P.’s March 2019 permit to construct and operate cross-border pipeline facilities at the U.S.-Canada border in Montana.

The Texas Supreme Court recently issued its anticipated decision in BlueStone Natural Resources II, LLC v. Randle, affirming in part and reversing in part the lower court’s ruling.  No. 19-0459, 2021 WL 936175 (Tex. Mar. 12, 2021).  The Court (1) affirmed that the lower court correctly concluded the oil and gas lease at issue explicitly resolved conflicting royalty provisions in favor of a gross-proceeds calculation; and (2) affirmed the lower court’s interpretation regarding application of the lease’s free-use clause, but remanded the case to recalculate the amount awarded to the royalty owners.
Continue Reading Texas Supreme Court Update: The Court Decides Issue of First Impression Related to the Scope of an Oil and Gas Lease’s Free-Use Clause and Further Interprets Conflicting Royalty Clause Provisions

Free-Use Clause and Further Interprets Conflicting Royalty Clause Provisions

The Texas Supreme Court recently issued its anticipated decision in BlueStone Natural Resources II, LLC v. Randle, affirming in part and reversing in part the lower court’s ruling.  No. 19-0459, 2021 WL 936175 (Tex. Mar. 12, 2021).  The Court (1) affirmed that the lower court

Texas Public Utility Commission orders all TDUs in the ERCOT region to rotate customers such that no such customer is subjected to an electricity outage of more than 12 hours.

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In Tier 1 Resources Partners et al. v. Delaware Basin Resources LLC, 08-20-00060-CV, the Court of Appeals for the Eighth District of Texas (El Paso) recently held oral argument on the proper construction of the word “and” used in a Delaware Basin oil and gas lease.  The meaning of the word is hotly contested

Several pieces of energy-industry legislation are teed up for debate as state legislatures reconvene for their first sessions of 2021. With topics ranging from offshore oil and gas moratoriums to restrictions on natural gas flaring and venting, the following is an overview of notable energy legislation to be heard in state legislatures this year.

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