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Oil & Gas Well Drilling Contract Terms

Houston Harbaugh, P.C.

Texas Supreme Court to Address the Obligation to Calculate Royalty on Gas Used to Fuel Off-Lease Operations

Houston Harbaugh, P.C. on

Let’s assume you own 165 acres in Tioga County. In 2019, you sign a new oil and gas lease with ABC Drilling. You negotiate an 18% net royalty. The royalty clause, however, requires ABC Drilling to calculate the royalty on...more

Gray Reed

Who is responsible for the negligence of the “company man” on the well?

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Parkman v. W&T Offshore, Inc., et al features two contractors playing hot potato over liability for a company man’s alleged negligence. The takeaway: Write your Master Service Agreement to address your liability concerns, and...more

Gray Reed

Supreme Court of Texas Tackles the Meaning of “Predecessors”

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The plain, ordinary, and generally accepted meaning of a word doesn’t mean “anything goes”. It depends on context, says the Supreme Court of Texas in Finley Resources Inc. v.  Headington Royalty Inc., a dispute over the...more

Gray Reed

Court of Appeals Rules on Texas PSA Well Permit

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The Austin Court of Appeals has ruled in Texas Railroad Commission et al v. Opiela, the dispute over a permit for a horizontal well under a Production Sharing Agreement.  We reported on the result in the trial court. Here are...more

Gray Reed

A Day Made a Difference in This Purchase and Sale Agreement

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And what a difference it was! In Apache Corp. v. Apollo Expl. LLC et al, Apache and others acquired an oil and gas lease on 100,000+ acres in the Texas Panhandle. The primary term was three years. The effective date was...more

Houston Harbaugh, P.C.

Can "Free Gas" Clauses Refute the Artificial Wellhead Value Suggested by Drillers?

Houston Harbaugh, P.C. on

An oil and gas lease with a “free gas” clause may be a valuable tool for landowners to push back against drillers’ inaccurate attempts to value gas at the “wellhead”. Prior to the advent of Marcellus Shale drilling, "free...more

Steptoe & Johnson PLLC

Pennsylvania Court Upholds Cross-Unit Drilling Under Act 85

Steptoe & Johnson PLLC on

On January 24, 2023, the U.S. District Court for the Middle District of Pennsylvania held that Act 85 of 2019, which permits drilling horizontal oil and gas wells across existing drilling units, is not unconstitutional....more

Gray Reed

City of Dallas Owes $33+ Million for Drilling Permit Denials

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If you have ever wondered how many ways a cocktail of stupidity*, treachery and feckless government can inflict financial harm on the undeserving, including the citizens the feckless government leaders are supposed to serve,...more

Gray Reed

A Texas Lien is Invalid if the Mineral Owner is Not Yet Obligated to Pay

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A subcontractor’s mineral lien in Texas is invalid when, at the time the mineral owner receives notice of the lien affidavit, the mineral owner is not yet obligated to pay the contract price to its contractor.  So says Pearl...more

Houston Harbaugh, P.C.

Texas Appellate Court Rules that Lease Terminated Due to Twelve Months of Non-Production

Houston Harbaugh, P.C. on

The modern producing gas well is a sophisticated and complex piece of equipment. The basic well head itself consists of several meters, valves and other components, each of which is under constant stress and pressure. ...more

Vinson & Elkins LLP

To Spud Or Not To Spud? In Sundown Energy LP v. HJSA No. 3, The Texas Supreme Court Interprets What “Drilling Operations” Means...

Vinson & Elkins LLP on

“To spud or not to spud,” that was the question before the Texas Supreme Court in determining whether a lessee, Sundown Energy, maintained a lease on non-producing acreage under the lease’s continuous drilling provisions.1...more

Gray Reed

What are “Drilling Operations”?

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As Humpty Dumpty would have said to Alice if he were Justice Dumpty of the Texas Supreme Court, the term means whatever the parties to an oil and gas lease say it means, neither more nor less. In Sundown Energy LP, et al. v....more

Gray Reed

Well Operator Protected by the Model Form JOA

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What is the standard of care imposed by the Model Form JOA on the well operator?  Crimson Exploration Op., Inc. v. BPX Op. Co. gives us the answer, and it is no surprise....more

Gray Reed

Texas Supreme Court Deems Continuous Development Clause Ambiguous

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In Endeavor Energy Resources, L.P. v. Energen Resources Corp. et al. the Supreme Court of Texas construed a continuous development clause in an oil and gas lease covering 11,300 acres in Howard County. After the primary term,...more

Gray Reed

Offer to Acquire Leases Could Not be Conditioned on a JOA

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From Great Western. Drilling, Ltd. v. Pathfinder Oil & Gas, Inc. we learn that if you want one agreement to be conditioned on execution of another one, you’d better say so … in writing … in the first one....more

Gray Reed

Coronavirus and the Energy Industry: Drilling into Force Majeure Clauses

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Many oil and gas contracts – leases and JOAs for example – have force majeure clauses. The purpose is to allow contracting parties to suspend or terminate performance when certain circumstances arise that are beyond their...more

A&O Shearman

First No Contract by Ambush. Now No Contract by Email, Texas Supreme Court Says.

A&O Shearman on

On February 28, 2020, the Texas Supreme Court reversed a ruling from the First Court of Appeals in Houston in the case of Chalker Energy Partners III, LLC, et al. v. Le Norman Operating LLC, 547 S.W.3d 27 (Tex. App.—Houston,...more

Gray Reed

Oil Field Services Gets Lump of Coal From Santa

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Our sympathies go out to those in the oilfield services industry in Texas—it looks like you got a lump of coal. In Mesa Southern CWS Acquisition v. Deep Energy Exploration Partners the Houston Court of Appeals upended the...more

Gray Reed

Wave Goodbye To Unenforcable Mineral Lien Waivers: The Houston Court Of Appeals Weighs In With Mesa V. Deep Energy

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The Fourteenth Court of Appeals in Houston recently issued an opinion that will have profound impacts on mineral liens and contractual provisions purporting to waive mineral liens. The question of whether or not a pre-work...more

Gray Reed

Spudding? Reworking? What are “Operations” Under an Oil and Gas Lease?

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Quick answer: It depends on what the lease says.  Last week featured a tug-of-war between a producer and the community in which it operates; this week in HJSA No. 3 LP v. Sundown Energy LP  it’s the producer and the lessor....more

Gray Reed

Industry Custom Does Not Supersede Contract Language

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In Barrow-Shaver Resources Company v. Carrizo Oil & Gas, Inc the Supreme Court of Texas has held again, here in a consent-to-assign dispute, that a contract means what the words say, even if in negotiations a landman said...more

Gray Reed

Redefining the Offset Well Clause, Part 2

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As promised, here is a more in-depth analysis of the recent Supreme Court of Texas opinion in TRO-X LP v. Anadarko Petroleum Corp. ...more

Gray Reed

Trespass But no Damages in a Texas Case

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What does it take these days to get money from a Texas jury? Not much, it seems; in XTO v. Goodwin the trick was convincing a higher court that you should keep it....more

Mitchell, Williams, Selig, Gates & Woodyard,...

Hydraulic Fracture Related Damage Claim: Federal Court Addresses Application of Consent and Release Agreement

A United States District Court (Western District Oklahoma) addressed in an October 10th Order issues associated with a producing vertical well’s claim for damages related to another company’s subsequent installation of a...more

Gray Reed

An Unusual Way To Hold an Oil and Gas Lease

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Here is what we believe is an unusual situation: A gas unit is formed. The gas well ceases to produce. Another gas well produces from an oil unit, but the lease at issue is not included in the oil unit. Is the lease...more

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