4Aug
Midstream Update: Eastland Court of Appeals Extends Denbury Test to Crude Petroleum Pipelines

Midstream Update: Eastland Court of Appeals Extends Denbury Test to Crude Petroleum Pipelines

This is a condemnation case from Comanche County, Texas.  In January 2013, the Railroad Commission of Texas designated BridgeTex as a common carrier and granted it a T-4 permit.  BridgeTex condemned an easement across Saner’s land and constructed a pipeline to transport crude petroleum from the Permian Basin to the Texas Gulf Coast.  Both the special commissioners and the trial court determined that the easement was for public use, and Saner now challenges the trial court’s finding.  The Eastland Court of Appeals affirmed the trial court’s judgment.  Read More »

19May

BREAKING: ConocoPhillips v. Koopmann

The Corpus Christi Court of Appeals released its Memorandum Opinion today in ConocoPhillips Company v. Koopman, 13-14-00402-CV. The case involved a deed which reserved a term NPRI for a period of fifteen years, or until December 27, 2011 and for “as long thereafter as there is production [of oil, gas, or minerals from the land] in paying quantities.”

The deed also included a savings clause that provided as follows:

[I]f any oil, gas, or mineral or mining lease covering [the Koopmanns’ land] is maintained in force and effect by payment of shut-in royalties or any other similar payments made to [the Koopmanns] in lieu of actual production while there is located on [the Koopmanns’ land] a well or mine capable of producing oil, gas, or other minerals in paying or commercial quantities but shut-in for lack of market or any other reason, then for purposes of determining [whether Strieber’s NPRI continues beyond December 27, 2011,] it will be considered that production in paying or commercial quantities is being obtained from the [Koopmanns’ land]. (emphasis supplied)

The lessee and NPRI owner claimed that these conditions were met and that a $24,000 lease extension fee constituted a “similar payment” to a shut-in royalty. The lessor burdened by the NPRI disagreed and suit was filed.  Among the issues addressed are:

  1. Whether a lease extension fee made under a paid-up lease constituted a payment that was “similar” to a shut-in royalty within the context of a savings clause contained within a deed reserving a term NPRI.
  2. Whether the term NPRI involved in that case created a future interest in violation of the rule against perpetuities.

Stay tuned over the next few days. We will be working through this case to provide our subscribers with a summary of the court’s holding…

25Apr
The Latest in the Fixed Versus Floating Royalty Battle

The Latest Shot Fired in the Fixed Versus Floating Royalty Battle

This is a deed interpretation case out ofthe San Antonio Court of Appeals, arisingfrom the 218th Judicial District Court of Karnes County, Texas.

In 1991, the Harrells executed a warranty deed (“1991 Deed”) that conveyed approximately 10 acres of land to the Dragons. The 1991 Deed was subject to prior reservations and it contained the following new reservation by the Harrells:

Read More »

13Jan
Oil pump jacks at sunset sky background. Toned.

Texas: Statutory Subordination of Mortgages

Texas House Bill 2207, effective January 1, 2016, statutorily subordinates certain real estate mortgages to oil and gas leases, introducing an interesting tweak to the long-standing and well-established “first in time, first in right” rule. However, this statute is not without its limitations.  For example, it only applies to foreclosure sales for which the foreclosure notice occurs or the judicial foreclosure action commences on or after January 1, 2016.  Additionally, the statute goes on to clarify that, although the lease is to survive the foreclosure, the right to use the surface estate may be terminated and extinguished by the foreclosure to the extent the security interest had priority over the lessee.

Read More »

29Dec

Oilfield Bankruptcy and Game Plan

Oil and gas price volatility is as much a part of the energy business as drill bits. Few predicted that the current down-cycle would be as long or as deep as it is proving to be. While global events could turn and prices improve, lower prices seem to be a reality for now. Lower prices impact the finances of everyone in the energy industry. Insolvencies, business failures, and bankruptcies are inevitable in this environment; and when they occur, they affect everyone, at all levels and in all aspects of the industry. Though industry participants can’t change the price of oil, they can protect their interests in other ways. In times like this, fortune favors the prepared.

Read More »

28Sep
Oil industry

Forecasting a Rise in Lease Termination and Royalty Litigation Amidst Prolonged Oil Slump

Originally appearing in the Energy Expert Analysis Section of Law360.

law 360 logoLaw360, New York (September 25, 2015) — Over the last five years, American shale production has more than tripled. Since last October, however, the oil and gas industry has trudged through a long and pronounced slump in crude oil prices in what has been termed the “Oil Bust of 2015.” Oil prices dropped below $40 a barrel last month for the first time in over six years, and major relief from this slump may be distant as EIA recently announced that it expects crude to average $59 per barrel in 2016.

This low-price environment has been unfavorable for most royalty owners, as low oil prices generally lead to proportionately low royalty payments. It has also lead to a slow-down in additional drilling and development activity as many oil and gas companies slashed budgets for 2015 and 2016. Drilling contractors have stored hundreds of rigs, and oil and gas companies have drastically reduced their workforces. A strong indicator of this slow-down can be found in the Texas Railroad Commission drilling statistics, showing 964 permits issued last month in Texas, compared with 2,440 in August of 2014. Read More »

21Sep
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How Changes to SEC Disclosure Requirements Five Years Ago are Affecting E&P Companies Today

Effective January 1, 2010, the SEC adopted amendments to its oil and gas reporting requirements for publicly traded exploration and production companies.  Among the amendments was the expansion of the definition of “PUD” (proved undeveloped reserves).  Under the new rules, E&P companies are allowed to include in their reserve report PUDs that they were not able to disclose under the previous rules.  The catch is that if an E&P company does not timely develop its PUDs, it may be forced to write them off.

Fast forward five years:  2015 – The price of oil has dropped dramatically causing E&P companies to significantly reign in their operations.  But what about developing those PUDs that E&P companies listed on their reserve report five years ago?  This article will address how changes to the SEC disclosure rules five years ago are impacting E&P companies today. Read More »

13Sep
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Texas Supreme Court to Determine Whether Accommodation Doctrine Applies to Severed Groundwater Estate

The Texas Supreme Court recently granted Coyote Lake Ranch’s petition to review an opinion by the Amarillo Court of Appeals in Lubbock v. Coyote Lake Ranch, holding that the “Accommodation Doctrine” does not apply to the relationship between a surface owner and the owner of a severed groundwater estate.  In the context of a severed mineral estate, the Accommodation Doctrine requires that the owner of a severed mineral estate accommodate pre-existing surface uses in certain circumstances.

By granting Coyote Lake Ranch’s petition to review, the Texas Supreme Court will have the opportunity to address whether this doctrine also applies to a severed groundwater estate.  The decision in this case could potentially answer an important question regarding conflicts between groundwater production activities and existing surface uses.  With the oil and gas industry dealing with sub-$50 oil prices, and the public’s increasing awareness of the importance of water, the Supreme Court’s holding in this case will have significant implications to the development of groundwater in Texas.  As Texas A&M University School of Law professor Gabriel Eckstein told Law 360, this case “has big implications, some of which we can’t even imagine yet.”

Read More »

26Aug
Handshake

Schlumberger to Buy Cameron – What does this Mean for A&D?

The world’s largest oilfield service company, Schlumberger Ltd., and one of the largest providers of oilfield equipment, Cameron International Corp., announced today in a joint press release that the parties have executed an Agreement and Plan of Merger under which Schlumberger will buy Cameron in an all-stock deal valued at $14.8 billion.

The parties held a teleconference this morning, as announced in their 8K filing. Under the Merger Agreement, Schlumberger Holdings will acquire Cameron in a transaction in which Rain Merger Sub LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Schlumberger Holdings, will merge with and into Cameron, with Cameron as the surviving entity, and with Schlumberger Holdings acquiring all of the stock of Cameron. Read More »

© Copyright 2014, Austin W. Brister. All Rights Reserved. DISCLAIMER: The information in this article is for general information purposes only. This article should not be substituted for legal advice and should not be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or reading this article does not constitute, an attorney-client relationship. You are encouraged to contact an attorney for legal advice concerning the information provided in this article.
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