Louisiana Oil & Gas Law

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On March 21, 2019, the U.S. District Court for the Western District of Louisiana held that a unit operator may not recover post-production costs from an unleased mineral owner’s share of production proceeds in Allen Johnson, et al. v. Chesapeake Louisiana, LP.[1]  The dispute in Johnson involved a group of unleased mineral owners (“UMOs”) who filed suit against a unit operator for deducting a litany of post-production costs against their share of production proceeds from an oil and gas unit in the Haynesville Shale.[2]

The UMOs argued that La. R.S. 30:10 governed whether a unit operator may deduct post-production costs against UMO’s share of production proceeds.[3] The argument, however, was one of exclusion. The UMOs argued that La. R.S. 30:10 contains the exclusive list of any costs that could be properly charged against a UMO’s share of production proceeds. Therefore, because post-production costs were not expressly listed in La. R.S. 30:10(A)(3), the UMOs argued that such expenses were not recoverable from a UMO’s share of production.[4] In opposition, the unit operator contended that La. R.S. 30:10 was inapplicable to the case because the costs outlined in the statute comprised only pre-production and production costs. The operator argued the statute was never intended to address  post-production costs.[5] As a result, the unit operator claimed that the statute did not forbid deductions for post-production costs against a UMO, but instead those costs were properly authorized under the general principles of unjust enrichment and co-ownership.[6]Continue Reading Western District of Louisiana Holds that Unit Operators May Not Recover Post-Production Costs from an Unleased Mineral Owner’s Share of Production Proceeds

In August 2018, dry natural gas production from the Haynesville shale averaged 6.774 billion cubic feet per day, which is the highest daily Haynesville production average since September 2012 when production averaged 6.962 billion cubic feet per day.  August 2018 was not an anomaly.  Instead, this year, the Haynesville has seen steady increases in production since January when production averaged 5.293 billion cubic feet per day.  Although the recent Haynesville production increases are a positive sign for the Louisiana energy industry, the August 2018 daily production average is still below the previous Haynesville peak production average, which was 7.403 billion cubic feet per day in January 2012.  However, if the current trend continues, the Haynesville could approach its prior peak production average in early 2019.
Continue Reading Haynesville shale gas production is increasing again; Will Haynesville-related litigation increase again, too?

While oil and gas company-defendants—and several courts alike—have deemed the applicability of the subsequent purchaser doctrine to mineral leases a settled issue of law, plaintiff-landowners have continued to argue otherwise.  In a unanimous opinion issued July 18, 2018 in Grace Ranch, LLC v. BP America Production Company, et al., the Third Circuit not only provides yet another example of the uniform application of the doctrine in cases involving mineral rights under Louisiana law, but expressly and thoroughly rejects the numerous arguments on which plaintiffs-landowners have continued to rely.
Continue Reading Louisiana’s Third Circuit (Again) Affirms the Applicability of the Subsequent Purchaser Doctrine to Mineral Leases

On or about May 23, 2018, several Defendants in the Coastal Zone Management Act (“CZMA”) Litigation filed Notices of Removal in 42 lawsuits filed against 212 oil and gas companies by six different parishes (Plaquemines, Jefferson, Cameron, Vermilion, St. Bernard, and St. John the Baptist), removing the cases to federal court.  The timing of the removal was based on Plaintiffs’ expert report, which was produced on April 30, 2018.  In their Notices of Removal, Defendants allege that Plaintiffs’ expert report purportedly identifies state “permitting violations,” which revealed for the first time in the CZMA Litigation that Plaintiffs’ claims primarily attack activities undertaken before the state permitting law at issue was effective and that were instead subject to extensive and exclusive federal direction, control, and regulation.
Continue Reading The Coastal Zone Management Act Litigation Removed to Federal Court (Again)

The Louisiana Supreme Court’s reversal of Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc., hands a victory to financiers of oil and gas operations and settles a long-running controversy over the amount of damages available for failure to pay mineral royalties.

The Gloria’s Ranch trial court held two mineral lessees and a mortgagee (Wells Fargo) solidarily liable for more than $20 million in damages resulting from failure to release a mineral lease in North Louisiana.  The Second Circuit affirmed the finding of solidarity on the basis that Wells Fargo became an owner of the mineral lease because it “controlled the bundle of rights that make up ownership, i.e., the rights to use, enjoy, and dispose of the lease.” However, a vigorous dissent warned that the majority’s “control theory” to impose solidarity between a mortgagee and a mineral lessee could have “[d]evastating economic repercussions” for the lending industry, and “[s]erious and harmful impact on the oil and gas industry.”Continue Reading Louisiana Supreme Court’s reversal of Gloria’s Ranch clarifies calculation of damages for unpaid mineral royalties, provides relief for holders of security interests in mineral rights

In a decision issued today, the Louisiana Third Circuit Court of Appeal issued the first appellate court opinion addressing the procedure for approval of settlements in cases governed by Act 312 (La. R.S. 30:29).  Britt v. Riceland Petroleum Corp., is a “legacy” lawsuit in which landowners sued Riceland Petroleum Company and BP America Production Company—the current and former operators on a certain tract of plaintiffs’ property.  Riceland and BP ultimately chose to settle all of the claims that Plaintiffs brought against them, and as part of the settlement they agreed to remediate the landowners’ property to the necessary state standards.  The settling parties then complied with the express mandates of Act 312 as they:  (1) provided notice of the settlement to the Department of Natural Resources (“LDNR”) and Attorney General (“AG”); (2) allowed the LDNR at least thirty days to review the settlement and provide any comments to the trial court; and, (3) sought and obtained the trial court’s approval of the settlement.
Continue Reading Louisiana Third Circuit Issues Decision on the Procedure for Settlements in Cases Governed by Act 312

In a highly anticipated ruling, the United States Fifth Circuit Court of Appeals issued its en banc decision in In re: Larry Doiron, Inc., No. 16-30217 (5th Cir. Jan. 8, 2018).  The case called upon the court to determine whether a contract for performance of specialty services to facilitate the drilling or production of oil and gas on navigable waters is maritime in nature.  In ruling that the particular contract at issue in the case was non-maritime, the Fifth Circuit took the significant step of streamlining and re-framing the analysis for maritime contracts generally.
Continue Reading Highly Anticipated En Banc Fifth Circuit Opinion Reframes Maritime Contract Analysis

On Friday, December 15, the Louisiana Supreme Court granted three separate writ applications filed by each of the defendants in Gloria’s Ranch, L.L.C. v. Tauren Exploration, Inc.  These applications sought review of the Louisiana Second Circuit’s June 2, 2017 decision affirming the trial court’s ruling that Wells Fargo, a mortgage lender with a security interest in a mineral lease, was solidarily liable with its borrowers (the mineral lessees) for a breach of the mineral lessees’ contractual and statutory obligations to produce in paying quantities, pay royalties, and respond to the mineral lessor’s demands regarding those obligations. 
Continue Reading Louisiana Supreme Court Grants Writs from Second Circuit Decision Finding Holder of Mortgage Encumbering a Mineral Lease Solidarily Liable with Mineral Lessees for Damages Resulting from the Mineral Lessees’ Breach of Contractual and Statutory Obligations

In a decision by the Louisiana Board of Tax Appeals, Liskow & Lewis attorneys Robert Angelico, Jim Exnicios, Cheryl Kornick, RJ Marse, and Jeff Birdsong obtained a ruling rejecting attempts by the Louisiana Department of Revenue to increase the amount of severance taxes due on crude oil produced in Louisiana.  The Department of Revenue targeted dozens of producers, including many smaller producers, with audits and assessments attempting to impose severance taxes on market center or index prices rather than the value of the crude oil in the field. 
Continue Reading Liskow Lawyers Obtain Win for Oil and Gas Industry in Severance Tax Litigation

In September 2017, President Donald Trump nominated Kyle S. Duncan and Judge Kurt Engelhardt to the United States Fifth Circuit Court of Appeals.  Duncan is currently a partner at Schaeer Duncan LLP in Washington D.C. while Judge Engelhardt serves as the Chief Judge for the U.S. District Court for the Eastern District of Louisiana.

Just recently, two industry groups in Louisiana approved of President Trump’s nominees.  The Louisiana Association of Business Industry (“LABI”) and the Louisiana Oil and Gas Association (“LOGA”) officially endorsed Duncan and Chief Judge Engelhardt in November 2017.  Both LABI and LOGA are strong advocates for developing incentives and legislation that support economic growth in Louisiana, especially through the production of oil and gas. 
Continue Reading LABI and LOGA Endorse President Trump’s Nominations for the United States Fifth Circuit Court of Appeals