25Mar

Acknowledgment of Record Title Held Not to Defeat Adverse Possession Claim

Scribner v. Wineinger, No. 02-19-00208-CV, 2019 Tex. App. LEXIS 9170 (Tex. App.—Fort Worth Oct. 17, 2019, no pet.)

In this leasehold adverse possession case, the Fort Worth Court of Appeals held that an acknowledgement of the record title holder’s title by an adverse possessor will not defeat an adverse possession claim if the limitations clock had already run out before the acknowledgement occurred. The trial court granted summary judgment in favor of the oil and gas company on their affirmative defense of adverse possession and limitations title under the five-year statute.

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20Mar

Heirs Estopped From Claiming Interests Reserved in 1989 Warranty Deed

Wagenschein v. Ehlinger, 2019 Tex. App. LEXIS 5949 (Tex. App—Corpus Chisti July 11, 2019, pet. filed)

In this case, the Corpus Christi Court of Appeals held that, when grantors of a 1989 warranty deed signed division orders and accepted royalty payments consistent with treatment of the reservation as creating a joint tenancy with right of survivorship, that established an affirmative defense of quasi-estoppel, subsequently estopping those grantors’ heirs from claiming the reservation created a tenancy in common.

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13Mar

Appellate Court Dissolves an Operator’s Injunction Against Town of Flower Mound

Town of Flower Mound v. EagleRidge Operating, LLC, 2019 Tex. App. LEXIS 7561 (Tex. App.—Fort Worth Aug. 22, 2019, no pet.)

In this case, the Fort Worth Court of Appeals held that the trial court lacked authority to grant a temporary injunction against the Town of Flower Mound enjoining the enforcement of a local ordinance that limited truck traffic to and from well sites.

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11Mar

Disposal Well Operator Held Not to Be an “Affected Person” With Standing to Challenge Competitor’s Application for Disposal Well Permit

NGL Water Sols. Eagle Ford, LLC v. R.R. Comm’n, No. 03-17-00808-CV, 2019 Tex. App. LEXIS 10302 (Tex. App.—Austin Nov. 27, 2019, no pet. h.)

This case involves a dispute as to whether a competitor saltwater disposal well operator is an “affected person” under 16 Tex. Admin. Code §3.9(5)(E) and, thus, whether such competitor has standing to challenge an application for disposal well permit.

NGL Water Solutions Eagle Ford (NGL) operated a saltwater disposal well under a permit issued by the Texas Railroad Commission (RRC). In April of 2016, one of its competitors, Blue Water, filed an application to operate a commercial injection well at a nearby location. NGL protested the application. At the RRC hearing, Blue Water claimed that NGL was not entitled to protest Blue Water’s application because NGL was not an “affected person”. NGL argued that Blue Water’s permit was not in the “public interest” because there was no present industry need for additional disposal capacity in the area, because NGL had existing injection wells with excess capacity in the area.

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6Mar

Mineral Buyer Unable to Demand Prior Unclaimed Royalties From Comptroller

Enerlex, Inc. v. Hegar, No. 03-18-00238-CV, 2019 Tex. App. LEXIS 6771 (Tex. App.—Austin Aug. 7, 2019, pet. filed)

In Enerlex, the Austin Court of Appeals held that a mineral buyer could not demand payment from the Texas Comptroller of Public Accounts for prior unclaimed royalty payments relating to the purchased royalty interest, because those royalty payments were turned over to the Comptroller under the prior owner/grantor’s name.

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4Mar

Texas Courts Continue to Analyze Oil and Gas Cases Under the Texas Citizen’s Participation Act

McDonald Oilfield Operations, LLC v. 3B Insp., LLC, No. 01-18-00118-CV, 2019 Tex. App. LEXIS 6400 (Tex. App.—Houston [1st Dist.] July 25, 2019, no pet.) and Pearl Energy Inv. Mgmt., LLC v. Gravitas Res. Corp., 2019 Tex. App. LEXIS 6833 (Tex. App.—Dallas Aug. 7, 2019, no pet.)

In this business torts case between pipeline monitoring companies, Houston’s First Court of Appeals held that the trial court erred by denying a motion to dismiss pursuant to the Texas Citizens Participation Act (TCPA). At issue were causes of action for defamation, business disparagement, tortious interference with contract, and tortious interference with prospective business relations. Each of these causes of action centered around an alleged conversation where Kelly McDonald contacted a former client of 3B Inspection, and said 3B was “not a real company” and its principal “did not know what he was doing.” 3B also asserted that McDonald Oilfield intentionally cancelled sponsorship of federal “Operator Qualifications,” allegedly with “malicious intent to shut down the project and cause harm to 3B Inspection’s business relationship with its client.”

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28Feb

Mineral Lien Claimant Must Establish Materials Were “Used In” Mineral Activities

ELG Oil, LLC v. Stranco Servs., LLC, No. 04-19-00088-CV, 2019 Tex. App. LEXIS 8946 (Tex. App.—San Antonio Oct. 9, 2019, no pet.)

In this case, the San Antonio Court of Appeals held that a mineral subcontractor claiming a mineral lien must conclusively establish that its labor, materials, machinery, and supplies were “used in” mineral activities, not merely “related to” mineral activities.

ELG entered into a contract with Turn-Key Specialists, Inc. to add natural gas bullet storage tanks to a treatment facility. Turn-Key then subcontracted to Stranco. Stranco was presumably not paid for its work, and Turn-Key filed for bankruptcy. Stranco filed suit against ELG, and moved for a partial summary judgment on its claim to foreclose on its alleged mineral lien. The trial court granted Stranco’s motion and awarded Stranco attorney’s fees.

Stranco contended that it was only required to prove that its labor and services were “related to” mineral activities. The court acknowledged that Section 56.002 of the Texas Property Code provides for mineral liens “to secure payment for labor or services related to the mineral activities.” However, the appellate court pointed out that Stranco must qualify as a “mineral subcontractor” in order to claim a lien, and the statutory definition of “mineral subcontractor” requires a mineral subcontractor “conclusively establish the labor and services it provided were ‘used in’ mineral activities.” The court also pointed out that “mineral activities” is defined, in pertinent part, as certain types of work “on oil or gas pipelines.”

The appellate court then turned to Stranco’s summary judgment evidence. Stranco primarily relied upon an affidavit from its owner, stating that Stranco performed mineral activities on ELG’s property, including work on the “pipelines and the pipeline terminal station” and furnishing materials “used in connection with … pipelines and the pipeline terminal station.”

The appellate court characterized Stranco’s affidavit as conclusory because it failed to provide any facts showing how Stranco’s work and materials on the bullet storage tanks were connected to the oil and gas pipelines. The court acknowledged that, to be “used in” mineral activities, the work did not have to be performed directly on the pipelines themselves, but Stranco’s summary judgment evidence failed to establish a link between the bullet storage tanks and the pipelines.

The failure to link Stranco’s work to the pipelines themselves was further exacerbated by ELG’s summary judgment evidence. ELG submitted two affidavits which described the work Stranco performed as being limited to the addition of bullet storage tanks within the facility, and not work on pipelines themselves. ELG’s affidavits further indicated that no pipelines that combine in the facility and the pipelines were actually segregated from the facility. The court explained that “we must resolve all doubts in favor of ELG.”

As a result, the San Antonio Court of Appeals held that the trial court erred in granting summary judgment in favor of Stranco, reversed the trial court’s judgment, and remanded the cause to the trial court for further proceedings.

26Feb

Class Certification Denied in Royalty Class Action Suit

Regmund v. Talisman Energy USA, Inc., No. 4:16-CV-02960, 2019 U.S. Dist. LEXIS 110363 (S.D. Tex. 2019)

The Plaintiffs, a putative class of lessors under oil and gas leases, brought claims against Talisman Energy USA, Inc. (“Talisman”) relating to Talisman’s “volumetric” method of calculating royalties. Some of the gas produced is “wet gas,” which requires stabilization prior to sale, which results in a reduction or “shrinkage” of the volume sold. Talisman commingled the production from numerous leases for processing at the stabilization facility, and then allocated the sales volumes back to individual leases on the basis of wellhead metered volumes (a “volumetric” allocation), and applied an estimate of overall shrinkage.

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21Feb

Buyer Not Entitled to Offset for Unpaid JIBs Mistakenly Omitted From Post-Closing Statement

Sundance Energy, Inc. v. NRP Oil & Gas LLP, 2019 Tex. App. LEXIS 7223 (Tex. App.—Houston [1st Dist.] Aug. 15, 2019, pet. filed)

This case out of the Houston First Court of Appeals involves a breach of retained liabilities provisions in a purchase and sale agreement, focusing on the legal and factual sufficiency of the jury’s damages award in light of its alleged failure to account for the seller’s evidence of an offset, whether the attorneys’ fees awarded by the trial court were reasonable and necessary, and whether it was an error for the court to admit evidence of attorneys’ fees in light of untimely disclosures.

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