On Friday, March 31, 2023, Representative Larry Bagley of Louisiana’s District 7 proposed amendments to Louisiana Revised Statutes § 30:10. The bill, HB 590, extends a prior substantive change in the law that was affected by the 2012 amendments to La. R.S. 30:10. In the 2012 amendment, operators of force-pooled drilling units were required
For nearly three years, unit operators in Louisiana have waited to see whether the Western District of Louisiana would change course or double down on its March 2019 decision in Johnson v. Chesapeake. In the original Johnson decision, the district court sent shockwaves across the oil and gas industry in Louisiana by finding that post-production costs were not properly deductible against proceeds owed to unleased mineral owners. In the wake of that decision, at least two putative class actions were filed against the largest producers in the Haynesville Shale, and operators have been flooded with demands and suits from unleased owners who relied on Johnson to contest the validity of post-production cost decisions from unleased interests.
Continue Reading Long-Awaited Victory on the Proper Deductibility of Post-Production Costs from Unleased Mineral Owners – The Western District of Louisiana Reverses Course in Johnson v. Chesapeake and Self v. BPX
Louisiana Revised Statutes 30:103.1 et seq. have been heavily litigated in recent years, but there are only a handful of reported decisions interpreting these statutes. Many of these decisions involve whether a party complied with the strict notice requirements contained in the statutes. B.A. Kelly Land Company, L.L.C. v. Aethon Energy Operating, L.L.C., 25…
In recent years, there has been an increase in litigation relating to the unleased owner reporting requirements contained in La. R.S. 30:103.1 and the penalty imposed in La. R.S. 30:103.2. There are few cases interpreting these statutes. However, the existing authority recognizes that even if an operator fails to comply with such reporting requirements, an unleased owner must provide sufficient notice under La. R.S. 30:103.1 and 103.2 before the statutory penalty may be imposed. The recent non-final interlocutory ruling in Limekiln Development, Inc. v. XTO Energy, Inc., provides yet another data point in an otherwise barren area of Louisiana law about the notices required under this statutory scheme in order to properly place operators on notice and to potentially impose the penalty of La. R.S. 30:103.2.
Continue Reading United States Western District of Louisiana Issues Opinion on Notice Required Under La. R.S. 30:103.1 and 103.2 to State a Plausible Claim for Relief
In Mary v. QEP Energy Company, the Western District of Louisiana rejected, for the second time in this case, Plaintiffs’ claims seeking a disgorgement of QEP’s profits. QEP was the lessee of a mineral lease covering Plaintiffs’ property, but because it wanted to transport off-site gas across their property, QEP also obtained a pipeline…
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. 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.
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. 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. 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. 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.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